Icelandair to acquire Wow Air

Lloyd Doyle
November 6, 2018

The deal is still subject to the approval of Icelandair Group's shareholders, but based on the jump in Icelandair shares (up almost 50% after the deal was announced), it seems like they are already on board. Now, a traditional carrier made a move on its newest competitor, WOW Air and has presented a share purchase agreement to control the budget-long haul operator.

The two airlines will continue to operate as separate brands and neither side has so far revealed a price or terms of the deal, which was announced Monday. The takeover will create opportunities for an expansion into new markets, and it is expected that Icelandair Group's unit cost will lower substantially. The acquisition creates an opportunity for both companies to become even better prepared to provide global carriers with strong competition in the worldwide airline market.

Together they have a combined 3.8 percent share of the transatlantic market, Icelandair, which warned on profit in July due to an increase in capacity on some routes across the Atlantic, added in a statement.

WOW Air and Icelandair have both faced some financial difficulties in recently.


"There are many opportunities for synergies with the two companies but they will continue to operate under their own brands and operating approvals. The Icelandic travel industry is a lynchpin of the Icelandic economy and its important that air transport to and from the country is in sure hands".

Meanwhile, CEO and founder of WOW air, Skúli Mogensen said that he is very proud of the success and development that WOW Air has enjoyed over the past years. We've built up a strong team which has had noteworthy success and been a pioneer in low-fair aviation across the Atlantic.

Icelandair sees the acquisition as creating opportunities for both airlines to provide stronger competition to carriers in the global market. WOW Air recently announced that it will be cutting U.S. destinations.

In the upcoming days, Icelandair Group's will convene a shareholders' meeting where Icelandair Group's shareholders will cast their vote on the acquisition. The meeting will take place in no more than three weeks time.

Other reports by Iphone Fresh

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