mjoelnir
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 3:24 pm

I am reading the main daily Morgunblaðið a fe points:

- Everybody at WOW seems to agree that it is better to be bought than going under. The WOW pilots do not seem stressed around keeping their work.
- The buyout offer, discussion and agreement happened over the weekend.
- The agreement has still to go to the shareholders meeting in both companies
- No changes at WOW at this time, the company will be run as a subsidiary to begin with
- The Icelandic competition authorities have to agree to the buyout
- New declared destination will be opened as planed.
- About a third of routes are flown at both companies
- The tourist industry in Iceland is happy about this outcome

- Isavia, the company running Keflavík airport declares, that current expansion and expansion plans remain unchanged.
 
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SRQKEF
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 3:49 pm

Interesting composition in the Morgunblaðið this morning:

Image
Nothing compares to taking off in an empty 757 with full thrust!
 
ScottB
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Re: Icelandair and WOW merging!

Tue Nov 06, 2018 4:11 pm

LAX772LR wrote:
frmrCapCadet wrote:
Could this have been to avoid a competitor buying WOW?

Perhaps, though ya gotta wonder what competitor would *want* it.

The assets maybe... but investing in an operation that thinks $399 California-Iceland fares are going to be profitable?
That's Swissair-level thinking, right there. :(


The merger consideration doesn't really seem to indicate any competitors were all that interested in WOW, and was there much of value outside the brand? The fleet is all leased and may be something of a negative if FI doesn't want to keep some or all of those aircraft. And I was thinking Etihad-level thinking but at least they had an oil daddy with deep pockets.

a350lover wrote:
Iceland has a very strategic position in the Atlantic Ocean, and it truly serves as a very interesting point to connect. Said that, there are these days tones of options which are non-stop and nearly as cheap.


The position isn't really all that strategic. Hubs on the European and North American continents can serve the same transatlantic flows as well as within-continent flows. There's a small niche in that the KEF hub can go a bit farther into North America with narrowbody aircraft than a hub at DUB/SNN but then the larger airports like LHR/CDG/FRA/AMS/JFK/EWR/BOS/IAD have far greater local markets to support routes.
 
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ODwyerPW
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Re: Icelandair and WOW merging!

Tue Nov 06, 2018 7:00 pm

usflyer msp wrote:
JannEejit wrote:
Maybe copy the Bmi loco model and rename Wow as 'Ice Ice Baby' ? OK I'll get my coat !

They can stop, collaborate, and listen with NH and call the new subsidiary "Vanilla Ice".


The best part of this quote is that as soon as I read Stop, Collaborate and Listen I immediately thought Vanilla Ice without even seeing the rest of the sentence. .. "Ice Baby" is another option. Thanks for the moment of Levity. :rotfl: :rotfl: :bigthumbsup:
learning never stops.
 
klm617
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Re: Icelandair and WOW merging!

Tue Nov 06, 2018 7:18 pm

frmrCapCadet wrote:
Could this have been to avoid a competitor buying WOW?


Yes like easyjet. I could see that as being a threat to FI.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
jimbo737
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 7:19 pm

Wow.

Once Icelandair takes a full peak under the kilt and has a full picture of the mess that is WOW, my bet is the sale price will be at the lowest end of the range, meaning not much more than $25m for an airline with 20 tails.

Even the most obtuse observer can do the math here.

The question becomes why pay anything for an airline that is obviously on its last legs.

Anyone on the inside knows just how damaging an airline on it's last legs can be in the market as it thrashes around pricing to ensure it survives another day.

It makes good business sense to buy them for the pittance they have negotiated, (a 20 airplane airline for barely $25m when it's all said and done, not including the liabilities and obligations associated with aircraft leases). WOW's fleet is 4 years old, Icelandair's is 24 years old. It's pretty obvious what's likely going to occur here.

A show of hands from everyone who's ever seen airlines in this situation promising to keep both brands.

Fat chance. Wow will be a distant memory in 18 months.
 
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SRQKEF
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 8:55 pm

jimbo737 wrote:
Wow.

Once Icelandair takes a full peak under the kilt and has a full picture of the mess that is WOW, my bet is the sale price will be at the lowest end of the range, meaning not much more than $25m for an airline with 20 tails.

Even the most obtuse observer can do the math here.

The question becomes why pay anything for an airline that is obviously on its last legs.

Anyone on the inside knows just how damaging an airline on it's last legs can be in the market as it thrashes around pricing to ensure it survives another day.

It makes good business sense to buy them for the pittance they have negotiated, (a 20 airplane airline for barely $25m when it's all said and done, not including the liabilities and obligations associated with aircraft leases). WOW's fleet is 4 years old, Icelandair's is 24 years old. It's pretty obvious what's likely going to occur here.

A show of hands from everyone who's ever seen airlines in this situation promising to keep both brands.

Fat chance. Wow will be a distant memory in 18 months.


Icelandair is actually 81 years old, first flight in 1937. That aside, I agree with everything you said.
Nothing compares to taking off in an empty 757 with full thrust!
 
