Icelandic LCC WOW Air will cut its aircraft fleet by nearly half and reduce its workforce by about 10%.
The move comes as the airline continues negotiations with private equity company Indigo Partners, which seeks to become a major shareholder of the carrier.
In a Dec. 13 statement, the airline said that, following what it described as a challenging year, it was “restructuring and simplifying its operations to return to its roots as a profitable ultra-low-cost airline.”
The airline’s all-Airbus fleet will be reduced from 20 aircraft to 11.
“WOW Air is in negotiations with its lessors to return some of its aircraft, including all Airbus A330s. Four Airbus A321s are being sold in a transaction that will improve WOW Air’s liquidity by more than $10 million,” the airline said.
It was reported Nov. 28 that two of WOW’s three A330-300s had already been returned to lessors. The third is now slated for disposal, putting in jeopardy several of the company’s long-haul sectors, including the Keflavik-Delhi route launched only this month.
The company said that, while there would be no schedule changes in December and early January 2019, it will implement a new flight schedule later in January. Details were not disclosed.
The airline said 111 permanent employees were being laid off Dec. 13, and contractors and short-term staff will not be renewed “for the time being.”
“This is the most difficult day in the history of WOW Air,” CEO and founder Skuli Mogensen said. “We have dedicated people who have worked hard to make WOW Air a reality and it breaks my heart to downsize the company. However, in order to ensure our future and preserve WOW Air in the long run, we unfortunately must take these drastic measures.”
After this restructuring, the airline’s workforce will number roughly 1,000.
“WOW Air hopes to be able to offer affected employees a future employment opportunity when WOW Air starts growing again,” the carrier said.
The airline said last week that talks with Indigo Partners, which holds stakes in several LCCs worldwide, had included due diligence meetings “as the initial steps to a potential Indigo investment.”
A team from Indigo spent two days with the airline’s management to review the airline’s business and opportunities. Both parties were working to finalize an investment by Indigo, WOW said.
“These have been two very good days with detailed discussions around WOW’s current business and how we would envision it going forward. WOW Air has a dedicated team and a strong brand that has significant potential,” Indigo managing partner Bill Franke said.
US-based Indigo is the controlling shareholder in Denver-based Frontier Airlines. It also has stakes in Hungary-based Wizz Air, Mexico-based Volaris and Chile-based JetSMART.
Before Indigo emerged as a potential stakeholder, WOW had agreed to a full takeover
by rival Icelandair. The deal failed after WOW conceded that it could not meet the terms specified for it to come through.