Icelandic airline Wow Air collapses and cancels all flights

https://www.cnbc.com/2019/03/28/icelandic-airline-wow-air-collapses-and-cancels-all-flights.html

by atulg2 • 7 years ago

9 18 7 years ago

gcb0• 7 years ago

good riddance. flied with them once. the seat was worse than those outdoors metal folding and stackable seats you see in very cheap beach front places. no padding. absolutely no reclining.

it was a criminal lack of basic ergonomics for the tens of hours you seat on them.

saagarjha2• 7 years ago

It would have been nice if they had shut down more gracefully, though, since there's currently hundreds (if not thousands) of people stranded across the globe…

londons_explore4• 7 years ago

A graceful shutdown can be considered fraudulent.

By doing a graceful shutdown, they will take much bigger losses in the last few weeks of trading, which is the directors not fulfilling their duty to shareholders.

p1mrx• 7 years ago

That's incredible... like, the seats were hard enough to knock on? What was the surface made of?

londons_explore4• 7 years ago

They're still sprung, just not very much because every inch of springyness in the back is an inch of space that could have been used to squeeze another row of seats in.

photonios2• 7 years ago

This is not unique to Wow Air. That's just how low cost airlines do business. Can't really complain considering their prices.

If you want comfort, go with a more premium airline.

sgillen• 7 years ago

Must have been pretty dramatic if they suddenly canceled all flights rather than winding down the company. The article doesn't exactly make that clear.

umeshunni2• 7 years ago

It was not abrupt. Things had been bad for them for the last year or so. WOW worked (publicly) for the past five months to find a new source of funding and restructure its operations, hoping to continue flights.

* In November 2018 it looked like Icelandair would acquire WOW Air, though that deal ended up falling through

* After that, Indigo Partners (private equity group which has invested in quite a few airlines) signed an agreement in principle to invest in WOW Air; just a few days ago it was announced that this deal fell through

* Earlier this month, WOW Air announced that they were back in discussions with Icelandair, and that the parties hoped to conclude negotiations by Monday, March 25, 2019

* On Sunday Icelandair announced that they had concluded talks with WOW Air, and didn’t intend to move forward

* Then things got really bad, as one of their planes was allegedly repossessed in Montreal

WOW Air bondholders approved a plan to convert their bonds into equity, but that only takes you so far

On a related note, WOW Air is the third European airline to halt operations this year, joining Flybmi and Germania.

dehrmann2• 7 years ago

Norwegian is also on the watch list. https://www.bloomberg.com/news/articles/2019-02-18/norwegian...

sudenmorsian• 7 years ago

Just as a note, Indigo Partners is an American private equity firm which has controlling stakes in Frontier Airlines and Chilean low cost carrier JetSmart and stakes in Wizz Air and Volaris, which are major low cost carriers in Eastern Europe and Mexico respectively.

The Indian low cost carrier Indigo is unrelated.

dehrmann2• 7 years ago

Just a reminder: when you buy something from a company that they don't deliver immediately, you're one of its creditors. If they declare bankruptcy, unless you're in the 90-day credit card chargeback window (or have some other protection), you get in line with the other creditors. This goes for gift cards, too.

In general, be careful buying things more than 90 days out because of this, and be careful when you effectively "lend" money to a struggling company.

photonios2• 7 years ago

"You can't get blood from a stone".

Even if you are one of the creditors. If the company is bankrupt the biggest creditors usually get paid first. In the case of Wow Air, that's most likely the companies that leased them the planes. Many creditors have to be statisfied before it's your turn as an invidiual.

Legally, you are indeed a creditor and you deserve to be paid back if possible. In reality, that rarely happens.

londons_explore4• 7 years ago

Having different classes of creditor ranked seems like almost fraud to me.

A bank who has a higher priority with bankruptcy proceedings has a strong incentive to keep loaning out cash to the failing business at ever worse rates until just the moment that the assets no longer cover their outlay. At that point, they make the company bankrupt with the full knowledge all the other creditors will get nothing and they'll get their full capital back.

panarky• 7 years ago

the biggest creditors usually get paid first

In bankruptcy, the size of the claim doesn't determine its priority.

The law determines claim priority, and the company doesn't have much discretion.

First in line are secured creditors who lent against collateral. In Wow's case, the airplanes collateralize most of the debt.

Then comes employees, taxes and bank loans.

After that comes unsecured bonds.

Next are unsecured creditors with unpaid invoices.

After that is preferred stock.

And if there is anything left over, it goes to common shareholders.

londons_explore4• 7 years ago

cough Tesla $2000 deposit cough

Icelandic airline Wow Air collapses and cancels all flights

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