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Icelandair Will Not Purchase WOW

 In Business, News, Politics

Icelandair dropped negotiations with WOW air yesterday, RÚV reports. The airline’s future appears to rest on whether it can convince creditors to convert its debt into shares. More developments are expected later today.

Aircraft grounded in Canada

WOW air jet TF-PRO, which was scheduled to transport passengers from Montréal last night, has been grounded in Canada. While passengers were told the decision was due to “technical difficulties,” mbl.is’s sources report that WOW has lost the right to use the aircraft due to breach of contract terms with its owner, Jin Shan 20 Ireland Company Limited. Most of WOW’s flights from Keflavík Airport have operated on schedule this morning.

Could cause 15% decrease in tourism

Jóhannes Þór Skúlason, director of the Icelandic Travel Industry Association, says WOW’s situation poses a serious threat to the Icelandic economy. WOW air lost ISK 22 billion ($183m/€161m) last year. Although dozens of international airlines transport passengers to Iceland, WOW’s share of the market is large enough that a potential bankruptcy could have a profound impact on the flow of tourists to the country. In the worst case scenario, says Jóhannes, WOW’s downfall could lead to a near 15% drop in tourism in 2019.

Government follows closely

Following Icelandair’s decision to cut talks yesterday, the Prime Minister met with the Ministers of Finance, Transportation, and Tourism to discuss the airline’s situation. The four declined to comment to media.

WOW owner Skúli Mogensen is reported to have attended several meetings after talks with Icelandiar Group were dropped yesterday afternoon. He told Vísir he was content with the company’s situation and still hopeful about its future.

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Hlynur Andrésson