Frontier Airlines owner to take stake in struggling Icelandic carrier Wow air

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Frontier Airlines owner Indigo Partners LLC and Icelandic airline agreed in principle for Indigo to invest in WOW air.

Terms of the transaction were not disclosed. Following successful completion of due diligence, the parties would work to close as soon as possible, a release stated.

USA Today reported that representatives of both companies met in Iceland this week to hammer out a deal. There is no assurance that the transaction will be finalized.

WOW’s CEO and primary shareholder, Skuli Mogensen, would remain a principal investor in WOW upon completion of the deal.

WOW air, likeFrontier, is an ultra-low-cost carrier. It currently serves 25 destinations inEurope and North America. One of the destinations is a Baltimore-Washington International Airport. The carrier offers service from BWI to Reykjavik, Iceland.

The carrier plans to offer connecting service from Baltimore-Washington and other cities to New Delhi in a move to minimize fierce competition in the European market.

The investment was announced after Icelandic Airlines dropped its merger plans amid signs of financial troubles at WOW air that led to service cuts.

“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,” said Mogensen. “I am excited to work with Indigo and I am convinced it is the best long-term move for our people and passengers.”

“Skuli and WOW’s management and employees have done a remarkable job in creating a well-regarded, successful ULCC brand,” said Bill Franke, managing partner of Indigo Partners. “We have a strategic vision for the airline, and look forward to working with its employees and agents to deliver that vision.”

WOW is advised in this transaction by Plane View Partners LLC, the U.S. air transportation advisory firm.

Indigo Partners was lead investor for Tiger Airways based in Singapore and Spirit Airlines based in Ft. Lauderdale, FL. It sold its take in Spirit after acquiring Frontier. Frontier is expanding rapidly, as the company acquires new aircraft.

Frontier serves Philadelphia and briefly flew out of New Castle Airport. Once ownership of Indigo took full control, flights were shifted to Philadelphia.

Indigo maintains lead investments in Wizz Air Holdings, Plc, a low fare carrier with multiple bases in Central and Eastern Europe; Frontier; Volaris Airlines, a low fare carrier based in Mexico City; and JetSMART, a budget airline based in Chile. Indigo is headquartered in Phoenix.

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