WOW Air, the struggling Icelandic carrier known for its purple planes and cheap fares to Europe, got a possible lifeline late Thursday.
Indigo Partners, a Phoenix-based investment firm with stakes in Frontier and other low-cost carriers, said it has reached a preliminary agreement to invest in WOW. The companies said WOW CEO and primary shareholder, Skúli Mogensen, would remain a principal investor after the deal.
Bill Franke, managing partner of Indigo and former chairman and CEO of America West Airlines, praised WOW and Mogensen in a statement, saying they have done a “remarkable job” in creating the ultra low-cost carrier.
“We have a strategic vision for the airline, and look forward to working with its employees and agents to deliver that vision,” the statement said.
The news came near the end of a bleak week for WOW, which has grown rapidly in the past few years and is best known for fares as low as $69 each way between the U.S. and Europe.
The proposed deal was announced hours after Icelandic Air called off its merger with WOW and a day after cash strapped WOW said it had to return four planes — one fifth of its fleet — to aircraft lessors. Travelers and airport officials have been bracing for significant flight cuts, on top of route cancellations announced earlier this fall, due to the shrinking fleet. No specifics have been revealed.
Mogensen acknowledged the airline’s survival was at stake, telling investors before the Indigo agreement was revealed that the airline is “taking every step possible to ensure the continuous operation of WOW Air.”
There are no guarantees the Indigo deal, which is subject to due diligence, will close. The Icelandic deal fell apart in a matter of weeks. But WOW’s Mogensen expressed optimism in a statement.
“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,” he said in a statement. “I am excited to work with Indigo and I am convinced it is the best long-term move for our people and passengers.”
Indigo, which made headlines in 2017 with a record Airbus aircraft order, also has stakes in international budget carriers Wizz Air, JetSmart and Volaris. The low-key firm used to own Spirit Airlines.