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16-Apr-2019 11:40 PM

Icelandic airlines: WOW air over-inflated - and burst

Analysis

WOW air ceased operations on 28-Mar-2019. The pioneering the low cost connecting model used its Reykjavik hub for one-stop Europe-North America services. From a start-up in 2012, it had 31% of Iceland's seat capacity in 2018. It only entered the North Atlantic in Mar-2015, but quickly became its second largest LCC (behind Norwegian), with 1.6% of seats in 2018.

A CAPA SWOT analysis on WOW air in Sep-2017 identified over-expansion as one of the LCC's greatest risks. Losses in 2017 gave some indication of its financial stresses, but a provisional sale to Icelandair in early Nov-2018 appeared to provide relief.

When this deal and another with Indigo Partners evaporated, WOW air's funding problems rapidly escalated, in spite of a significant cut to its fleet and network.

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