WOW Applies for Air Operating Licence

WOW air

More than two years since Iceland’s WOW air went bankrupt, the company that purchased its assets has applied for an air operating licence from the Icelandic Transport Authority, RÚV reports. Airline management specialist Ögmundur Gíslason, who is working for the new owner of WOW, says there are plans to rebuild the defunct airline. Ögmundur says it will take a few months for the licence application to be processed.

Following the bankruptcy of low-cost airline WOW air in March 2019, the company’s assets were purchased by Michelle Roosevelt Edwards, known until last year as Michelle Ballarin. The resurrected airline was originally set to take to the skies in late 2019, but the launch has yet to happen.

Edwards is something of an enigma and has made several claims to Icelandic reporters that have not proven true. In November 2020, she gave an interview to an Icelandic television crew at a Virginia mansion she claimed was her home. The Washington Post reported last week that she did not in fact own the property and accessed it without the knowledge of its true owner. In the interview, Edwards also claimed other parties owned shares in Icelandair on her behalf and there were plans to merge the company with WOW air.

Ballarin introduces WOW asset purchase.
Michelle Roosevelt Edwards (then Michelle Ballarin) introduces WOW asset purchase at a press conference in Iceland, 2019.

The news of WOW air’s resurrection comes during the same week that a different low-cost airline will launch in Iceland. PLAY, founded by former WOW air executives, will fly its inaugural flight tomorrow. Ögmundur stated the success of the company was irrelevant to the fledgling WOW air. “It doesn’t matter if PLAY is successful or not.”

Prospective Airline Play Secures USD 40 Million in Funding

play airline

Prospective low-cost airline Play raised more than USD 40 million (ISK 5.1 billion) through a private share offering that ended last Friday, Fréttablaðið reports. The investors include some of Iceland’s largest investment companies and two pension funds. Former WOW executive Birgir Jónsson will take over as CEO of the company upon the request of investors. Established nearly two years ago, Play has yet to operate any flights and does not yet hold an air operator’s certificate.

Flight Delays

Play was established in 2019 in the aftermath of WOW air’s bankruptcy by a number of WOW air’s former employees. The new company held a press conference in November 2019 to present its name and details of its forthcoming operations. One and a half years later, Play has obtained a landing permit at three airports in London and Dublin but has yet to receive an air operator’s certificate, a prerequisite for operating aircraft for commercial purposes.

The company aims to list on the First North Growth Market this summer and hopes to raise an additional USD 20 million in funding according to Fréttablaðið’s sources.

WOW Buyer Ballarin Claims Indirect Ownership in Icelandair

Ballarin introduces WOW asset purchase.

American businesswoman Michelle Ballarin says other parties hold shares in Icelandair on her behalf of which she is the true owner. In 2019, Ballarin purchased Icelandic low-cost airline WOW air’s assets after the company went bankrupt. She told RÚV reporters there were plans to merge the still-defunct airline with Icelandair.

Iceland Review reported on WOW air’s bankruptcy in March, 2019, when the company unceremoniously ceased all service, stranding passengers on both sides of the Atlantic and prompting what were then the largest layoffs in Icelandic history. Later that year, Ballarin purchased WOW air’s assets and stated at a Reykjavík press conference that she planned to resurrect the airline. Nearly one and a half years later, WOW air remains defunct, but Ballarin nevertheless appears to have big plans for the brand as well as broader ambitions in Iceland’s aviation industry.

Icelandair – the only remaining commercial airline in the nation after the fall of WOW air – experienced its own financial struggles throughout last year as the COVID-19 pandemic brought travel more or less to a halt. The company managed to stay afloat, however, thanks to government support and restructuring its finances, in part through a successful public stock offering last September. In the stock campaign, Icelandair rejected an offer of ISK 7 billion [$274.688 million; €231.961 million] from Ballarin, who would have gained ownership of one-fourth of the company had her offer been accepted. Ballarin now claims, however, that other parties hold shares in the company on her behalf.

Ballarin says she plans to purchase more shares in Icelandair and merge the airline with WOW. An interview with Ballarin, where she discusses WOW air and her thoughts about the future of aviation, is featured in investigative journalism program Kveikur tonight.

Budget Airline Play Ready to Start Flying This Fall

Play Air from Iceland

Play, a budget airline formed in the wake of WOW air’s bankruptcy last year, is ready to launch its flight schedule no later than this fall, Vísir reports. “It’s been going really well,” remarked CEO Arnar Már Magnússon. “We’ve used the last few weeks and months for final preparations.”

