Avolon takes back con­trol of air­craft leased to Wow Air

The Irish Times - Business - - BUSINESS / NEWS - BARRY O’HALLORAN

Air­craft fi­nancier Avolon has taken back con­trol of four air­craft that it had leased to Wow Air, the trou­bled Ice­landic bud­get air­line.

Wow’s fu­ture is in doubt as its big­ger ri­val Ice­landair yes­ter­day dropped plans to buy the smaller car­rier, whose fi­nan­cial woes emerged in Septem­ber, after run­ning the rule over its books.

It is un­der­stood that Dublin-based Avolon has moved four craft that it has leased to Wow, although it has not ter­mi­nated the agree­ments to pro­vide the planes to the Ice­landic car­rier.

The move al­lows Avolon to main­tain con­trol of the craft, while leav­ing it open to the company to re­turn them to Wow should its trou­bles pass.

Avolon took the step to pre-empt any dif­fi­cul­ties that could po­ten­tially arise should Wow be­come in­sol­vent.

The craft in ques­tion are two Air­bus A330s and two A320s. It is un­der­stood that Avolon has re­de­ployed them else­where.

The Ir­ish company has not com­mented but Wow is­sued a state­ment this week say­ing that it had re­turned four craft to lessors as part of a re­struc­tur­ing.

Air­craft fi­nanciers such as Avolon buy planes from man­u­fac­tur­ers and lease them to air­lines in re­turn for rent and other pay­ments. The agree­ments al­low lessors to keep tight se­cu­rity over their craft.

Founded by tech multi-mil­lion­aire Skúli Mo­gensen, Wow of­fers cheap flights from Europe, in­clud­ing the Repub­lic, to Ice­land’s main air­port, Ke­flavik, and from there to var­i­ous US and Cana­dian cities.

The air­line bor­rowed €60 mil­lion through a bond sale in Septem­ber, but higher fuel prices and tougher terms sought by air­craft lessors squeezed its cash flow.

Ice­landair pledged to buy Wow this month, once its terms were met by to­day, but said yes­ter­day that it was not go­ing ahead with the deal.

Bogi Nils Bo­ga­son, Ice­landair’s in­terim chief ex­ec­u­tive, con­firmed that the company would not buy its com­peti­tor. “This con­clu­sion is cer­tainly dis­ap­point­ing,” he said.

Wow had also hoped to raise about €22 mil­lion by sell­ing craft to an avi­a­tion fi­nancier and leas­ing them back but that also fell through.

Svan­hvit Fridriks­dot­tir, Wow’s spokes­woman, said yes­ter­day that the air­line was mak­ing progress with other op­por­tu­ni­ties but gave no de­tails. She stressed that the merger’s fail­ure would not hit flights.

In­dus­try ex­perts be­lieve that smaller Euro­pean air­lines will fold as higher fuel prices, in­creased com­pe­ti­tion and fall­ing fares be­gin to bite around the con­ti­nent.

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