Icelandair on Thursday canceled a plan to purchase low-cost
competitor Wow Air, one day before the Icelandair board was scheduled to vote
on the deal.
The airlines said Wow was unable to meet the conditions
required under the share purchase agreement the companies entered into on Nov.
5.
"Due to this this situation, both parties agree to
abandon the aforementioned purchase agreement," Icelandair said.
The deal's failure comes during a week in which Wow reported
that its financial situation has grown worse in recent months. On Wednesday,
Wow said it is downsizing its fleet by four aircraft in cooperation with lessors.
The carrier didn't say how the fleet downsizing will impact its network.
"This is a part of necessary restructuring of the
airline and to ensure maximum utility of its remaining fleet," the carrier
said.
A day earlier, Wow reported that its fourth-quarter results will
be "materially worse" than anticipated. The carrier attributed that
state of affairs to a snowball of negative events, much of it caused by bad
publicity about its financial health. Wow had previously reported that it lost
$47.6 million during the first half of this year.
The resulting loss of confidence in the company by Wow's
creditors and aircraft lessors has led to a demand for stricter payment terms,
which has put further pressure on the company's cash flow, Wow said.
Wow currently flies from Reykjavik to 10 U.S. cities, with
Orlando service slated to begin on Dec. 18.