Many of those involved with Play previously worked at WOW air, and Arnar says that the new airline – which has eschewed WOW’s trademark fuchsia for bright red aircraft – is applying lessons learned at their former company. “We’re building on their experience,” Arnar noted. “We’ve got a lot of people who have a great deal of expertise in airline operations.” Play has also already completed contract negotiations with the unions for both pilots and flight crews.

In the beginning, Play will operate one aircraft, but Arnar says the fleet can be increased as needed. The airline’s flight routes are set but the market still needs to be further examined in order to determine what the inaugural route will be. As of today, the airline has 36 employees and Arnar says the company has been slowly building up staff since last fall. “Thankfully, things have been delayed a little so we’ll be better equipped when air travel begins again in earnest.” Play is still waiting on its operating license, but Arnar says that the company is expecting it soon.

“All the work behind the scenes is done, but there’s so much connected to COVID that there has been something of a delay,” Arnar continued. “But in a good place. We’re working very closely with the Icelandic Transport Authority on these matters. As things stand now, it’s really difficult for us to determine [when we should start flying], just as it is for most [airlines], but we have a number of scenarios regarding when the first flight will be and, in fundamentals, we’re ready for it.”

Year in Review 2019: Business & Economy

Central Bank Ásgeir Jónsson seðlabankastjóri

From a downturn in tourism to a scandal in Namibian waters, here are Iceland’s biggest business and economy stories of 2019.

Emergency landing

This year proved challenging for the Iceland economy, in large part due to the bankruptcy of WOW air in March and the downturn in tourism that followed. (More on this year’s tourism news in Year in Review 2019: Travel.) The fall of WOW led to the biggest mass layoff in Icelandic history, and high rates of unemployment.

The gloomy climate pervaded other industries as well. Arionbanki and Íslandsbanki let 120 employees go on the same day in September, with Íslandsbanki laying off another 20 just two months later. As a result of the downturn, the Central Bank of Iceland lowered interest rates for three consecutive months this fall, to a historic low of 3%.

Aquaculture industry set to grow

While the tourism industry took a hit, the aquaculture industry saw significant expansion. Export value of farmed fish grew by over 60% compared to 2018. The export value of the industry is expected to grow to ISK 40 billion ($322m/€294m) per year by 2021, or nearly 3% of national exports, which would put the industry on par with traditional fishing.

Open-net salmon farms account for around three quarters of all fish farms in Iceland. Environmental activists have been vocal in their opposition of such farms, which pollute the surrounding marine environment and carry risks of genetic damage to wild stocks. In November, a petition signed by 180,000 people was delivered to the Icelandic parliament, urging it to stop granting licenses for open-net fish farming and to rescind currently valid licenses in stages.

Activists are not the only challenges the industry faces. In November, IPN virus was detected in salmon in an open-net fish farm in the East Fjords. It’s the first time the virus has been detected in salmon in Iceland.

Iceland on financial grey list

Having failed to comply with the recommendations of the Financial Action Task Force (FATF) concerning anti-money laundering and counter-terrorist financing measures, Iceland was added to the FATF’s grey list in October. The decision was made after Iceland’s Parliament failed to act quickly and extensively enough to implement recommended changes to their financial legislation recommended in a 2018 FATF report.

It is unclear what exactly being greylisted means for Iceland. Besides undermining the country’s reputation, the categorisation may also make it more difficult for Icelandic companies to do business abroad. Insiders have claimed that the greylisting is a serious indictment of Icelandic governance.

Samherji accused of tax evasion and bribery 

Iceland made global headlines just last month when one of its largest fishing companies Samherji was accused of tax evasion and bribery in Namibia. Leaked documents showed convincing evidence the company paid high-ranking officials in the country – and individuals connected to them – more than ISK 1 billion ($8.1m/€7.3m) since 2012 to ensure access to horse-mackerel fishing quotas in the country.

In the wake of the documents going public, Samherji’s CEO Þorsteinn Már Baldvinsson stepped down from his position, while the Namibian Ministers of Justice and Fisheries resigned shortly after the leaked documents were made public. An investigation into the company’s operations is in progress.

Iceland vs. Iceland

In lighter business news, Iceland – the country – finally won a years-long legal battle against the supermarket chain of the same name, who had secured an EU-wide trademark for the word “Iceland” in 2014. Icelandic authorities sued to have the trademark invalidated on the basis of being far too broad and creating a monopoly that prevented Icelandic companies from registering their products with reference to their country of origin.

This year, the European Union Intellectual Property Office (EUIPO) closed the case, ruling in favour of the country, and invalidating the supermarket’s trademark entirely, noting that “It has been adequately shown that consumers in EU countries know that Iceland is a country in Europe and also that the country has historical and economic ties to EU countries, in addition to geographic proximity.”

