Icelandic low-cost carrier Wow Air has handed back four aircraft and is facing a cash flow crisis after what it called “materially worse than originally anticipated” results for the last quarter.
The carrier is the latest airline to reveal financial problems after Flybe said it was set to make a significant loss last week while both Primera Air and Cobalt Air both ceased operations last month.
Wow’s problems are reportedly to arise from conditions attached to Icelandair bonds worth about £160 million. Two Airbus A330s, an A321 and an A320 have flown from Keflavik Airport to be returned to lessors, reducing Wow’s fleet by one-fifth. It now also has only one widebody aircraft left in its fleet.
Wow has called the move part of a “necessary restructuring” and chief executive, Skuli Mogensen (pictured above) has reportedly written to bondholders saying “a number of external and internal events have unfortunately worsened significantly” since a bond issue in September.
A sale-and-leaseback deal that was expected to raise $25m (£11.7m) has reportedly been cancelled and it is now seeking long-term funding to continue operations, a move that it says is a “necessity for the business”.
The situation could well jeopardise the planned takeover of Wow by Icelandair and the £16 million deal was set to be approved at a shareholders’ meeting on 30 November where it was being debated and then voted on.