WEBVTT 00:00:00.000 --> 00:00:02.319 OK, let's unpack this. If you were traveling 00:00:02.319 --> 00:00:05.839 to Europe any time between, say, 2012 and 2019, 00:00:06.200 --> 00:00:08.300 you almost certainly saw them. Oh, you couldn't 00:00:08.300 --> 00:00:10.759 miss them. Right. You'd be standing at a gate. 00:00:11.050 --> 00:00:13.869 in Newark or Gatwick or maybe Boston, looking 00:00:13.869 --> 00:00:16.989 out the window at this sea of mostly white and 00:00:16.989 --> 00:00:19.750 gray planes. And then suddenly rolling down the 00:00:19.750 --> 00:00:22.170 taxiway, there was this absolute assault on the 00:00:22.170 --> 00:00:25.089 senses. The purple comet. Exactly. Yeah. A bright, 00:00:25.210 --> 00:00:28.309 unapologetic, neon purple Airbus. And if you 00:00:28.309 --> 00:00:30.530 didn't see the plane, you definitely saw the 00:00:30.530 --> 00:00:32.409 ads. They were everywhere. Fly to Europe for 00:00:32.409 --> 00:00:35.829 $99. London to New York for the price of a nice 00:00:35.829 --> 00:00:38.109 dinner. It felt like a glitch in the matrix. 00:00:38.390 --> 00:00:41.359 I remember thinking, is this legal? Can I actually 00:00:41.359 --> 00:00:43.600 cross the Atlantic Ocean for less than 100 bucks? 00:00:43.719 --> 00:00:45.579 For a little while, you absolutely could. But 00:00:45.579 --> 00:00:48.079 as we know now, sitting here in early 2026, that 00:00:48.079 --> 00:00:51.159 ticket price was an illusion. It was a temporary 00:00:51.159 --> 00:00:53.700 gift subsidized by billions of dollars of investor 00:00:53.700 --> 00:00:56.219 money that ultimately just evaporated. Today, 00:00:56.380 --> 00:00:59.280 we're doing a definitive deep dive into the rise, 00:00:59.479 --> 00:01:02.240 the fall, and the very, very strange afterlife 00:01:02.240 --> 00:01:06.400 of WW Air. But we aren't just talking about YYW. 00:01:06.540 --> 00:01:09.159 We have to talk about the entire Icelandic hub 00:01:09.159 --> 00:01:11.939 experiment. We have to. Because, and this is 00:01:11.939 --> 00:01:13.840 the elephant in the room, we are recording this 00:01:13.840 --> 00:01:16.739 in early 2026. And just a few months ago, in 00:01:16.739 --> 00:01:20.560 late 2025, YYW's spiritual successor, the airline 00:01:20.560 --> 00:01:23.659 Play, also ceased operations. And that really 00:01:23.659 --> 00:01:25.840 is the context that changes everything. It's 00:01:25.840 --> 00:01:28.760 the key. If just YOW had failed, we could write 00:01:28.760 --> 00:01:31.400 it off as, you know, bad management, Schuber 00:01:31.400 --> 00:01:33.659 is flying too close to the sun. A one -off. A 00:01:33.659 --> 00:01:36.260 one -off. But now that Play has followed it into 00:01:36.260 --> 00:01:38.000 the grave, we have to ask a much bigger question. 00:01:38.260 --> 00:01:41.120 Is the business model itself fundamentally broken? 00:01:41.359 --> 00:01:44.099 Is the whole idea flawed? We have a massive stack 00:01:44.099 --> 00:01:46.060 of sources today. We've got the original financial 00:01:46.060 --> 00:01:49.640 reports from YOW's collapse in 2019, the bankruptcy 00:01:49.640 --> 00:01:52.959 filings from Play. in 2025, fleet registries, 00:01:52.980 --> 00:01:55.439 and some truly wild reporting on what you called 00:01:55.439 --> 00:01:57.879 the zombie phase of the company. Our mission 00:01:57.879 --> 00:02:00.540 is to understand how a tech entrepreneur tried 00:02:00.540 --> 00:02:02.819 to turn a volcanic island in the North Atlantic 00:02:02.819 --> 00:02:06.200 into the Dubai of the North, why it failed so 00:02:06.200 --> 00:02:08.800 spectacularly, and why the geography of Iceland 00:02:08.800 --> 00:02:11.360 might actually be a trap for airlines, not an 00:02:11.360 --> 00:02:14.580 advantage. It's a story about hubris, cheap money, 00:02:14.759 --> 00:02:17.780 and just the brutal, unforgiving physics of aviation. 00:02:18.379 --> 00:02:21.229 So let's start at the very beginning. Who creates 00:02:21.229 --> 00:02:23.930 an airline like this? I mean, usually when you 00:02:23.930 --> 00:02:25.870 look at airline founders, they are ex -pilots 00:02:25.870 --> 00:02:28.610 or they are, you know, logistics guys who spent 00:02:28.610 --> 00:02:31.310 30 years at British Airways or Lufthansa. Right. 