Iceland review - 2019, Page 13

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Iceland Review
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Glacier
Walks
Iceland’s airline industry is the backbone
of the island nation’s tourism sector, and
yet, it has struggled amidst increasing
financial woes and uncertainty. While
Icelandair has been able to weather
rising oil prices, decreasing profits, and
the resignation of its CEO last year, that
venerable airline’s scrappy kid brother,
WOW air, didn’t fare so well. On the
morning of March 28, 2019, WOW air
unceremoniously ceased all service,
stranding thousands of passengers on
both sides of the Atlantic, prompting the
largest mass layoffs in Icelandic history.
Observers both in Iceland and abroad are
left wondering what the company’s down-
fall will mean for the future of Icelandic
tourism.
From good…
WOW air was an incredible success story
when it launched in 2011. The airline trans-
ported 110,000 passengers in its first year
and had quadrupled that number only five
years later. In 2017, 2,800,000 passengers
flew with WOW. By the following year, the
airline commanded a fleet of 20 planes,
employed over 1,000 people (not to men-
tion the hundreds of individuals employed
by other companies that provided WOW
with support services), and was operat-
ing routes to 35 cities internationally.
But this rapid expansion took its toll and
WOW announced a loss of ISK 4.8 billion
($39.3m/€35.3m) between July 2017 and
July 2018.
Taking the bad news in stride, CEO
Skúli Mogensen sought bonds inves-
tors in the hopes of raising ISK 12 billion
($98.3m/€88.1m) to get the airline back on
track. Provided he was successful in this
endeavour, Skúli said, WOW had “[…] never
been in a better position.”
…to bad
In the fall of 2018, WOW’s bondholders
invested ISK 8.2 billion ($66.9m/€60m)
in the airline – not enough to restore the
company to solvency. WOW began dis-
continuing routes. Cincinnati, Cleveland,
Pittsburg, San Francisco, and St. Louis,
fell by the wayside in the US; Edinburgh,
Stockholm, and Tel Aviv were suspended
indefinitely.
WOW air Goes Bankrupt
Words by
Larissa Kyzer
Photography by
Golli
IN FOCUS