AEROLÍNEAS

Ultra Low Cost Champion Indigo Steps In To Save WOW In Transatlantic Partnership

Phoenix-based private equity firm, Indigo Partners LLC, has stepped in to back WOW air, following Icelandair Group’s decision to cancel a planned purchase of the Icelandic long-haul low-cost airline.

The terms of the transaction were not disclosed in the announcement, but the deal will be completed «as soon as practicable» after successful completion of due diligence. WOW’s founder, Skúli Mogensen, would continue to be a principal investor after the sale.

Unlike the structure of the canceled Icelandair acquisition, this fresh deal would allow Mogensen an opportunity to sustain the brand and prove its worth.

Indigo’s involvement is a significant vote of confidence in the Icelandic carrier and in the viability of the long-haul low-cost model. The private equity firm has also invested in Spirit Airlines, Frontier Airlines, Mexican ULCC Volaris, Chilean ULCC JetSMART, Singapore’s Tiger Airways, and is the lead investor in Europe’s Wizz Air.

While Tiger Airways floundered, the firm’s other ventures have flourished. Wizz Air is growing a rapid clip in Central Europe and beyond with a lean operating model, strong ancillary sales strategy, and digital mindset.

«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 of Indigo Partners. «We have a strategic vision for the airline, and look forward to working with its employees and agents to deliver that vision.»

This offer comes as welcome news to Mogensen who believes there are still gains to be made. «The demand for low-cost air service continues to expand rapidly worldwide, and with Indigo as a partner, we hope to take full advantage of this highly attractive market segment,» said Mr. Mogensen. «I am excited to work with Indigo and I am convinced it is the best long-term move for our people and passengers.»

WOW will still need to make some difficult decisions to ensure that it keeps costs manageable while taking on both flagship and low-cost competitors that offer direct transatlantic service…

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