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Bloomberg
US private-equity firm Indigo Partners agreed to invest an undisclosed sum in Iceland’s Wow Air Hf, breathing new life into the discount carrier just hours after another suitor walked away.
Indigo is led by William Franke, who has founded or invested in low-fare carriers around the globe. Terms of
the preliminary agreement weren’t disclosed in a statement from the companies.
Franke’s move came on the same day that Icelandair Group Hf abandoned a bid for Wow, stirring concern that the island’s tourism industry would be hurt by a collapse of the discounter. The Indigo investment, if completed, could save Europe from another airline bankruptcy after five already this year, spurred by higher fuel prices and a capacity overhang that’s hurt fares.
Indigo owns US discounter Frontier Airlines and has stakes in Mexico’s Volaris, East European low-cost leader Wizz Air Holdings Plc and Chile’s JetSmart. It last year agreed to buy 430 Airbus SE aircraft valued at $50 billion, the largest commercial jet transaction in the planemaker’s history.
Icelandair Slumps
Shares of Icelandair fell as much as 14 percent as Indigo’s involvement raised the prospect of the flag-carrier facing a revived Wow, and its investors backed a rights issue. The stock closed down 13 percent following news of the merger failure.
Wow said financial projections had worsened significantly since a September 24 bond sale, and that talks to secure long-term funds had become a necessity.