WOW air completes its bond offer

WOW air’s bond issue amounts to 60 million Euros and hopes to overtake Icelandair’s position as Iceland’s leading airline by next year.

wow gma Friðrik Örn Hjaltested
Credit: Friðrik Örn Hjaltested/ WOW air

The Icelandic low-cost airline, WOW air, has completed its bond offer. The size of the bond issue is 60 million Euros, of which 10 million Euros will be sold to investors. Initially, WOW air had hoped to issue a bond amounting to 50 million Euros within a framework amount of 100 million EUR.

According to information provided by the company, proceeds will finance general corporate purposes, pay transaction costs, and serve as a bridge to an initial public offering expected to take place in the coming 12 to 18 months.

A blunder, or no?
Up until now, WOW air has been a private company and as such, very little information regarding its finances has been available publicly. It came as a surprise to many that WOW air’s investor presentation, containing details about the company, its markets, and its finances, was made accessible to all on the website of Pareto Securities, an independent investment bank that oversaw the bond issue. The presentation remained online despite a disclaimer stating that the information was “solely for use in connection with the contemplated offering of bonds” and may not be “reproduced or redistributed in whole or in part to any other person”. Neither WOW air nor Pareto Securities have addressed the matter, so it is not clear whether the publication was a mistake or not. What is clear is that the airline’s competitors will have gained great insight into the company and its management through the documents. According to Túristi’s sources, making investor presentations public is not customary in cases such as this.

Bigger than Icelandair by 2019
What the presentation revealed, among other things, is that WOW air expects to see a loss of 14 million USD this year. However, a major turnaround is predicted by next year with the company’s EBIT forecast at 42 million USD, mainly due to increasing sales of so-called Premium and Comfy seats. Also, WOW air believes it will overtake Icelandair’s position as Iceland’s leading airline by 2019. Company heads hope that newly established routes to New Delhi, India will open a channel to a “large, fast growing and underserved market”.

However, these are not the only changes going on within the company, as Ben Baldanza, who joined WOW air’s Board of Directors in 2016, left the company in late August and currently serves on the board of American airline JetBlue.