Icelandair buys WOW Air
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Icelandair is buying rival Wow Air in a major consolidation of the Icelandic aviation market.
Icelandair announced it will purchase the other Icelandic airline, low-cost carrier WOW air, in an all-share deal worth $25m.
The two airlines will continue to operate as separate brands where they currently have 3.8 per cent of the total transatlantic market.
The purchase of loss-making WOW air comes during an accelerating period of consolidation in European aviation, driven by failures and takeovers.
WOW air lost $27.5m before tax in 2017 and expects to lose $6m this year.
Icelandair’s share price has slumped by one-third over the past year, though it rose 50 per cent on news of the deal.
Speaking about the merger, Wow Air’s CEO and founder Skuli Mogensen said: “I am very proud of the success and development that we at WOW Air have enjoyed in the past few years. We have created a strong team that ..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 its international competitiveness even further.”
Analysts expect schedules will be restructured to reduce direct competition, and fares may rise.