WOW air downsizes its fleet by four aircraft over financial woes

WOW air is downsizing its fleet by two Airbus A320 aircraft (serials 4270 and 4305) and two Airbus A330 aircraft (serials 1624 and 1607) in cooperation with its lessor, Avolon. The belated aircraft are registered TF-LUV, TF-WOW, TF-BRO and TF-SIS. In a statement, the airline said that the measure is part of a necessary restructuring of the airline and to ensure maximum utility of its remaining fleet. This restructuring, however, will not impact WOW air´s current plans to fly to India.

Meanwhile, Icelandair plans to take over WOW air have been postponed as it’s expected that “not all conditions will be fulfilled by the Icelandair’s shareholding meeting next 30 November“.

On this event, Skuli Mogensen, WOW air’s CEO wrote a letter to WOW air’s bondholders.

Dear WOW air bondholder,

Since the closing of our bond offering in September a number of external and internal events have unfortunately worsened significantly and we are now working hard on securing the long-term funding of WOW air.

During and following our bond offering we had significant bad publicity about the
financial health of WOW air which ended up having a more negative impact on our
sales and credit position than anticipated. As a result, our Q4 results are materially
worse than originally anticipated.

Secondly when Primera air collapsed in October the negativity escalated which has
further worsened an already challenging situation. We were making with finalizing a
sale-leaseback agreement which has since been cancelled resulting in USD25m less
inflow than originally planned.

Thirdly and due to the continuous negative events all our lessors, creditors and
authorities have been monitoring the situation even closer and demanding stricter payment terms than before further putting pressure on our cash flow.

Last but not least oil surged to new heights in the weeks and months after our offering
which at that time also put pressure on our financial outlook. While this has since
retreated the impact on our position during these weeks has not recovered
accordingly.

With the above in mind, we have been working diligently to seek additional funding and have received interest from a number of parties including Icelandair as has been publicly announced.

Timing is a consideration as the situation described above has resulted in these
funding initiatives becoming a necessity for the business.

While this is not a situation that any of us envisioned in September and I personally
invested EU 5.5m cash in the bond as I was convinced the funding would be sufficient
to take us to an IPO in the next 18 months. So having to write this note is not taken
lightly by any means and I can ensure you that we are taking every step possible to
ensure the continuous operation of WOW air.

This is however where we are and hopefully, we can together finalise an acceptable
solution.

Regards,

Skuli Mogensen