Icelandair buys Wow air, hopes to conquer international markets
European airline scope is shrinking again. This time airline consolidation is happening in Iceland, where a travel industry corporation and parent of the national airline - Icelandair - has just announced acquiring WOW Air, with an aim of conquering international markets.
On November 5, 2018, the Icelandair Group – a parent company of the country’s flag carrier – issued a brief statement confirming a purchase agreement of all WOW Air shares. Both airlines are to continue operate under separate brands once (and if) the deal is approved by the group’s shareholders and Icelandic authorities.
The acquisition is explained as an attempt to challenge international markets by providing “strong competition,” the Group statement reads. Currently, both airlines hold approximately 3.8% of transatlantic market combined.
“We have created a strong team that has reached remarkable success and has been a pioneer in low cost flights across the North-Atlantic,” Skúli Mogensen, CEO and founder of WOW air is quoted in a statement as saying.
“A new chapter now starts where WOW air gets an opportunity to grow and prosper with a strong backer like Icelandair Group that will strengthen the foundations of the company and strengthen its international competitiveness even further“.
WOW air has indeed demonstrated a significant growth. Since it was established in 2011, the LCC has successfully expanded in Iceland, Europe and North America, carrying approximately 2.8 million passengers in 2017, and expecting 3.6 million travelers in 2018 - according to the airline itself.
But on the financial side, its flight is not as successful. In August 2018, a leaked presentation revealed the airline was seeking investors, as it suffered a $13.5 million loss in 2017 and was bracing for another $28 million downfall in 2018, local media reported at the time.
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