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vatveng
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 9:29 pm

SRQKEF wrote:
jimbo737 wrote:
Wow.

Once Icelandair takes a full peak under the kilt and has a full picture of the mess that is WOW, my bet is the sale price will be at the lowest end of the range, meaning not much more than $25m for an airline with 20 tails.

Even the most obtuse observer can do the math here.

The question becomes why pay anything for an airline that is obviously on its last legs.

Anyone on the inside knows just how damaging an airline on it's last legs can be in the market as it thrashes around pricing to ensure it survives another day.

It makes good business sense to buy them for the pittance they have negotiated, (a 20 airplane airline for barely $25m when it's all said and done, not including the liabilities and obligations associated with aircraft leases). WOW's fleet is 4 years old, Icelandair's is 24 years old. It's pretty obvious what's likely going to occur here.

A show of hands from everyone who's ever seen airlines in this situation promising to keep both brands.

Fat chance. Wow will be a distant memory in 18 months.


Icelandair is actually 81 years old, first flight in 1937. That aside, I agree with everything you said.


He was referring to Icelandair's fleet. The 757s are about 24 years old.
 
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SRQKEF
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 9:31 pm

vatveng wrote:
SRQKEF wrote:
jimbo737 wrote:
Wow.

Once Icelandair takes a full peak under the kilt and has a full picture of the mess that is WOW, my bet is the sale price will be at the lowest end of the range, meaning not much more than $25m for an airline with 20 tails.

Even the most obtuse observer can do the math here.

The question becomes why pay anything for an airline that is obviously on its last legs.

Anyone on the inside knows just how damaging an airline on it's last legs can be in the market as it thrashes around pricing to ensure it survives another day.

It makes good business sense to buy them for the pittance they have negotiated, (a 20 airplane airline for barely $25m when it's all said and done, not including the liabilities and obligations associated with aircraft leases). WOW's fleet is 4 years old, Icelandair's is 24 years old. It's pretty obvious what's likely going to occur here.

A show of hands from everyone who's ever seen airlines in this situation promising to keep both brands.

Fat chance. Wow will be a distant memory in 18 months.


Icelandair is actually 81 years old, first flight in 1937. That aside, I agree with everything you said.


He was referring to Icelandair's fleet. The 757s are about 24 years old.


Oops. That's what you get for sleeping 2 hours the night before a test! :blush:

My bad! And I agree with his point. However, the fact that thr 757s are owned and fully paid for also might play into the potential decision FI makes.
Nothing compares to taking off in an empty 757 with full thrust!
 
jmmadrid
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 9:59 pm

What do the fish think about this operation? They have every right to be heard and should have a say.
 
jimbo737
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 10:26 pm

SRQKEF wrote:
vatveng wrote:
SRQKEF wrote:

Icelandair is actually 81 years old, first flight in 1937. That aside, I agree with everything you said.


He was referring to Icelandair's fleet. The 757s are about 24 years old.


Oops. That's what you get for sleeping 2 hours the night before a test! :blush:

My bad! And I agree with his point. However, the fact that thr 757s are owned and fully paid for also might play into the potential decision FI makes.


The old "free airplanes" argument.

One of the biggest fibs in the industry.

The airplanes may be "free".

Operating, fueling and maintaining them isn't.
 
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OzarkD9S
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 11:03 pm

SRQKEF wrote:

Interesting composition in the Morgunblaðið this morning:

Image


Well THAT brings hideous to a whole new level. :covereyes:
Next up: STL-DAL-ABQ-DAL-STL. A little December day trip. Because that's what av-geeks do. :airplane:
 
SEA
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 11:11 pm

OzarkD9S wrote:
SRQKEF wrote:

Interesting composition in the Morgunblaðið this morning:

Image


Well THAT brings hideous to a whole new level. :covereyes:


The CFM56 and A321 wing looks a little skinny for the 757 too :rotfl:
 
usflyer msp
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 11:31 pm

jimbo737 wrote:
SRQKEF wrote:
vatveng wrote:

He was referring to Icelandair's fleet. The 757s are about 24 years old.


Oops. That's what you get for sleeping 2 hours the night before a test! :blush:

My bad! And I agree with his point. However, the fact that thr 757s are owned and fully paid for also might play into the potential decision FI makes.


The old "free airplanes" argument.

One of the biggest fibs in the industry.

The airplanes may be "free".

Operating, fueling and maintaining them isn't.


It is not a big. Having depreciated aircraft is important for a highly seasonal carrier like FI. They can park aircraft in the winter and it has no effect on their bottom line since they are paid for. Newer fleets have to stay in the air to pay for themselves.
 
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SRQKEF
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 11:41 pm

usflyer msp wrote:
jimbo737 wrote:
SRQKEF wrote:

Oops. That's what you get for sleeping 2 hours the night before a test! :blush:

My bad! And I agree with his point. However, the fact that thr 757s are owned and fully paid for also might play into the potential decision FI makes.


The old "free airplanes" argument.

One of the biggest fibs in the industry.

The airplanes may be "free".

Operating, fueling and maintaining them isn't.