00:02:31.370 --> 00:02:33.610 They are ops people. They live and breathe this 00:02:33.610 --> 00:02:35.629 stuff. They care about fuel hedging and crew 00:02:35.629 --> 00:02:38.550 rotations and maintenance schedules. But the 00:02:38.550 --> 00:02:42.449 founder of WW Air, Schooley Mogenson, was none 00:02:42.449 --> 00:02:44.639 of that. He wasn't an airline guy at all. Not 00:02:44.639 --> 00:02:47.599 even close. Schooley was a quintessential tech 00:02:47.599 --> 00:02:50.180 entrepreneur. He made his fortune in telecoms 00:02:50.180 --> 00:02:52.620 and technology. He had had successful exits in 00:02:52.620 --> 00:02:54.500 Iceland, across Europe, and in North America. 00:02:54.699 --> 00:02:57.240 He was an investor. He looked at the world through 00:02:57.240 --> 00:02:59.599 the lens of Silicon Valley. Which is? Disrupt, 00:02:59.719 --> 00:03:02.800 scale fast, acquire users at any cost, and then, 00:03:02.879 --> 00:03:04.479 you know, figure out the profitability later. 00:03:04.680 --> 00:03:06.919 That is a terrifying mindset to bring to aviation. 00:03:07.560 --> 00:03:09.840 In software, if you move fast and break things, 00:03:09.979 --> 00:03:13.020 you can just release a patch on Tuesday. In aviation, 00:03:13.319 --> 00:03:16.620 if you break things, you have 4 ,000 people stranded 00:03:16.620 --> 00:03:19.400 in Reykjavik in the middle of a snowstorm. Precisely. 00:03:19.500 --> 00:03:21.620 The stakes are just fundamentally different. 00:03:22.159 --> 00:03:24.780 But that outsider perspective was also his superpower, 00:03:25.039 --> 00:03:28.419 at least initially. He founded WIW Air in November 00:03:28.419 --> 00:03:31.560 2011 through his investment vehicle, a company 00:03:31.560 --> 00:03:34.560 called Titan. He was the sole owner, the CEO, 00:03:34.860 --> 00:03:37.599 and a board member. So he had total control. 00:03:37.719 --> 00:03:40.300 Total control. There was no board of grumpy old 00:03:40.300 --> 00:03:42.400 aviation veterans to tell him, no, that's insane, 00:03:42.479 --> 00:03:45.139 you can't do that. It was his vision, his money, 00:03:45.280 --> 00:03:48.360 his show. And what was that vision? I mean, obviously, 00:03:48.439 --> 00:03:50.400 Iceland is an island. People need to fly to get 00:03:50.400 --> 00:03:53.219 there. But he had much bigger plans than just 00:03:53.219 --> 00:03:55.919 ferrying tourists to the Blue Lagoon. He did. 00:03:56.120 --> 00:03:58.919 His vision was entirely based on geography. If 00:03:58.919 --> 00:04:00.819 you look at a globe, and it's important to look 00:04:00.819 --> 00:04:03.000 at a globe, not a flat map, and you draw a line 00:04:03.000 --> 00:04:05.539 from London to New York or Paris to Toronto, 00:04:05.719 --> 00:04:08.120 that line, the shortest possible route, goes 00:04:08.120 --> 00:04:10.780 almost directly over Iceland. It's the perfect 00:04:10.780 --> 00:04:13.319 stepping stone. The Great Circle Route. Right. 00:04:13.520 --> 00:04:16.019 And Mogensen wasn't the first person to notice 00:04:16.019 --> 00:04:18.379 this. We have to give a nod to Loftlayer. The 00:04:18.379 --> 00:04:22.000 hippie airline. Yes. Back in the 1960s and 70s, 00:04:22.000 --> 00:04:24.800 Loftlayer offered dirt cheap flights across the 00:04:24.800 --> 00:04:27.779 Atlantic by stopping in Iceland. They flew these 00:04:27.779 --> 00:04:31.319 slow prop planes. It took forever, but it was 00:04:31.319 --> 00:04:34.100 affordable for students and backpackers. Mogensen 00:04:34.100 --> 00:04:36.519 essentially wanted to reboot the hippie express 00:04:36.519 --> 00:04:39.100 for the Instagram generation. They use this very 00:04:39.100 --> 00:04:41.680 specific phrase that I find fascinating. The 00:04:41.680 --> 00:04:45.180 Dubai of the North. That is a massive ambition. 