Liquidity challenges have forced the airline to suspend payments to Iceland’s airport operator, but funds could be on the way.
WOW air owes about two billion Icelandic krona (€15.7 million) to airport operator Isavia in unpaid airport charges, the Icelandic newspaper Morgunbladet reports.
WOW has been in search of new working capital for a long time, to be used as medium-term financing until it can be listed on the stock exchange before the end of next year.
There is intensifying need for new capital, because in the last 12 months the airline has lost around 300 million krona.
The liquidity challenges it faces have forced it to suspend payments to the airport operator, which runs the international airport in Keflavik, WOW’s treasured hub between the two sides of the Atlantic.
According to the press reports, WOW has not paid airport charges in Iceland at all this year, and in Isavia’s half-year accounts as at 30 June the claims had increased by 1.22 billion Icelandic krona.
Isavia is not commenting on the issue in the Icelandic media, simply saying that “Isavia is working with companies to find a solution in cases of default of debt.”
In the long run, however, there should be more money in the WOW air coffers as it has been selling bonds. In August, Pareto Securities undertook to implement a bond issue that would provide European investors with a return of between six and 12 billion krona.
On Friday, WOW was able to announce that by the middle of this week it would have completed bond sales with a total value of €50 million.
There is no information as to whether the much-needed proceeds will be used to redeem the Isavia debt or if there are other creditors who are further ahead of the queue with their receivables, Morgenbladet writes.
Skuli Mogensen, CEO of WOW air, has issued a statement responding to the Morgunblaðið article about the allegedly owed airport charges, saying that “this is simply wrong. We are very close to Isavia and have never owed them over two billion krónur, and it is a shame that Morgunbladið is to publish such headlines without reliable sources.”
He added that “the performance of WOW air in Q3 will be good and it looks good that the second half of the year will be good too.”