It is not a big. Having depreciated aircraft is important for a highly seasonal carrier like FI. They can park aircraft in the winter and it has no effect on their bottom line since they are paid for. Newer fleets have to stay in the air to pay for themselves.


Exactly. It might be a fib as a general rule, but in FI’s case it’s definitely a factor. Both because of the seasonal nature of their route network and because of routes such as DEN, MCO and SEA where the aircraft sits for 20~ hrs before returning to KEF.
Nothing compares to taking off in an empty 757 with full thrust!
 
jimbo737
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 11:43 pm

Can they park all the crews and infrastructure and overhead required to operate the full fleet, or is that "free" too?
 
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flybynight
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Re: Icelandair taking over WOW

Tue Nov 06, 2018 11:46 pm

I don't think replacing FI's 757 would work in all markets (with WOW's A321's). I believe the 752's have a slightly longer range, which is important for cities like Portland, Vancouver, Anchorage and Seattle.
Heia Norge!
 
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SRQKEF
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 12:06 am

flybynight wrote:
I don't think replacing FI's 757 would work in all markets (with WOW's A321's). I believe the 752's have a slightly longer range, which is important for cities like Portland, Vancouver, Anchorage and Seattle.


You are correct. Until the A321neoLR arrives, the 757 is the only narrowbody that can reliably operate those routes with a full load and cargo 365 days a year. Those routes also include DEN, MCO and TPA.
Nothing compares to taking off in an empty 757 with full thrust!
 
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SRQKEF
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Re: Icelandair taking over W

Wed Nov 07, 2018 12:10 am

jimbo737 wrote:
Can they park all the crews and infrastructure and overhead required to operate the full fleet, or is that "free" too?


Removing the infrastructure already in place for the 757 and adjusting the route network to another type is no easy feat either, including the sim Icelandair operates in Hafnarfjordur and all the equipment at Icelandair Technical Services. The 757 is very embedded in the fleet and operation of FI after being the backbone of the airline for almost 30 years, for better or worse. It’ll take some time to move on from them, they can’t just all be thrown away at once.

But yes, there’s also not a fat chance Icelandair Group will operate a mixed fleet of 73M/757/767/32S/330 for long either. Something has to give, and it’ll be interesting to see how it plays out.
Nothing compares to taking off in an empty 757 with full thrust!
 
Lapplander800
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 12:13 am

jimbo737 wrote:
Can they park all the crews and infrastructure and overhead required to operate the full fleet, or is that "free" too?


Yes and bankrolling an insolvent operation is probably "free" as well.

I see risks... Hotel gold can get squandered quickly on trying to become bigger than you can given that you are chasing inherently seasonal and low yielding customers.

I liked their plan, move to a core of high CapEx, low OpEx 737MAX for high utilization and high frequency trough the year and then you crank up the low CapEx, high OpEx 757 dinosaurs when seasonal demand requires until you can.

Now FI needs to figure out how to be profitable with these two operations and high monthly expenses, regardless of demand.
Last edited by Lapplander800 on Wed Nov 07, 2018 12:16 am, edited 1 time in total.
 
Lapplander800
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 12:15 am

SRQKEF wrote:
flybynight wrote:
I don't think replacing FI's 757 would work in all markets (with WOW's A321's). I believe the 752's have a slightly longer range, which is important for cities like Portland, Vancouver, Anchorage and Seattle.


You are correct. Until the A321neoLR arrives, the 757 is the only narrowbody that can reliably operate those routes with a full load and cargo 365 days a year. Those routes also include DEN, MCO and TPA.


How much cargo can neoLR do vs. 757?

(I am asking because I do not know)
 
usflyer msp
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 1:20 am

jimbo737 wrote:
Can they park all the crews and infrastructure and overhead required to operate the full fleet, or is that "free" too?


Those are relatively minor sunken costs in the big scheme of things - no where near the scale of the ownership costs of a mortgaged/leased aircraft.
 
arcticcruiser
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 1:28 am

Lapplander800 wrote:
SRQKEF wrote:
flybynight wrote:
I don't think replacing FI's 757 would work in all markets (with WOW's A321's). I believe the 752's have a slightly longer range, which is important for cities like Portland, Vancouver, Anchorage and Seattle.


You are correct. Until the A321neoLR arrives, the 757 is the only narrowbody that can reliably operate those routes with a full load and cargo 365 days a year. Those routes also include DEN, MCO and TPA.


How much cargo can neoLR do vs. 757?

(I am asking because I do not know)


About a quarter to half in terms of volume.
 
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aemoreira1981
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 1:29 am

SRQKEF wrote:
vatveng wrote:
SRQKEF wrote:

Icelandair is actually 81 years old, first flight in 1937. That aside, I agree with everything you said.


He was referring to Icelandair's fleet. The 757s are about 24 years old.


Oops. That's what you get for sleeping 2 hours the night before a test! :blush:

My bad! And I agree with his point. However, the fact that thr 757s are owned and fully paid for also might play into the potential decision FI makes.