00:04:45.379 --> 00:04:47.939 It is. I mean, think about what Dubai is. It's 00:04:47.939 --> 00:04:50.220 a global connector. Emirates Airlines connects 00:04:50.220 --> 00:04:52.879 Europe to Asia, Asia to Africa, Africa to the 00:04:52.879 --> 00:04:55.300 U .S. Billions of people live within a four, 00:04:55.439 --> 00:04:58.709 five, six hour flight of Dubai. Mogensen saw 00:04:58.709 --> 00:05:01.069 Kefalovic Airport and wanted to turn it into 00:05:01.069 --> 00:05:03.089 that kind of indispensable connector for the 00:05:03.089 --> 00:05:05.430 Atlantic. But Dubai has a state -backed airline 00:05:05.430 --> 00:05:08.050 with what feels like infinite oil money. And 00:05:08.050 --> 00:05:10.189 they have perfect weather year -round. Iceland 00:05:10.189 --> 00:05:12.689 has. Puffins and volcanoes. Right. And some of 00:05:12.689 --> 00:05:15.040 the most volatile weather on the planet. Absolutely. 00:05:15.180 --> 00:05:16.720 But you have to remember the timing. This is 00:05:16.720 --> 00:05:19.279 2011. Iceland had just gone through a horrific 00:05:19.279 --> 00:05:23.120 financial crisis in 2008. The currency, the krona, 00:05:23.160 --> 00:05:25.339 was in the toilet. Which made Iceland incredibly 00:05:25.339 --> 00:05:28.480 cheap for tourists. Incredibly cheap. And then... 00:05:28.800 --> 00:05:31.500 The universe handed Iceland a gift. In 2010, 00:05:31.699 --> 00:05:34.620 you had the eruption of Eyjafjallajökull. The 00:05:34.620 --> 00:05:36.800 volcano that shut down all of European airspace 00:05:36.800 --> 00:05:39.240 for, what, a week? It shut down the airspace, 00:05:39.339 --> 00:05:42.139 but it also put Iceland on every TV screen in 00:05:42.139 --> 00:05:44.060 the world for weeks on end. It was the biggest 00:05:44.060 --> 00:05:46.279 free marketing campaign in history. Suddenly, 00:05:46.360 --> 00:05:48.860 everyone wanted to see this dramatic, volcanic, 00:05:49.259 --> 00:05:52.779 otherworldly land. Skuli Mogensen saw that wave 00:05:52.779 --> 00:05:54.439 of interest forming and decided he was going 00:05:54.439 --> 00:05:56.639 to build a surfboard to ride it. So he launches 00:05:56.639 --> 00:05:59.480 the brand. And the brand itself was loud. Wow. 00:05:59.899 --> 00:06:02.600 Wow. It was meant to signify the reaction he 00:06:02.600 --> 00:06:04.560 wanted people to have, both to the prices and 00:06:04.560 --> 00:06:06.899 to Iceland itself. But there's a great little 00:06:06.899 --> 00:06:09.319 design Easter egg in the logo if you take the 00:06:09.319 --> 00:06:11.899 letters W -O -W and you flip them upside down. 00:06:11.980 --> 00:06:15.540 It spells M -O -M? It spells M -O -M. And they 00:06:15.540 --> 00:06:16.879 actually leaned into that in their marketing. 00:06:16.959 --> 00:06:19.579 They were very clever about it. They started 00:06:19.579 --> 00:06:21.699 registering the tail numbers of their planes 00:06:21.699 --> 00:06:23.560 to spell out family words. Oh, that's right. 00:06:23.600 --> 00:06:26.560 I remember seeing those. T -F -M -O -M. TF Dad, 00:06:26.920 --> 00:06:32.540 TF Bureau, TF SIS, even TFJ. Really? Yeah, in 00:06:32.540 --> 00:06:34.759 support of Reykjavik Pride. It was all part of 00:06:34.759 --> 00:06:37.740 this quirky, friendly, accessible image. It was 00:06:37.740 --> 00:06:41.160 a signal. We are not a stuffy, boring legacy 00:06:41.160 --> 00:06:44.939 carrier. We're fun. So they launch in late 2011. 00:06:45.139 --> 00:06:48.519 Their first flight to Paris is in May 2012. And 00:06:48.519 --> 00:06:50.480 almost immediately... They go into acquisition 00:06:50.480 --> 00:06:53.360 mode. Right away. In October 2012, just a few 00:06:53.360 --> 00:06:54.879 months after their first flight, they bought 00:06:54.879 --> 00:06:57.139 Iceland Express. This was their main low -cost 00:06:57.139 --> 00:06:59.980 competitor in the Icelandic market. So by swallowing 00:06:59.980 --> 00:07:02.639 them, WW instantly became the dominant budget 00:07:02.639 --> 00:07:04.480 player in the country. And they got their routes. 