Ultra-low-cost airline specialist Indigo Partners has concluded a preliminary agreement with struggling Wow Air, within hours of the airline abandoning a potential acquisition by its compatriot Icelandair Group.
No terms for the transaction have yet been disclosed following the agreement in principle for Indigo to invest in Reykjavik-based Wow. Following successful completion of due diligence, the two companies say they “would work to close as soon as practicable.”
Wow’s founder, CEO and primary shareholder, Skuli Mogensen, would remain a principal investor in the carrier upon completion of the transaction.
The move to bring in a respected and successful ULCC specialist such as Indigo, with its strong buying power, is seen by many as a wise step by Wow, which has been in an increasingly precarious financial position in recent months, seeing it return four aircraft from its 20-strong fleet to lessors earlier this week. Wow has an all-Airbus fleet, while Indigo has major orders with Airbus in place for its existing ULCCs, ordering 430 A320neo and A321neo last year at the Dubai Airshow – an order valued at nearly US$50 billion.
Phoenix-headquartered private equity firm Indigo was a lead investor in Tiger Airways based in Singapore and Spirit Airlines based in Ft. Lauderdale, Florida. It has ULCC lead investments in Hungary’s Wizz Air, Denver-based Frontier Airlines, Mexico City’s Volaris Airlines and JetSMART, based in Chile.
“The demand for low-cost air service continues to expand rapid
ly worldwide, and with Indigo as a partner, we hope to take full advantage of this highly attractive market segment,” said Mogensen (pictured, right). “I am excited to work with Indigo and I am convinced it is the best long-term move for our people and passengers.”
“Skuli and Wow’s management and employees have done a remarkable job in creating a well-regarded, successful ULCC brand,” said Bill Franke, managing partner at Indigo. “We have a strategic vision for the airline, and look forward to working with its employees and agents to deliver that vision.”
WOW is being advised in this transaction by Plane View Partners LLC, the US air transportation advisory firm.