So are 3 of the 4 767s (one is dry-leased from GECAS). That said, I would say it's time for FI to place a Dreamliner order to replace those 767s, which are about 20 years old or a little older than that. 8 Dreamliners would sound about right. Some of the MAX 8/9 frames can be used to replace the leased 757 freighters, which in turn could be replaced by converting two of its own 757s to freighters. The B789s would be a better fit since they would have better value to lease out secondhand during down-time.
 
Lapplander800
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 2:30 am

aemoreira1981 wrote:
SRQKEF wrote:
vatveng wrote:

He was referring to Icelandair's fleet. The 757s are about 24 years old.


Oops. That's what you get for sleeping 2 hours the night before a test! :blush:

My bad! And I agree with his point. However, the fact that thr 757s are owned and fully paid for also might play into the potential decision FI makes.


So are 3 of the 4 767s (one is dry-leased from GECAS). That said, I would say it's time for FI to place a Dreamliner order to replace those 767s, which are about 20 years old or a little older than that. 8 Dreamliners would sound about right. Some of the MAX 8/9 frames can be used to replace the leased 757 freighters, which in turn could be replaced by converting two of its own 757s to freighters. The B789s would be a better fit since they would have better value to lease out secondhand during down-time.


They put these 767s online in the last 2-3 years and when they did they spent a lot of money on refurbishing them. They look like new. While I am sure they could get a good price for them for a freighter conversation, I would put my money on them hanging out for a bit longer.

Given how little use these 757 freighters see these days (so much available belly space in pax '57s and '67s compared to 6 years ago) I assume they are on inexpensive leases.
 
Lapplander800
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 2:37 am

arcticcruiser wrote:
Lapplander800 wrote:
SRQKEF wrote:

You are correct. Until the A321neoLR arrives, the 757 is the only narrowbody that can reliably operate those routes with a full load and cargo 365 days a year. Those routes also include DEN, MCO and TPA.


How much cargo can neoLR do vs. 757?

(I am asking because I do not know)


About a quarter to half in terms of volume.


Well... FI actually sells that space for white boxes of something fresh so it is interesting to see what the value of that freight space + 25% higher fuel bill + low CapEx frame that can easily be parked during off-season vs a high CapEx frame and its financing. For FI its not all about the pax revenues for sure.
 
arcticcruiser
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 2:41 am

True, but the cargo revenue is not equally dispersed around the network. Very limited on some routes.
 
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lightsaber
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Re: Icelandair and WOW merging!

Wed Nov 07, 2018 2:44 am

Bricktop wrote:
:D All I can say is WOW!

:rotfl:

SCQ83 wrote:
IMO Icelandair's biggest competitor was not WOW, but Norwegian/LEVEL/etc flying non-stop low-cost from Europe to the US, hence by-passing KEF. That is the bigger picture.

This has to be of concern. As thinner longhaul travel grows, KEF will lose routes. Bummer, but it is what it is. It will make cargo efficiency that much more important.

BestWestern wrote:
I wouldn’t sleep well if I was a wow crew member. The capacity will be shrunk dramatically within twelve months. Too much overlapping capacity to Iceland.

Sadly, I must agree.

marcelh wrote:
That’s a lot of additional capacity for hauling fish :bigthumbsup:

It is all about the fist. ;)

Lightsaber
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
usflyer msp
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 2:47 am

aemoreira1981 wrote:
SRQKEF wrote:
vatveng wrote:

He was referring to Icelandair's fleet. The 757s are about 24 years old.


Oops. That's what you get for sleeping 2 hours the night before a test! :blush:

My bad! And I agree with his point. However, the fact that thr 757s are owned and fully paid for also might play into the potential decision FI makes.


So are 3 of the 4 767s (one is dry-leased from GECAS). That said, I would say it's time for FI to place a Dreamliner order to replace those 767s, which are about 20 years old or a little older than that. 8 Dreamliners would sound about right. Some of the MAX 8/9 frames can be used to replace the leased 757 freighters, which in turn could be replaced by converting two of its own 757s to freighters. The B789s would be a better fit since they would have better value to lease out secondhand during down-time.


To whom are they going to lease 789's during the off-season? Except for the deep South America carriers and Aus/NZ, the off-season for most widebody operating carriers is the same time as the off-season for FI.

I would expect them to hold on to the 757/767's for the near future and acquire some used A332's down the road once the prices start dropping on them.
 
prebennorholm
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 2:56 am

Lapplander800 wrote:
How much cargo can neoLR do vs. 757?

(I am asking because I do not know)

If you buy a neoLR, then it is because you need its range. When you fly that far, and fill all three belly tanks, then it can take a pax load including bags, and zero cargo.

If you fly a 757 the same distance with pax and bags, then it can also take zero cargo.

The 757 has much larger wing tanks. On shorter routes you can fly it with half full tanks and fill cargo in the belly up to MTOW.

