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Indigo buys stake in Iceland's WOW Air

A logo of IndiGo Airlines. Photograph:( Reuters )

AFP Reykjavík, Iceland Nov 30, 2018, 05.10 PM (IST)

US private equity firm Indigo Partners has agreed to buy a stake in Iceland's loss-making carrier WOW Air, the no-frills company said Friday, one day after Icelandair ditched plans to buy it.

Indigo, which also owns stakes in Wizz Air and Frontier Airlines among others, and WOW Air did not disclose the terms of the preliminary agreement.

But a WOW statement said its "chief executive officer and primary shareholder, Skuli Mogensen, would remain a principal investor in WOW upon completion of the transaction."

Meanwhile, Bill Franke, managing partner of Indigo Partners, said it had "a strategic vision for the airline, and looks forward to working with its employees and agents to deliver that vision."

The airline, founded in 2011 and which flies to 25 destinations in Europe and North America, posted a pre-tax loss of almost $60 million in the first half of the year.

On Thursday, Icelandair announced that its planned acquisition of WOW -- which local media estimated to be worth two billion kronur (around 16 million euros, $18 million) -- would not go ahead.

Icelandair provided no explanation but the airline's financial woes are believed to be worse than previously thought.

Story highlights

The airline, founded in 2011 and which flies to 25 destinations in Europe and North America, posted a pre-tax loss of almost $60 million in the first half of the year.