00:07:04.699 --> 00:07:07.100 They got their routes to Gatwick, to Copenhagen, 00:07:07.100 --> 00:07:09.500 Berlin. It was a massive shortcut to building 00:07:09.500 --> 00:07:11.519 a network. And the growth numbers from this point 00:07:11.519 --> 00:07:13.939 on are just staggering. Looking at the data we 00:07:13.939 --> 00:07:17.660 pulled, 400 ,000 passengers in 2013. That's a 00:07:17.660 --> 00:07:20.480 respectable start for a new airline. But by 2016, 00:07:20.939 --> 00:07:23.459 just three years later, they were carrying 1 00:07:23.459 --> 00:07:27.500 .6 million people a year. That's a fourfold increase. 00:07:27.720 --> 00:07:30.870 It's exponential growth. That is. tech startup 00:07:30.870 --> 00:07:33.810 growth, not normal airline growth. And the only 00:07:33.810 --> 00:07:36.129 way you can possibly achieve that kind of growth 00:07:36.129 --> 00:07:38.709 is to stimulate demand that didn't exist before. 00:07:38.850 --> 00:07:40.389 And you do that with price. You do that with 00:07:40.389 --> 00:07:42.250 the ninety nine dollar ticket. OK, let's get 00:07:42.250 --> 00:07:43.850 into the mechanics of this, because I feel like 00:07:43.850 --> 00:07:45.870 this is where the average traveler gets confused 00:07:45.870 --> 00:07:48.970 and frankly, where the magic trick happens. How 00:07:48.970 --> 00:07:52.290 does an airline actually sell a ticket for ninety 00:07:52.290 --> 00:07:53.990 nine dollars and not go bankrupt immediately? 00:07:54.269 --> 00:07:56.449 Or were they just losing money on every single 00:07:56.449 --> 00:07:58.579 seat? Well, it's a mix of a few things. It's 00:07:58.579 --> 00:08:01.360 loss leaders, it's unbundling, and it's ancillary 00:08:01.360 --> 00:08:04.899 revenue. So first, the unbundling. That $99 fare 00:08:04.899 --> 00:08:07.839 you saw advertised is for a seat, just the seat. 00:08:07.980 --> 00:08:10.579 It does not include a carry -on bag, not even 00:08:10.579 --> 00:08:13.100 a small one sometimes. It does not include a 00:08:13.100 --> 00:08:15.319 check bag. It does not include a meal. It does 00:08:15.319 --> 00:08:17.779 not include a bottle of water. It certainly doesn't 00:08:17.779 --> 00:08:20.300 include the ability to choose your seat. So by 00:08:20.300 --> 00:08:22.180 the time you add a suitcase and a sandwich... 00:08:22.350 --> 00:08:24.889 You're already paying, what, $300, $350? Exactly. 00:08:25.089 --> 00:08:29.389 And often, that $99 fare was only available one 00:08:29.389 --> 00:08:32.090 way, and only if you booked a return flight that 00:08:32.090 --> 00:08:34.450 was much, much more expensive. Or it was only 00:08:34.450 --> 00:08:36.889 available on a Tuesday in February. It was a 00:08:36.889 --> 00:08:39.529 marketing hug. A brilliant one, because it worked. 00:08:39.570 --> 00:08:41.990 It got you onto the website, it filled the planes, 00:08:42.110 --> 00:08:44.149 and you have to remember, an airline seat is 00:08:44.149 --> 00:08:47.129 the most perishable good in the world. Once that 00:08:47.129 --> 00:08:49.090 plane door closes and it pushes back from the 00:08:49.090 --> 00:08:53.269 gate, an empty seat is worth zero. Forever. So 00:08:53.269 --> 00:08:55.909 getting $99 is infinitely better than getting 00:08:55.909 --> 00:08:57.870 zero, provided you have enough other people on 00:08:57.870 --> 00:09:00.350 that plane paying full price to cover the fuel 00:09:00.350 --> 00:09:02.809 and the crew. So they're filling the planes to 00:09:02.809 --> 00:09:06.629 Europe with this model. But Skuli Mogensen wanted 00:09:06.629 --> 00:09:09.450 the Dubai model. He needed to connect to North 00:09:09.450 --> 00:09:12.100 America. The transatlantic leap. This was the 00:09:12.100 --> 00:09:14.200 big move. This happened in 2015. They started 00:09:14.200 --> 00:09:16.620 small with Boston and Baltimore. Those are shorter 00:09:16.620 --> 00:09:18.539 flights, easier to do with a narrow body plane. 00:09:18.700 --> 00:09:21.320 Right. But in 2016, they went big. They launched 00:09:21.320 --> 00:09:24.159 Los Angeles and San Francisco. And flying from 00:09:24.159 --> 00:09:27.259 Reykjavik to Los Angeles is a haul. That is a 00:09:27.259 --> 00:09:30.019 nine or 10 hour flight. It is a very long flight. 00:09:30.080 --> 00:09:32.080 And to do that, they had to lease bigger plans. 