The neoLR can do the same, but there isn't much volume for cargo because the belly tanks take up a lot of the belly volume. Therefore if you want an A321 to fly both pax and cargo on such shorter range, then you would never buy a neoLR with three belly tanks and have to fly with some of them empty. You would buy some other A321 version with less belly tanks and more belly volume for bags and cargo. (Unless your cargo is very heavy and dense, gold bars or such :o )

The 757 is a more flexible plane. It does both pretty long range with no cargo, and shorter flights with cargo capability, for which you need multiple different A321 versions. It is also a bigger plane with more pax floor area, bigger wing, more powerful engines, and heavier combined fuel and payload capability.

The neoLR lacks that flexibility. It's a niche plane which is optimized to haul only pax the same range as the 757 can do with slightly less pax, but improved economy.
Always keep your number of landings equal to your number of take-offs
 
Lapplander800
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 3:09 am

prebennorholm wrote:
Lapplander800 wrote:
How much cargo can neoLR do vs. 757?

(I am asking because I do not know)

If you buy a neoLR, then it is because you need its range. When you fly that far, and fill all three belly tanks, then it can take a pax load including bags, and zero cargo.

If you fly a 757 the same distance with pax and bags, then it can also take zero cargo.

The 757 has much larger wing tanks. On shorter routes you can fly it with half full tanks and fill cargo in the belly up to MTOW.

The neoLR can do the same, but there isn't much volume for cargo because the belly tanks take up a lot of the belly volume. Therefore if you want an A321 to fly both pax and cargo on such shorter range, then you would never buy a neoLR with three belly tanks and have to fly with some of them empty. You would buy some other A321 version with less belly tanks and more belly volume for bags and cargo. (Unless your cargo is very heavy and dense, gold bars or such :o )

The 757 is a more flexible plane. It does both pretty long range with no cargo, and shorter flights with cargo capability, for which you need multiple different A321 versions. It is also a bigger plane with more pax floor area, bigger wing, more powerful engines, and heavier combined fuel and payload capability.

The neoLR lacks that flexibility. It's a niche plane which is optimized to haul only pax the same range as the 757 can do with slightly less pax, but improved economy.


Brilliant. Thanks for taking the time. I keep reading how 321neoLRXL whatever is the best thing since sliced bread, which I do not doubt is true for many airlines. Yet, it ain't that black and white.
 
MIflyer12
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 3:25 am

jimbo737 wrote:
Wow.

Once Icelandair takes a full peak under the kilt and has a full picture of the mess that is WOW, my bet is the sale price will be at the lowest end of the range, meaning not much more than $25m for an airline with 20 tails.
...

It makes good business sense to buy them for the pittance they have negotiated, (a 20 airplane airline for barely $25m when it's all said and done, not including the liabilities and obligations associated with aircraft leases).


Has anybody seen a source that cites Enterprise Value of the purchase transaction? Acquisition price plus value of debt and leases taken on.
 
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aemoreira1981
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Re: Icelandair taking over WOW

Wed Nov 07, 2018 3:25 am

Lapplander800 wrote:
prebennorholm wrote:
Lapplander800 wrote:
How much cargo can neoLR do vs. 757?

(I am asking because I do not know)

If you buy a neoLR, then it is because you need its range. When you fly that far, and fill all three belly tanks, then it can take a pax load including bags, and zero cargo.

If you fly a 757 the same distance with pax and bags, then it can also take zero cargo.

The 757 has much larger wing tanks. On shorter routes you can fly it with half full tanks and fill cargo in the belly up to MTOW.

The neoLR can do the same, but there isn't much volume for cargo because the belly tanks take up a lot of the belly volume. Therefore if you want an A321 to fly both pax and cargo on such shorter range, then you would never buy a neoLR with three belly tanks and have to fly with some of them empty. You would buy some other A321 version with less belly tanks and more belly volume for bags and cargo. (Unless your cargo is very heavy and dense, gold bars or such :o )

The 757 is a more flexible plane. It does both pretty long range with no cargo, and shorter flights with cargo capability, for which you need multiple different A321 versions. It is also a bigger plane with more pax floor area, bigger wing, more powerful engines, and heavier combined fuel and payload capability.

The neoLR lacks that flexibility. It's a niche plane which is optimized to haul only pax the same range as the 757 can do with slightly less pax, but improved economy.


Brilliant. Thanks for taking the time. I keep reading how 321neoLRXL whatever is the best thing since sliced bread, which I do not doubt is true for many airlines. Yet, it ain't that black and white.


This may be why Lufthansa is pushing for the A321XLR---it wants to carry cargo across the Atlantic on narrow-body planes. If this gets built, I suspect Icelandair will listen...it has flexibility since the first 6 MAX planes FI got or will get are owned by lessors under sale-leaseback terms (although 2 may count as assets of FI since they're JOLCO terms).
 
Lapplander800
Posts: 30
Joined: Sat Jun 30, 2018 4:56 pm

Re: Icelandair taking over WOW

Wed Nov 07, 2018 3:43 am

aemoreira1981 wrote:
Lapplander800 wrote:
prebennorholm wrote:
If you buy a neoLR, then it is because you need its range. When you fly that far, and fill all three belly tanks, then it can take a pax load including bags, and zero cargo.

If you fly a 757 the same distance with pax and bags, then it can also take zero cargo.

