Icelandic ultra-LCC WOW Air has won approval from its bondholders to convert debt to equity following the recent collapse of talks with two potential investors.

In a brief notice to investors March 26, the carrier said: “Bondholders have formally approved to convert their bonds into equity and formal discussions with investors have commenced to fund the company. This is an important milestone in financially restructuring the company and secur[ing] the long-term sustainability of WOW Air.”

The note gave no indication as to the amount of debt or percentage of the airline’s equity now held by the bondholders. Nor was there any indication of the position of WOW Air founder, CEO and majority shareholder Skúli Mogensen.

WOW Air expanded rapidly in recent years in the low-cost transatlantic market, as well as in providing services to Iceland as a destination. It hit financial difficulties late last year. An initial attempt by Icelandair Group to acquire WOW fell through in late November 2018, as did a second set of negotiations on March 24.

In the intervening period, US-based private equity fund Indigo Partners entered protracted negotiations with WOW, with the intention of taking an initial 49% stake. However, Indigo withdrew from the talks shortly before the Icelandair negotiations resumed.

Alan Dron,