00:09:32.259 --> 00:09:35.600 They brought in the Airbus A330 -300. Okay, here's 00:09:35.600 --> 00:09:37.509 where it gets interesting technically. And maybe 00:09:37.509 --> 00:09:40.330 a little nerdy. Why does adding a new plane type 00:09:40.330 --> 00:09:42.750 matter so much? It matters immensely. I mean, 00:09:42.750 --> 00:09:44.789 this is the cardinal rule of low -cost carriers. 00:09:45.289 --> 00:09:47.549 If you look at the most successful ones, Southwest, 00:09:47.990 --> 00:09:51.490 Ryanair, Wizz Air, they are fanatical about simplicity. 00:09:51.769 --> 00:09:54.330 They fly one type of plane. Southwest flies only 00:09:54.330 --> 00:09:57.149 the Boeing 737. Wizz Air flies only the Airbus 00:09:57.149 --> 00:09:59.529 A320 family. Because then every pilot can fly 00:09:59.529 --> 00:10:01.690 every plane. Every flight attendant is trained 00:10:01.690 --> 00:10:04.049 for every plane. And every mechanic has the same 00:10:04.049 --> 00:10:06.539 set of spare parts in the hangar. Exactly. It's 00:10:06.539 --> 00:10:09.500 all about commonality. It keeps your costs brutally 00:10:09.500 --> 00:10:14.919 low. When WOWW Air leased those A330s, these 00:10:14.919 --> 00:10:18.440 big twin -aisle wide -body jets, they broke that 00:10:18.440 --> 00:10:21.019 fundamental rule. Suddenly, they needed a separate 00:10:21.019 --> 00:10:23.620 pool of pilots trained and certified just for 00:10:23.620 --> 00:10:26.399 the A330. They needed a separate inventory of 00:10:26.399 --> 00:10:28.279 spare parts. They needed separate maintenance 00:10:28.279 --> 00:10:30.960 schedules and ground equipment. The complexity 00:10:30.960 --> 00:10:33.539 of the entire operation doubled overnight, but 00:10:33.539 --> 00:10:35.539 their back office infrastructure didn't. And 00:10:35.539 --> 00:10:37.679 the utilization of the plane itself becomes a 00:10:37.679 --> 00:10:40.799 problem too, right? A huge problem. A wide -body 00:10:40.799 --> 00:10:43.480 plane is incredibly expensive to lease. I mean, 00:10:43.480 --> 00:10:45.279 you're talking hundreds of thousands of dollars 00:10:45.279 --> 00:10:48.519 a month per plane. To make money, that plane 00:10:48.519 --> 00:10:51.460 needs... to be in the air 15, 16 hours a day, 00:10:51.539 --> 00:10:53.940 every day. Just constantly flying. But if your 00:10:53.940 --> 00:10:56.159 entire model is based on funneling people through 00:10:56.159 --> 00:10:58.659 a hub in Iceland, the schedule is very constrained. 00:10:58.899 --> 00:11:01.220 The flight from LA has to arrive in Keflavik 00:11:01.220 --> 00:11:03.179 in the morning, in time for the connecting bank 00:11:03.179 --> 00:11:05.679 of flights to Europe. That means if the plane 00:11:05.679 --> 00:11:08.240 sits on the ground in Los Angeles for eight hours 00:11:08.240 --> 00:11:10.480 waiting for the right departure slot, it's not 00:11:10.480 --> 00:11:12.879 making money. It's just burning cash. But Mogensen 00:11:12.879 --> 00:11:15.500 didn't stop at the West Coast. He looked even 00:11:15.500 --> 00:11:18.399 further. He looked east. And this is where the 00:11:18.399 --> 00:11:21.779 Dubai ambition really went off the rails. They 00:11:21.779 --> 00:11:25.820 decided to fly to India, to New Delhi. From Iceland. 00:11:26.000 --> 00:11:28.019 From Iceland. The idea being that you could fly 00:11:28.019 --> 00:11:31.519 from, say, San Francisco to New Delhi via Iceland. 00:11:31.700 --> 00:11:34.019 Which, if you look at a globe again, seems to 00:11:34.019 --> 00:11:35.460 make some sense. The line is pretty straight. 00:11:35.559 --> 00:11:37.159 It goes right over the pole. Geographically, 00:11:37.159 --> 00:11:40.279 it's elegant. But operationally, it is a complete 00:11:40.279 --> 00:11:42.200 nightmare. I mean, just think about the chain 00:11:42.200 --> 00:11:45.139 of events. You have a flight. Leaving San Francisco, 00:11:45.299 --> 00:11:48.700 it has to fly nine hours to Keflavik. It lands 00:11:48.700 --> 00:11:51.360 in the middle of the North Atlantic winter. You've 00:11:51.360 --> 00:11:55.399 got blizzards, high winds, ice. Right. The plane 00:11:55.399 --> 00:11:57.879 has to be de -iced, refueled, and turned around 00:11:57.879 --> 00:12:01.159 in maybe 90 minutes. Then passengers have to 00:12:01.159 --> 00:12:04.000 get off, clear security again, and board another 00:12:04.000 --> 00:12:06.000 flight for another nine or ten hours to Delhi. 