The 757 has much larger wing tanks. On shorter routes you can fly it with half full tanks and fill cargo in the belly up to MTOW.

The neoLR can do the same, but there isn't much volume for cargo because the belly tanks take up a lot of the belly volume. Therefore if you want an A321 to fly both pax and cargo on such shorter range, then you would never buy a neoLR with three belly tanks and have to fly with some of them empty. You would buy some other A321 version with less belly tanks and more belly volume for bags and cargo. (Unless your cargo is very heavy and dense, gold bars or such :o )

The 757 is a more flexible plane. It does both pretty long range with no cargo, and shorter flights with cargo capability, for which you need multiple different A321 versions. It is also a bigger plane with more pax floor area, bigger wing, more powerful engines, and heavier combined fuel and payload capability.

The neoLR lacks that flexibility. It's a niche plane which is optimized to haul only pax the same range as the 757 can do with slightly less pax, but improved economy.


Brilliant. Thanks for taking the time. I keep reading how 321neoLRXL whatever is the best thing since sliced bread, which I do not doubt is true for many airlines. Yet, it ain't that black and white.


This may be why Lufthansa is pushing for the A321XLR---it wants to carry cargo across the Atlantic on narrow-body planes. If this gets built, I suspect Icelandair will listen...it has flexibility since the first 6 MAX planes FI got or will get are owned by lessors under sale-leaseback terms (although 2 may count as assets of FI since they're JOLCO terms).


FI will make money on their MAX purchase regardless. They bargained hard with Boeing in a conference room which was next to the conference room that had Airbus in it, into the wee hours at FI HQ in the spring of 2013. At that point MAX hadn't been for sale for long, and had not gotten many orders. FI got MAX orders in early. The story goes that FI was close to going Airbus when Boeing offered something much better. They also have first dibs on 8 production slots that might open up, in addition to the 16 commited orders. Through the years FI has shown the ability to make money on these kind of situations (800s).

As per Q2 financial presentation 2 MAX are JOLCO and 1(2018)+3 (2019) are sale/leaseback. Fiancing for the remaining 3 of the 2019 frame deliveries have not been announced AFAIK.
 
MartijnNL
Posts: 484
Joined: Sun Jan 01, 2017 11:44 am

Re: Icelandair taking over WOW

Wed Nov 07, 2018 4:25 am

usflyer msp wrote:
I would expect them to hold on to the 757/767's for the near future and acquire some used A332's down the road once the prices start dropping on them.

Yes, that sounds much better than buying expensive B789's. No need for annoying dimmable windows either.
 
mjoelnir
Posts: 7570
Joined: Sun Feb 03, 2013 11:06 pm

Re: Icelandair taking over WOW

Wed Nov 07, 2018 4:32 am

prebennorholm wrote:
Lapplander800 wrote:
How much cargo can neoLR do vs. 757?

(I am asking because I do not know)

If you buy a neoLR, then it is because you need its range. When you fly that far, and fill all three belly tanks, then it can take a pax load including bags, and zero cargo.

If you fly a 757 the same distance with pax and bags, then it can also take zero cargo.

The 757 has much larger wing tanks. On shorter routes you can fly it with half full tanks and fill cargo in the belly up to MTOW.

The neoLR can do the same, but there isn't much volume for cargo because the belly tanks take up a lot of the belly volume. Therefore if you want an A321 to fly both pax and cargo on such shorter range, then you would never buy a neoLR with three belly tanks and have to fly with some of them empty. You would buy some other A321 version with less belly tanks and more belly volume for bags and cargo. (Unless your cargo is very heavy and dense, gold bars or such :o )

The 757 is a more flexible plane. It does both pretty long range with no cargo, and shorter flights with cargo capability, for which you need multiple different A321 versions. It is also a bigger plane with more pax floor area, bigger wing, more powerful engines, and heavier combined fuel and payload capability.

The neoLR lacks that flexibility. It's a niche plane which is optimized to haul only pax the same range as the 757 can do with slightly less pax, but improved economy.


The advantage of the LR are not only the 3 ACT, you do not need to take all of them, but increased MTOW.
 
User avatar
Nomadd
Posts: 133
Joined: Sat Dec 09, 2017 3:26 pm

Re: Icelandair taking over WOW

Wed Nov 07, 2018 11:33 am

The most important thing is that nothing happens for one more day so I can catch my flight out of Keflavik. I'm going to miss those cheap 1st class fares.
 
airberlin2017
Posts: 24
Joined: Sat Oct 01, 2016 4:40 am

Re: Icelandair taking over WOW

Fri Nov 09, 2018 6:06 am

The business has not been informed about what the debts of WOW air are now, but according to the investment announcement that the Pareto Securities company compiled in conjunction with the WOW air bond auction in September, the company's interest-bearing debt at mid-year amounted to approx. 150 million dollars, equivalent to 18 billion.


Source: https://www.mbl.is/vidskipti/frettir/20 ... _rodurinn/

:eek:
 
arcticcruiser
Posts: 239
Joined: Tue Aug 22, 2017 2:16 pm

Re: Icelandair taking over WOW

Fri Nov 09, 2018 9:00 am

Nomadd wrote:
The most important thing is that nothing happens for one more day so I can catch my flight out of Keflavik. I'm going to miss those cheap 1st class fares.


