The American owner of defunct airline WOW Air’s assets has claimed she also indirectly holds shares in Iceland’s only remaining airline Icelandair. As well as this new claim, Michelle Ballarin has floated the idea of merging the two airlines. We’ve explored what this could mean.
WOW Air went bankrupt in March 2019, leaving travelers stranded around the world and a whole host of assets. After discussions about what should happen with the airline, American Michelle Ballarin announced in September 2019 she had bought the airline’s remaining assets and would look to relaunch.
Now the Iceland Review is claiming that at around the same time as she acquired WOW Air, Ballarin also acquired shares in Icelandair. Icelandair successfully managed to raise capital last September to help it deal with the impact of the global pandemic. It did so use a public stock offering. However, the airline rejected an outright offer from Ballarin of ISK 7 Billion ($274 million) for a 25% stake in the company.
This rejection reportedly did not stop Ballarin, who now says several third parties acquired shares on her behalf. It is currently unclear who these third parties might be. During the September stock offering, the largest percentage sold was just 8%, which was bought by an Icelandic bank. Ballarin has also said she intends to purchase more Icelandair shares to increase her control with the aim of merging Icelandair with a relaunched WOW Air.
Merging the airlines
If Ballarin does have some indirect control in Icelandair as well as owning WOW Air, she could very well initiate a merger. Although this idea might surprise some, it isn’t totally shocking news. Icelandair and WOW Air were set to merge way back in 2018 before the deal fell through.
Both WOW Air and Icelandair operated flights on the Transatlantic market, a notoriously difficult market to break into. Additionally, both airlines offer similar routes directly competing against each other from Reykjavik’s Keflavik Airport. A merger would have increased Icelandair’s transatlantic share marginally.
A new merger
If a merger does go ahead, WOW Air certainly isn’t bringing much in terms of aircraft to the table. The airline had 23 aircraft at its height, including six A320, 14 A321, and three A330 widebody aircraft. However, most of these either left the airline before its collapse or were sold on to airlines such as Vistara, Air Canada, and Balkan Holidays Air.
A new merger between the two airlines could facilitate Icelandair’s plans to encourage more tourism in Iceland. Offering WOW air as a low-cost carrier connecting Iceland to Europe would allow Icelandair to offer connecting services while focusing on long-haul routes to the US and Asia.
With travel restrictions still in place, Ballarin certainly has plenty of time to think about her next move. If she does indeed have indirect control over Icelandair, we could see a new future for the airline emerge.
What do you think of this news? Should Icelandair merge with a relaunched WOW air? We’d love to hear what you think, so let us know your thoughts in the comment section.