Year in Review 2019: Travel

wow air tourism Iceland

Iceland’s tourism industry faced a difficult year, most notably due to the bankruptcy of WOW air, which led to a steep drop in the number of foreign visitors. Nevertheless, big strides were made toward improving infrastructure for the country’s visitors, and preserving some of the natural areas that draw tourists in the first place. Here’s a summary of Iceland’s biggest travel news stories of 2019.

WOW air

After months of operational difficulties, Iceland’s only budget airline WOW air unceremoniously ceased all service on March 28, 2019, leaving thousands of passengers stranded. The company’s bankruptcy prompted the biggest mass layoffs in Icelandic history, with some 2,000 people losing jobs either directly or indirectly due to WOW’s downfall. The national unemployment rate has since risen, particularly in Suðurnes, where Keflavík Airport is the largest employer.

Two would-be companies, one led by former WOW executives and the other by USAerospace Associates, have been rushing to fill the gap left by WOW. So far, the task seems easier said than done: both have delayed their official launch.

Icelandair didn’t have a much easier year either, having to ground their three Boeing 737 Max 8 planes in March following two crashes involving the same models in other airlines. The planes remain grounded currently, and will be so well into next year.

Conservation

Minister for the Environment Guðmundur Ingi Guðbrandsson and Minister of Tourism Þórdís Kolbrún Reykfjörð Gylfadóttir announced extensive plans to build up tourism infrastructure at 130 popular nature sites across the country. The government will allocate ISK 3.5 billion ($28.8m/€25.5m) over the next three years to the initiative, which will be used to protect both Icelandic nature and cultural heritage.

It’s not only local authorities that are recognising the value in Iceland’s sights. In July, Vatnajökull National Park was approved as a UNESCO World Heritage Site, becoming the third in the country. In October, however, Þingvellir National Park’s UNESCO status was revealed to be at risk, due to the extensive diving and snorkelling operations in the park’s Silfra rift.

Safe salmon

While some come to Iceland to look at nature, others want to reel it in. British billionaire Jim Ratcliffe bought additional property in Northeast Iceland, with the stated intention of protecting its salmon stocks. Ratcliffe has announced he will undertake conservation measures in the area that include installing salmon ladders, releasing fertilised roe into the rivers, and even improving the ecosystems along the banks of rivers. While some have expressed concern over how easily foreigners can purchase land in Iceland, salmon fishermen are undoubtedly supportive of the initiative. For a recap on news of Iceland’s flora and fauna this year, readers can consult Iceland Review’s Year in Review 2019: Nature.

New destinations

Despite the difficulties, there are reasons for optimism in Icelandic travel. Juneyao Airlines of China has announced they will launch direct flights to Iceland in March, expecting to carry 20,000 tourists to the country in 2020. Local airline Icelandair Connect has also announced they will be expanding their operations in Greenland, which is expected to grow as a tourist destination in its own right. Entrepreneurs are optimistic as ever: seven hotels are currently under construction in Reykjavík, and expect to offer a combined 800 new hotel rooms to visitors next year.

Unemployment Jumps to 8.4% in Suðurnes

Reykjanesbær

Unemployment on the Suðurnes peninsula in Southwest Iceland was more than double the national rate last month. While across the country, 4.1% of the labour force was registered as unemployed, in Suðurnes that rate was 8.4%, an increase of 1.1% from the previous month. The numbers come from the Directorate of Labour’s monthly report.

WOW effect

The Suðurnes peninsula is one of the most densely populated areas of Iceland, with a population of over 25,000, most of whom live in the town of Reykjanesbær. The region’s biggest employer is Keflavík International Airport. The bankruptcy of WOW air in March significantly reduced traffic at the airport, leading to layoffs among several airport service companies.

Unemployment affects young, foreign men

More men are unemployed in Suðurnes than women, and nearly 60% of those unemployed are foreigners. Most of those unemployed do not have a high level of education and most are young – many under 30 and the vast majority under 50 years old.

Historic fluctuations

Mayor of Reykjanesbær Kjartan Már Kjartansson told Vísir the region is used to ups and downs. “Unemployment went up to 15% when the [American] army went,” he stated. “There are certainly other opportunities in employment but they have little weight compared to the airport.”

The national unemployment rate is expected to increase in December to somewhere between 4.2% and 4.4%. Hildur Jakobína Gísladóttir, the director of the Suðurnes branch of the Directorate of Labour, says the situation should change in the spring. “Tourism revs up again around March and we hope that people find work then.”

Uncertainty About Unpaid Wages of WOW Flight Attendants

Flight attendants WOW air Icelandair

It is unclear whether the bankrupt estate of WOW Air will be able to fully settle salary-related preferential claims, says Sveinn Andri Sveinsson, Supreme Court Attorney and one of the trustees of the estate, RÚV reports. WOW Air declared bankruptcy in March of this year. The estate has approved salary-related preferential claims amounting to ISK 3.8 billion ($31,224,512 / €28,236,014). The estate’s assets are still being sold and its finances fluctuate week to week. The trustees met with the Icelandic Cabin Crew Association this week.

