The Icelandair acquisition of WOW air could be the first of many in Europe as airline consolidation looms.
Giving a state of the industry presentation at WTM London, JLS Consulting owner John Strickland said airlines are facing rising costs in Europe following a rise of fuel prices by 40% to up to $80.
As demand softens over the winter while capacities remain the same or grow, he added so more airlines will be come vulnerable to collapse or acquisition.
Icelandair today announced the acquisition of the low cost carrier in an all share deal that would leave Wow shareholders the equivalent of 5.4% of the group’s shares.
The airlines will continue to operate under separate brands, although the deal is awaiting both share holder and government approval
"WOW air has in recent years built a strong brand and enjoyed great success in the company‘s markets to and from Iceland and across the Atlantic," said Bogi Nils Bogason, interim president and chief executive of Icelandair.
“There are many opportunities for synergies with the two companies but they will continue to operate under their own brands and operating approvals.
“The tourism industry is one of the cornerstones of the Icelandic economy and it is important that flights to and from Iceland will remain frequent.”
The combined business’ market share on transatlantic routes is about 3.8 percent. Icelandair said the deal creates opportunity for both companies to “become even better prepared” to provide international carriers with strong competition in the international airline market.
Skúli Mogensen, chief executive and founder of WOW air, said: “I am very proud of the success and development that we at WOW Air have enjoyed in the past few years and I am thankful for the response we have received since our very first flight.
"We have created a strong team that has reached remarkable success and has been a pioneer in low-cost flights across the North Atlantic.
“A new chapter now starts where WOW air gets an opportunity to grow and prosper with a strong backer like Icelandair Group that will strengthen the foundations of the company and strengthen its international competitiveness even further."