First Class? On WOW? You’ve got to be kidding...

Or you don’t know what a real First Class is.
 
masseybrown
Posts: 5202
Joined: Wed Dec 11, 2002 2:40 pm

Re: Icelandair taking over WOW

Fri Nov 09, 2018 5:36 pm

The Cleveland newspaper published some useful data on last summer's CLE-KEF traffic. CLE boardings per day were 200 in June, 185 in July, 170 in August, and 158 in September. Between FI (5x73M) and WW (4xA321) an average of 228 seats per day were offered, which produced a 88% load factor in June, declining as summer wore on. So there's a market FI should easily be able to rationalize at some profitable level by raising fares a bit and cutting capacity a bit for 2019. I suspect there are other opportunities in the other markets where FI and WW competed.

https://www.cleveland.com/travel/2018/1 ... -back.html
 
Eitilt
Posts: 13
Joined: Fri Feb 05, 2016 4:59 pm

Re: Icelandair taking over WOW

Fri Nov 09, 2018 7:54 pm

I can see this becoming a mess.
Who pays the unpaid fees at Keflavik airport.
Icelandair has to honour all the below cost fares that Wowair were pushing to generate cash in the last month.
The cheaper Wowair crews will be used to force salaries lower at Icelandair causing labour issues, and any staff laid off must be paid full
Icelandic law redundancies.
Fares will have to rise if Icelandair want to make any money out of this resulting in less passengers.
Icelandair may wish they let Wowair die
 
Ryanair01
Posts: 297
Joined: Fri Dec 27, 2013 9:27 pm

Re: Icelandair taking over WOW

Sun Nov 11, 2018 9:53 am

Eitilt wrote:
I can see this becoming a mess.
Who pays the unpaid fees at Keflavik airport.
Icelandair has to honour all the below cost fares that Wowair were pushing to generate cash in the last month.
The cheaper Wowair crews will be used to force salaries lower at Icelandair causing labour issues, and any staff laid off must be paid full
Icelandic law redundancies.
Fares will have to rise if Icelandair want to make any money out of this resulting in less passengers.
Icelandair may wish they let Wowair die


I'll be interested to see how this plays out. Icelandair revenue is a heart stopping 10% lower than expected, already staff lay offs, they're moving a lot of back room operations to Estonia, having to renegotiate bonds, asset stripping the hotel chain and the CEO is gone. They're facing so much more competition than ever before, easyjet have expanded significantly into Keflavik, Wizz serve the immigrant market, BA and Lufthansa are both strong, the US3 are in town too. So all those tourists who were once guaranteed to be on Icelandair are now partly using their home airlines.

I suspect Icelandair were worried about a strong competitor buying Wow. One of the large European ULCCs (e.g. easyjet/Wizz) could have bought it with loose change and probably gain fleet and crew efficiencies, not to mention provide brand presence in Europe, to make it sustainable. I think that scenario is something Icelandair would move (and is moving) heaven and earth to avoid.
 
Natflyer
Posts: 570
Joined: Fri Oct 11, 2013 9:29 pm

Re: Icelandair taking over WOW

Sun Nov 11, 2018 10:25 am

Eitilt wrote:
I can see this becoming a mess.
...
Icelandair may wish they let Wowair die


That still may happen if due diligence unearths bigger issues than presented and aircraft lessors don’t accept returns of a significant chunk of the fleet (probably including all the 330s). I give this about 50/50 chance.
 
smartplane
Posts: 195
Joined: Fri Aug 03, 2018 9:23 pm

Re: Icelandair taking over WOW

Sun Nov 11, 2018 7:27 pm

mjoelnir wrote:
[threeid][/threeid]
Elementalism wrote:
I'd expect them to eventually wind down WOW. Given it sounds like WOW leases their aircraft. There is no equity there and Icelandair can rid themselves of the lease costs. I would be interested in seeing if they can find a spot for the A330s. Certainly a step up from the 767s they run. If Icelandair requires the capacity I could see them dropping the leased A321s for leased 787 Max until they can purchase more.


It is not always that easy to get rid of leasing contracts. As young as those frames are, I expect those leasing contracts to run a while longer. And I expect that Icelandair has to take a few more frames that are on order by WOW.

In the run-up to acquisition, WOW probably breached covenants, or had to re-negotiate lease terms in anticipation of covenants being breached.

Acquisition is usually used as an opportunity to re-price or terminate leases by the leasor. Where the credit risk is the same, usually no change. Where the credit risk has improved, overall cost of lease may reduce, and reverse if perceived to have deteriorated.

If the leasor wants to reduce existing lease costs (better credit risk, additional opportunities, etc), this will either be incorporated in new aircraft on new leases, discounting end of lease costs, or below the line reimbursement (like fund portion of training costs).
 