A Standard Meeting

There was nothing unusual about the meeting between WOW Air’s trustees and representatives of the Icelandic Cabin Crew Association, including the Association’s lawyer, Sveinn Andri stated. During the meeting, the trustees reviewed flight attendants’ demands, invoices, and other matters of dispute, the nature of which was not clarified. More meetings are expected in the future.

About 450 flight attendants have made salary-related preferential claims on the estate. A lot of work has been done to review these claims in detail, Sveinn Andri stated, however, it is unclear at the moment whether the estate will be able to pay outstanding salaries and salary-related fees.

Attempt to Settle All Preferential Claims

The Wage Guarantee Fund will repay a portion of the salaries, but it remains to be seen how much of the remaining balance the estate will be able to settle. All parties with preferential claims are equal in the eyes of the trustees and will receive equal pay. The trustees’ policy is to attempt to settle all preferential claims to prevent debts from falling on the government.

According to an article by Vísir in November, the estate is still disputing claims amounting to approximately ISK 1.3 billion ($10,698,773 / €9,674,486). Another division of estate meeting has been scheduled for January 30 to settle this dispute. The six thousand claims that have been declared of the estate amount to ca ISK 151 billion ($1.2 billion / €1.1 billion). The estate will not consider non-preferential claims as it is clear that the estate will not be able to pay them.

WOW Air was an Icelandic ultra-low-cost carrier founded in 2011 that operated services between Iceland, Europe, Asia, and North America.

New Airline PLAY Paints WOW Red

The new Icelandic airline founded from the bankruptcy of WOW air will be called PLAY. The company’s representatives held a press conference in Reykjavík’s Perlan building this morning to present the new company’s name as well as details of its coming operations. PLAY will swap out WOW’s quintessential fuschia colour for red.

According to PLAY’s CEO Arnar Már Magnússon, the colour red was chosen to represent passion as well as Icelandic nature. At the press conference, Arnar shed light on the company’s preparations during the past few months as well as its goals for the near future.

Last September, Michele Ballarin held a press conference in Iceland announcing her company USAerospace Associates’ purchase of WOW air’s assets, and their intention to resurrect the airline. At that time, Ballarin announced the airline would begin operations in October. Last month, that date was delayed until December and it was stated that the new airline would focus on cargo transport before it began operating passenger flights.

Operating licence in the works

PLAY will operate jets from the Airbus A320 family. Arnar pointed out that the short- to medium-range jets can carry both cargo and passengers to all of the airline’s planned destinations. Arnar stated that the company has yet to obtain an air operating licence, but is in the final stages of the process.

The airline will begin operations with flights to Europe, but plans to eventually operate flights to North America as well. Flights west across the Atlantic are expected to begin next spring, when the airline’s fleet will increase to six aircraft. Arnar declined to give details about specific destinations, but stated that PLAY plans to operate ten aircraft within the first three years of operations.

The airline’s website is up and running, and ticket sales are scheduled to begin this month. The airline is giving away 1,000 tickets to mark the beginning of operations. Arnar stated that PLAY will need an enormous amount of staff in a variety of positions, including flight crew and pilots. Positions in marketing, finance, programming, and customer service will also be available.

Controversial cargo?

“PLAY consists of people with a wide range of experience from the aviation industry from airlines such as WOW air and Air Atlanta,” reads a press release on the company’s website. The latter airline made headlines in March last year when it came to light that they had been transporting weapons to Saudi Arabia. Icelandic politicians have expressed concerns over PLAY’s intended cargo transport, as airlines under Ballarin’s leadership have partaken in weapons transport as well.

New WOW air to Transport Cargo Before Passengers

Ballarin introduces WOW asset purchase.

Preparations are underway to get the new WOW air off the ground within a few weeks, RÚV reports. The airline’s first flights will transport cargo between Keflavík and Washington. The new WOW air was originally scheduled to begin flights this October, but delayed its start of operations by two months.

Michelle Ballarin, the airline’s founder, arrived in Iceland this weekend to oversee the company’s preparations. Gunnar Steinn Pálsson, Ballarin’s spokesperson, says there are several reasons that preparations have taken longer than expected, but the airline hopes to begin flying within a few weeks.

Gunnar Steinn stated the airline will initially focus on cargo transport rather than passenger transport. Operations with begin with two planes transporting fish and other goods, and will expand based on demand. The airline aims to eventually offer regular passenger flights to mainland Europe.