Wow Air Mulls Stake Sale, Buoyed by Interest in Rival Norwegian
(Bloomberg) -- Icelandic carrier Wow Air Ehf, which offers low-cost trans-Atlantic flights via a hub in Reykjavik, said it could seek to raise funds through a stake sale this year and that major airline groups have shown an interest.
Wow needs to finance expansion plans that include services to Asia and its first direct Europe-U.S. flights, and could alternatively seek a non-industry investor or opt for an initial public offering, founder and chief executive officer Skuli Mogensen said in an interview in London.
Burgeoning bid interest in Norwegian Air Shuttle ASA, which says it’s had a number of approaches since IAG SA revealed that it might pursue a takeover, has shown that major carriers are sold on the concept of discounted long-distance travel, Mogensen said. He declined to name possible suitors for Wow.
“The interest in Norwegian creates more awareness and really validates what we are trying to do, that low-cost, long-haul is here to say,” he said. “People are just waiting to see what we decide. This is an industry in which everyone knows everyone and I think we could call on a few select people.”
Wow will announce its first Asian route from Iceland next month with the aim of connecting travelers to the eastern seaboard of North America via the shortest Arctic flight path, Mogensen said. Services will be operated by new Airbus SE A330neo aircraft -- four of which are due to be added to the fleet this year -- and more Asian destinations could be unveiled in the second half.
Dublin and London remain options for a base for Wow’s first direct U.S. discount flights, while Wow is continuing to explore the possibility of establishing a “counter-seasonal” hub -- possibly in the southern hemisphere -- where it could shift aircraft during the northern winter when demand ebbs, Mogensen said. That might mean founding a new unit or reaching a loan deal with another carrier, according to the CEO, who founded Wow after selling mobile software company Oz Communications to Nokia Oyj in 2008.
Norwegian has led the way in both developments, operating cut-price U.S. flights from Western Europe and working toward developing an Argentinian arm. Chief Executive Officer Bjorn Kjos said Thursday his company has had approaches from other “very serious, professional” airline groups in addition to IAG. He softened his stance on a takeover by appointing advisers and a steering committee to evaluate the situation.
IAG and Norwegian would be a good fit, with the British Airways parent one of the few carriers big enough to absorb the mammoth fleet orders that have burdened the Scandinavian company’s balance sheet, Mogensen said.
“I can see a lot of logic for both groups,” he said. “Of course, Bjorn wants more money and IAG doesn’t want to overpay. But he’ll have got good prices on those aircraft and IAG could use them.”
Mogensen said he doesn’t expect Ryanair Holdings Plc to bid for Norwegian, adding that while Europe’s biggest discount carrier could integrate the short-haul operation, its CEO Michael O’Leary probably isn’t ready to commit to trans-Atlantic flights.
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