the latest in a series of proposed takeovers that came to nothing. Mogensen had sold the bonds

for €50 million last autumn. The carrier reported it owed three times that when it folded. Icelandair appeared ready to

acquire Wow late last year but pulled out of a deal in November. Then US private equity

investor Indigo Partners stepped in to rescue the carrier. It pulled out on March 21 having said it would invest “up to $75 million” in Wow, about half what the carrier owed. Given that Indigo is a serial

investor in budget carriers – including Wizz Air in Europe, Tiger Airways in Singapore, Spirit Airlines and Frontier Airlines in the US, and Volaris in Mexico – the failure of the deal suggests Wow had problems the investor deemed insurmountable. Wow immediately announced

it was back in talks with Icelandair, only for the Icelandic flag-carrier to walk away a second time on March 24. Four of Wow Air’s 11 aircraft

were grounded at the start of last week – two held by an aircraft lessor in Miami and Montreal and one at Iceland’s Keflavik airport. A fourth aircraft was grounded for maintenance. The carrier had already cut its fleet from 24 to 11 aircraft and ceased flying to the US West Coast. However, its UK website was

still offering flights from Gatwick, Stansted and Edinburgh to Reykjavik and on to destinations including New York, Boston, Washington, Toronto and Montreal last week. Mogensen said: “We wanted

to use Iceland as a global hub connecting three continents.” He blamed the failure on a decision to order long-haul aircraft in 2016. But the airline made serial mistakes – crucially, failing to hedge on fuel costs when the oil price rose last year.

Tui warns grounding of B737 Max will hit profits

Ian Taylor

Tui issued a profit warning last week, blaming the worldwide grounding of the Boeing 737 Max aircraft as it cut its full-year earnings forecast by a quarter.

The aircraft has been grounded

while investigators identify the cause of the Ethiopian Airlines crash on March 10 and that of a Lion Air 737 Max in Indonesia last October. Tui operates 15 of the aircraft,

about a tenth of its fleet, and was due to take delivery of another eight in May. However, the group operated only one 737 Max from the UK, with the remainder flying from Belgium, the Netherlands and Scandinavia. Chief executive Fritz Joussen

forecast Tui’s earnings would fall by 17% from the €1.2 billion it reported in 2018 if the 737 Max returns to service by mid-July, but by 26% if the aircraft is grounded throughout the summer. The aircraft’s grounding

will have “a one-off impact on underlying earnings of

Jet Airways seals finance deal as Goyal steps down

Jet Airways was saved from insolvency last week when founder Naresh Goyal stepped down and a consortium of lenders led by the State Bank of India took over in a debt-for-equity swap. The banks agreed to an immediate loan of $220 million to allow Jet Airways to resume operating. The carrier was poised to go

into insolvency at the end of March 62 4 April 2019 17%

Tui’s predicted drop in earnings if B737 Max is grounded until July

approximately €200 million” if the aircraft resumes flying by mid-July. If it continues, Tui assumes an additional impact of “up to €100 million” by September 30. Tui attributed the costs to

without a deal, with all but 41 of its 123 aircraft already grounded. Aircraft leasing companies had refused to let the aircraft take off because of unpaid bills. Pilots, engineers and other crew had also gone unpaid for months. A deal agreed in February

between Goyal, the banks and shareholder Etihad, which owns a 24% stake in Jet, had stalled due to a dispute about Goyal’s continuing involvement. In a statement, the airline said

it would use the funds “to partly clear pending dues towards lessors, vendors, creditors and employees. It said: “The move will

JET AIRWAYS: The carrier flies from Heathrow and Manchester

see Jet Airways redeploy several of its grounded aircraft, helping renew many of the routes it suspended.” Goyal set up Jet Airways in 1992.

“replacement of aircraft, higher fuel costs, other disruption costs and the anticipated impact on trading”. The group said it had already “made arrangements to guarantee customers’ holidays” to mid-July by leasing additional aircraft and extending the use of aircraft the 737 Max was due to replace, and would “extend the measures” until the end of the summer if necessary. Boeing announced the release of a software fix to the control system

of the Boeing 737 Max last week. › Talk Back, page 19

OUT OF ACTION: The grounding of Tui’s 15 B737 Max aircraft has forced Tui to lease alternative aircraft to guarantee holidays


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