00:12:06.179 --> 00:12:08.240 If that first flight from San Francisco is two 00:12:08.240 --> 00:12:10.059 hours late because of headwinds over Canada, 00:12:10.360 --> 00:12:12.419 the whole connection is blown. The whole thing 00:12:12.419 --> 00:12:15.340 collapses. And unlike Emirates and Dubai, where 00:12:15.340 --> 00:12:17.279 if you miss your connection, they've got six 00:12:17.279 --> 00:12:18.980 other flights going to your destination that 00:12:18.980 --> 00:12:23.039 day, WOW Air didn't. They had one. If you missed 00:12:23.039 --> 00:12:25.179 it, you were stuck in Iceland for 24 hours or 00:12:25.179 --> 00:12:27.240 more. And guess who has to pay for your hotel 00:12:27.240 --> 00:12:30.610 and food? Wow. W .Airdis. In Iceland, which is 00:12:30.610 --> 00:12:32.490 one of the most expensive countries on Earth. 00:12:32.610 --> 00:12:36.029 So one delay, one small technical issue could 00:12:36.029 --> 00:12:38.610 wipe out the entire profit margin for that flight 00:12:38.610 --> 00:12:40.490 and probably the next three flights after it. 00:12:40.570 --> 00:12:43.750 It was a ridiculously high risk, high complexity 00:12:43.750 --> 00:12:46.309 strategy run on a shoestring budget. And they 00:12:46.309 --> 00:12:48.370 were doing all of this while constantly churning 00:12:48.370 --> 00:12:50.470 their fleet. They weren't just adding new types 00:12:50.470 --> 00:12:52.549 of planes. They were swapping them out. Right. 00:12:52.960 --> 00:12:56.000 They started with old, cheap -to -lease, 20 -year 00:12:56.000 --> 00:12:59.240 -old A320s. But Schooley, with his tech background, 00:12:59.419 --> 00:13:01.159 wanted the newest, most efficient technology. 00:13:01.480 --> 00:13:04.740 So they started leasing brand new A320neos and 00:13:04.740 --> 00:13:08.000 A321neos. Which are great planes. They're fantastic 00:13:08.000 --> 00:13:10.799 planes. Incredibly fuel -efficient, quiet, longer 00:13:10.799 --> 00:13:15.100 range. But the monthly lease rates are astronomically 00:13:15.100 --> 00:13:17.500 higher than for a 15 -year -old plane. So their 00:13:17.500 --> 00:13:20.169 fixed costs just exploded. They were hoping that 00:13:20.169 --> 00:13:22.549 insane growth would pay for it all. It's the 00:13:22.549 --> 00:13:24.850 Porsche problem. They bought the expensive, high 00:13:24.850 --> 00:13:26.970 -performance Porsche before they had the steady, 00:13:27.049 --> 00:13:29.730 high -paying job to actually afford it. And they 00:13:29.730 --> 00:13:31.850 were trying to pay for the Porsche by using it 00:13:31.850 --> 00:13:34.269 as a long -haul taxi service to India. That is 00:13:34.269 --> 00:13:37.470 a very vivid image. So all of this brings us 00:13:37.470 --> 00:13:40.509 to 2017. The expansion is in full swing. The 00:13:40.509 --> 00:13:43.210 purple planes are absolutely everywhere. But 00:13:43.210 --> 00:13:44.929 behind the scenes, the financials are starting 00:13:44.929 --> 00:13:48.169 to look really, really scary. 2017 was the tipping 00:13:48.169 --> 00:13:50.309 point. If you look at their annual report for 00:13:50.309 --> 00:13:53.549 that year, their revenue increased by 58%, which... 00:13:53.850 --> 00:13:57.149 on a chart looks amazing money is just pouring 00:13:57.149 --> 00:13:59.750 into the company but they swung from a healthy 00:13:59.750 --> 00:14:03.009 profit in 2016 to a significant loss in 2017. 