Icelandair shareholders were due to ratify the €18 million takeover of its loss-making rival on Friday, but worries about debt and a warning yesterday that losses at WOW Air were worse than expected led to shareholders indicating they could not back the purchase.
Bogi Nils Bogason, Icelandair Group interim president and chief executive said: "The planned acquisition of Icelandair Group of WOW Air will not go through. The board of directors and management of both companies have worked on this project in earnest. This conclusion is certainly disappointing.”
In a statement, WOW Air said “both parties” had agreed the deal could not go ahead.
It added: “Icelandair Group issued a stock exchange release last Monday stating that the company estimated that it would be unlikely that all of the conditions in the share purchase agreement would be fulfilled by the shareholders’ meeting on November 30th. That situation remains unchanged.
“Therefore, it is unlikely that the board of directors of Icelandair Group can recommend to the shareholders that they agree to the purchase agreement. Furthermore, the Board does not intend to submit to the shareholders’ meeting a proposal to postpone decision-making on the purchase agreement.
“Due to this this situation, both parties agree to abandon the aforementioned purchase agreement.”
WOW Air, which flies from Gatwick, Stansted and Edinburgh to Iceland, this week returned four aircraft to lessors in a bid to reduce costs. A question mark hangs over its next route launch, from Reykjavik to Delhi, which is due to start on December 11. The service does not appear in GDS inventories after January 30, according to reports.