Air Lease Corporation CEO lashes out against Isavia over grounding

ALC leased six aircrafts to WOW air, one of which has been grounded at Keflavík airport since the 28th of March as collateral against the 2 billion ISK WOW air owed to Isavia.

WOW air aircraft at Keflavik International Airport. Credit: Isavia

The CEO of Air Lease Corporation has expressed disappointment in the way Isavia (the national airport and air navigation service provider of Iceland) has conducted itself following the collapse of Icelandic low-cost carrier WOW air. ALC had leased six aircrafts to WOW air, one of which has been grounded at Keflavík airport since the 28th of March as collateral against the 2 billion ISK WOW air owed in landing and flight handling fees. ALC argues that the grounding has no legal footing and intends to have the issue resolved in court.

CEO Steve Udvar-Házy said in a written statement that it is highly absurd to expect a third party to pay for another company’s debt. He claims that Isavia has no one to blame except itself, as they were the ones that allowed WOW air to rack up debt. Udvar-Házy also points out that by doing so, Isavia discriminated against other airlines that were expected to pay landing and flight handling fees.

Isavia, on the other hand, claims to be acting in accordance to Article 136 of the Icelandic Aviation Act. The company argues that it is allowed to prevent an aircraft from taking off until all fees for the aircraft in question have been paid or security has been posted for such payment. As previously reported WOW air and Isavia had agreed in September last year that the airline would always have one aircraft at Keflavik International airport as collateral to its debt to Isavia. However, by the end of 2018, WOW air had sold the only four Airbus aircrafts it owned to Air Canada. Therefore, Isavia could only seize one of WOW air’s leased aircrafts when the company failed to pay accumulated fees. However, this agreement had never been disclosed to ALC.

In April, Björn Óli Hauksson, who had served as Isavia’s CEO for the past decade, resigned his position, claiming it was time to pass the torch to a new senior officer who could lead the company into its next phase. Isavia’s politically appointed board director denies that Björn Óli’s resignation is in any way related to WOW air’s collapse.

The legitimacy of the grounding of the ALC aircraft at Keflavik International Airport will be decided by an Icelandic local court today.