LONDON (Reuters) - Icelandic transatlantic budget carrier Wow Air is considering a possible initial public offering (IPO) in 2019, its CEO told Reuters on Monday, as it explores opportunities for the fast-growing business.
Wow Air is one of a new breed of carriers that have focused on low-cost travel across the Atlantic, prompting traditional long-haul players such as British Airways parent IAG (ICAG.L) to set up new operations or change pricing structures.
Wow Air, which also competes with Norwegian Air on transatlantic routes, connects Europe and North America via its hub in Reykjavik, often with smaller A320 jets typically used for short-haul flights.
Founder and CEO Skuli Mogensen said the Wow Air’s rapid expansion means he will start exploring options for the business from next year and will be ready to act in 2019.
“By 2019 we’ll do about a billion in revenue, in U.S. dollars. So that’s when we’re hitting a point where we’ll be an interesting size to go public,” Mogensen told Reuters on the sidelines of the World Travel Market event in London.
“To continue our growth we will have to look at various opportunities to find a strategic partner, go public, et cetera. We haven’t really selected which path to take.”
Mogensen, Wow Air’s sole owner, said that possible partners had already expressed an interest in getting involved with the company, adding that he would not sell the airline.
The company is also interested in acquiring collapsed airline Monarch’s slots at Gatwick for flights between Iceland and London, Mogensen said.
Wow Air, founded in 2011, flew 1.6 million passengers last year and is forecasting a near-doubling of that to more than 3 million this year.
It currently operates 17 Airbus jets, its website says, including three long-haul A330 planes that it uses to fly to California.
Mogensen said that the focus for growth would remain on routes to North America, which now account for about 50 percent of its network, though four new A330-900neos to be leased next year could also offer routes to Asia.
Mogensen said he expects ancillary revenue eventually to exceed $60 per passenger, which could supplement squeezed margins on transatlantic routes.
“If you are willing to be a little bit flexible, a $99 (£75.4) fare is the new normal price. Everyone in the industry is getting smarter, and those who don’t simply fail.”
Reporting by Alistair Smout; Editing by Victoria Bryan and David Goodman