00:14:03.309 --> 00:14:05.830 profitless growth yeah the classic tech bubble 00:14:05.830 --> 00:14:07.750 symptom exactly they were bringing in more and 00:14:07.750 --> 00:14:09.929 more cash but they were spending it even faster 00:14:09.929 --> 00:14:12.830 on those expensive leases on fuel for the long 00:14:12.830 --> 00:14:15.769 haul routes and on just handling the operational 00:14:15.769 --> 00:14:19.169 chaos of their overextended network this is also 00:14:19.169 --> 00:14:21.389 when the customer service reputation really started 00:14:21.389 --> 00:14:23.779 to tank oh i remember this stories. I mean, they 00:14:23.779 --> 00:14:26.120 were all over social media, people stranded for 00:14:26.120 --> 00:14:29.340 days, no customer support line to call, just 00:14:29.340 --> 00:14:31.820 an email address that nobody ever answered. And 00:14:31.820 --> 00:14:33.960 that's because when you run that lean, you have 00:14:33.960 --> 00:14:36.779 no buffer. Legacy Airlines have spare planes 00:14:36.779 --> 00:14:40.059 and spare crews on standby. Wow, IOW had nothing. 00:14:40.259 --> 00:14:43.159 If a plane went tech, had a mechanical failure 00:14:43.159 --> 00:14:45.620 in Los Angeles, there was no backup. You just 00:14:45.620 --> 00:14:47.659 had to wait until a part could be flown in and 00:14:47.659 --> 00:14:51.419 they could fix it. So enter 2018. The walls are 00:14:51.419 --> 00:14:54.370 clearly closing in. By late 2018, the situation 00:14:54.370 --> 00:14:56.669 was critical. The bond market was getting very 00:14:56.669 --> 00:14:58.549 nervous. They were having trouble raising more 00:14:58.549 --> 00:15:00.809 debt. And crucially, their suppliers were getting 00:15:00.809 --> 00:15:03.149 nervous. Explain why the suppliers matter so 00:15:03.149 --> 00:15:05.610 much in this equation. An airline runs on credit. 00:15:05.789 --> 00:15:08.649 It's fundamental. You buy jet fuel today. You 00:15:08.649 --> 00:15:11.529 pay the supplier in 30 days. You get ground handling 00:15:11.529 --> 00:15:13.809 services at an airport. You pay the bill later. 00:15:14.029 --> 00:15:17.090 But when suppliers smell fear, when they think 00:15:17.090 --> 00:15:19.330 you might be on the verge of bankruptcy, they 00:15:19.330 --> 00:15:21.710 change the terms. They demand cash up front. 00:15:21.960 --> 00:15:26.080 Exactly. No cash, no fuel. Pay us now or we won't 00:15:26.080 --> 00:15:28.500 load the bags. And that drains your liquidity, 00:15:28.600 --> 00:15:30.539 your available cash, almost instantly. It's a 00:15:30.539 --> 00:15:33.419 run on the bank, basically. So in November 2018, 00:15:33.820 --> 00:15:36.860 Scully Mogensen sought a lifeline. He turned 00:15:36.860 --> 00:15:40.079 to his biggest rival. To the establishment. To 00:15:40.079 --> 00:15:42.039 Icelandair. The legacy carrier that they had 00:15:42.039 --> 00:15:44.299 been trying to disrupt. On November 5, 2018, 00:15:44.799 --> 00:15:47.740 Icelandair announced they had agreed to buy WOW 00:15:47.740 --> 00:15:50.639 Air. And on paper, it made a lot of sense. You 00:15:50.639 --> 00:15:52.679 consolidate the market. You stop the brutal price 00:15:52.679 --> 00:15:55.460 war. You stabilize the Icelandic tourism economy. 00:15:55.779 --> 00:15:58.519 But the deal fell apart incredibly fast. It lasted 00:15:58.519 --> 00:16:00.879 less than a month. Icelandair entered the due 00:16:00.879 --> 00:16:03.860 diligence phase, which means their accountants 00:16:03.860 --> 00:16:06.379 and lawyers went into WIW's headquarters and 00:16:06.379 --> 00:16:08.379 opened the books. And what they saw in there 00:16:08.379 --> 00:16:10.720 must have absolutely terrified them. Do we know 00:16:10.720 --> 00:16:12.940 what they found specifically? We can infer it 00:16:12.940 --> 00:16:15.620 from what happened next. They likely found that 00:16:15.620 --> 00:16:17.720 the debt was much deeper than had been publicly 00:16:17.720 --> 00:16:19.960 reported. They probably found that the lease 00:16:19.960 --> 00:16:22.519 return conditions on the aircraft were very messy 00:16:22.519 --> 00:16:25.259 and expensive. And I bet they found that the 00:16:25.259 --> 00:16:27.440 forward bookings, the number of tickets sold 00:16:27.440 --> 00:16:30.980 for future flights, were dangerously soft. On 00:16:30.980 --> 00:16:34.159 November 29, Icelandair walked away. They put 00:16:34.159 --> 00:16:36.419 out a statement and basically said, no thanks, 00:16:36.519 --> 00:16:39.019 we can't touch this. That really should have 00:16:39.019 --> 00:16:41.299 been the end of the story right there. But on 00:16:41.299 --> 00:16:44.309 the very same day that Icelandair walked, a white 00:16:44.309 --> 00:16:46.350 knight appeared. Indigo Partners. And this was 00:16:46.350 --> 00:16:49.289 a huge deal. A massive deal. For anyone who doesn't 00:16:49.289 --> 00:16:51.629 follow the business of aviation, Indigo Partners 00:16:51.629 --> 00:16:54.149 is the gold standard for ultra -low -cost carriers. 