1989worstyear
Posts: 220
Joined: Sun Dec 04, 2016 6:53 pm

Re: Icelandair taking over WOW

Sun Nov 11, 2018 7:46 pm

MartijnNL wrote:
usflyer msp wrote:
I would expect them to hold on to the 757/767's for the near future and acquire some used A332's down the road once the prices start dropping on them.

Yes, that sounds much better than buying expensive B789's. No need for annoying dimmable windows either.


Except the A332 is a CO2 spewing 1994 aircraft and the other is from this decade... :banghead:

How many A330NEO's did WOW have on order?
Stuck at age 15 thanks to the certification date of the A320-200 and my parents' decision to postpone having a kid by 3 years. At least there's Dignitas...
 
usflyer msp
Posts: 3096
Joined: Tue May 23, 2000 11:50 am

Re: Icelandair taking over WOW

Sun Nov 11, 2018 8:06 pm

1989worstyear wrote:
MartijnNL wrote:
usflyer msp wrote:
I would expect them to hold on to the 757/767's for the near future and acquire some used A332's down the road once the prices start dropping on them.

Yes, that sounds much better than buying expensive B789's. No need for annoying dimmable windows either.


Except the A332 is a CO2 spewing 1994 aircraft and the other is from this decade... :banghead:


That is the point. A332's will be cheap to acquire just like that 757/767 fleet is now.
 
mjoelnir
Posts: 7570
Joined: Sun Feb 03, 2013 11:06 pm

Re: Icelandair taking over WOW

Sun Nov 11, 2018 8:25 pm

1989worstyear wrote:
MartijnNL wrote:
usflyer msp wrote:
I would expect them to hold on to the 757/767's for the near future and acquire some used A332's down the road once the prices start dropping on them.

Yes, that sounds much better than buying expensive B789's. No need for annoying dimmable windows either.


Except the A332 is a CO2 spewing 1994 aircraft and the other is from this decade... :banghead:

How many A330NEO's did WOW have on order?


WOW had contracted two with Avolon and as far as I know, they are still on order.
 
mjoelnir
Posts: 7570
Joined: Sun Feb 03, 2013 11:06 pm

Re: Icelandair taking over WOW

Sun Nov 11, 2018 8:28 pm

smartplane wrote:
mjoelnir wrote:
[threeid][/threeid]
Elementalism wrote:
I'd expect them to eventually wind down WOW. Given it sounds like WOW leases their aircraft. There is no equity there and Icelandair can rid themselves of the lease costs. I would be interested in seeing if they can find a spot for the A330s. Certainly a step up from the 767s they run. If Icelandair requires the capacity I could see them dropping the leased A321s for leased 787 Max until they can purchase more.


It is not always that easy to get rid of leasing contracts. As young as those frames are, I expect those leasing contracts to run a while longer. And I expect that Icelandair has to take a few more frames that are on order by WOW.

In the run-up to acquisition, WOW probably breached covenants, or had to re-negotiate lease terms in anticipation of covenants being breached.

Acquisition is usually used as an opportunity to re-price or terminate leases by the leasor. Where the credit risk is the same, usually no change. Where the credit risk has improved, overall cost of lease may reduce, and reverse if perceived to have deteriorated.

If the leasor wants to reduce existing lease costs (better credit risk, additional opportunities, etc), this will either be incorporated in new aircraft on new leases, discounting end of lease costs, or below the line reimbursement (like fund portion of training costs).


That still does not mean, that Icelandair could cancel all leasing contracts.
 
1989worstyear
Posts: 220
Joined: Sun Dec 04, 2016 6:53 pm

Re: Icelandair taking over WOW

Sun Nov 11, 2018 10:52 pm

usflyer msp wrote:
1989worstyear wrote:
MartijnNL wrote:
Yes, that sounds much better than buying expensive B789's. No need for annoying dimmable windows either.


Except the A332 is a CO2 spewing 1994 aircraft and the other is from this decade... :banghead:


That is the point. A332's will be cheap to acquire just like that 757/767 fleet is now.


Crazy how civil aircraft technology hasn't changed since the A320-200 came out in 1988. Screw Gen X and Y.
Stuck at age 15 thanks to the certification date of the A320-200 and my parents' decision to postpone having a kid by 3 years. At least there's Dignitas...
 
User avatar
SRQKEF
Topic Author
Posts: 1443
Joined: Fri Jun 17, 2011 7:10 pm

Re: Icelandair taking over WOW

Sun Nov 11, 2018 11:15 pm

1989worstyear wrote:
usflyer msp wrote:
1989worstyear wrote:

Except the A332 is a CO2 spewing 1994 aircraft and the other is from this decade... :banghead:


That is the point. A332's will be cheap to acquire just like that 757/767 fleet is now.


Crazy how civil aircraft technology hasn't changed since the A320-200 came out in 1988. Screw Gen X and Y.


You do realise the A320s (and A330s, 737NGs etc etc) of today are nothing like the first ones off the line? Just look at the performance of modern 242t A333s vs the early A330s primarily used on short haul to medium haul bulk routes in Asia. Two different aircraft in everything but name and appearance.
Nothing compares to taking off in an empty 757 with full thrust!

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