Yesterday, WOW Air announced that it was in advanced discussions with a majority of its bond holders and other creditors to reach an agreement on a voluntary restructuring that would include converting current debt into equity and “fund the company towards long term sustainability”. Also, yesterday, Icelandair announced that its possible involvement in WOW air’s operations “will not materialize” and that all discussions between the parties have ended. Indigo Partners pulled out of discussions to acquire WOW on March 21, presumably related to the airline’s worsening financial condition. WOW Air announced on March 9 that it was in breach of information disclosure requirements and financial covenants.
WOW Air stated that further information will be given today. This morning, however, reports state that the airline has cancelled its morning flight from Gatwick to Reykjavik as fears grow of its imminent collapse.
Meanwhile, Jet Airways fortunes are unlikely to turn around through mandatory or at least forced Indian bank investment, seen at Kingfisher, which created a stay of execution and all it did in fact was let a failing airline go back into the domestic market and run more crazy ticket sales that damaged the other airlines around it. Lessors will not thank me for pointing this out, but Jet Airways should be allowed to fail for the good of the overall Indian airline market. But be under no illusions whatsoever, Jet’s woes are in no small part due to the Indian government’s continued support of Air India that distorts the market and puts huge pressure on other airlines. The Indian government propped up Air India to save thousands of jobs, now here we are again, with 23,000 Jet jobs on the line – this is a political issue and that means the merry-go-round starts all over again. This situation coupled with rising Indian ATF prices means that there are very few safe havens for aircraft in India and maybe lessors would be best avoiding the market save for IndiGo and Air India if absolutely no other option exists. Flipping Jet aircraft into SpiceJet is of course an option but if Jet is propped up then it is SpiceJet which will be damaged as Jet starts ticket sales to get people in seats.
Then there is the plight of Norwegian – given the 737MAX and 787 troubles I wonder how long they have and as others start to think the same, forward bookings will suffer. Norwegian has to keep itself out of the news – this is key for them.