00:16:54.909 --> 00:16:57.330 This is Bill Frank's private equity firm. They 00:16:57.330 --> 00:16:59.769 own Frontier in the U .S., Wizz Air in Europe, 00:17:00.009 --> 00:17:02.769 Volaris in Mexico, JetSmart in South America. 00:17:03.129 --> 00:17:05.730 They are the absolute experts in making this 00:17:05.730 --> 00:17:08.130 model work profitably. So if anyone on Earth 00:17:08.130 --> 00:17:11.539 could fix WIW Air, it was them. You'd think so. 00:17:11.880 --> 00:17:14.640 But Indigo is ruthless. Their entire model is 00:17:14.640 --> 00:17:16.880 based on extreme efficiency and cost control. 00:17:17.099 --> 00:17:20.460 They looked at WIW and said, this is a mess. 00:17:20.500 --> 00:17:23.930 We need to cut the fat. So the downsizing began. 00:17:24.190 --> 00:17:27.529 It was brutal. YOW cut its staff by 360 people 00:17:27.529 --> 00:17:29.990 down to about a thousand. They had to shrink 00:17:29.990 --> 00:17:32.490 the fleet. They returned four aircraft to the 00:17:32.490 --> 00:17:36.210 lessors. Which ones? A mix of A320s and A330s. 00:17:36.329 --> 00:17:39.710 They canceled the orders for the brand new A330neos 00:17:39.710 --> 00:17:42.029 they were so excited about. They canceled the 00:17:42.029 --> 00:17:45.269 route to India. They canceled Los Angeles, San 00:17:45.269 --> 00:17:47.869 Francisco. They were desperately trying to shrink 00:17:47.869 --> 00:17:50.609 back to the 2015 version of the airline just 00:17:50.609 --> 00:17:53.569 flying. buying narrow body planes to the US East 00:17:53.569 --> 00:17:55.789 Coast and core European cities. They were chopping 00:17:55.789 --> 00:17:57.890 off limbs to try and save the body. And Indigo 00:17:57.890 --> 00:18:00.009 spent months looking at the deal. They proposed 00:18:00.009 --> 00:18:03.710 buying a 49 % stake. Schooley Mogensen was fighting 00:18:03.710 --> 00:18:06.109 for his company's life here. At one point, he 00:18:06.109 --> 00:18:08.150 even put millions of his own personal money back 00:18:08.150 --> 00:18:10.250 into the company just to keep it afloat during 00:18:10.250 --> 00:18:13.490 the negotiations. But in March 2019, Indigo also 00:18:13.490 --> 00:18:15.500 pulled out. They did their due diligence and 00:18:15.500 --> 00:18:17.819 decided the hole was just too deep to climb out 00:18:17.819 --> 00:18:20.299 of. Even the best turnaround artists in the world 00:18:20.299 --> 00:18:22.220 looked at the numbers and couldn't see a clear 00:18:22.220 --> 00:18:24.559 path to profitability. That is the death knell. 00:18:24.640 --> 00:18:27.400 I mean, when the experts in your specific niche 00:18:27.400 --> 00:18:30.119 business model say it's unfixable, then it's 00:18:30.119 --> 00:18:33.480 unfixable. It is. In a last -ditch effort, WowaW 00:18:33.480 --> 00:18:36.019 went back to Icelandera one last time in mid 00:18:36.019 --> 00:18:38.519 -March, practically begging. Icelandera took 00:18:38.519 --> 00:18:40.859 another quick look and, again, immediately said 00:18:40.859 --> 00:18:44.660 no. So we are in late March 2019. The money is 00:18:44.660 --> 00:18:46.779 gone. The investors are gone. And the planes 00:18:46.779 --> 00:18:49.180 are about to go. This brings us to the final 00:18:49.180 --> 00:18:52.200 chaotic collapse. I think people often think 00:18:52.200 --> 00:18:54.720 of corporate bankruptcy as, you know, a paperwork 00:18:54.720 --> 00:18:57.210 thing that happens in a courtroom. But in aviation, 00:18:57.470 --> 00:18:59.950 it's a very physical, very dramatic event. It 00:18:59.950 --> 00:19:02.410 really is. It's all about repossession. And you 00:19:02.410 --> 00:19:04.049 have to understand, airlines generally don't 00:19:04.049 --> 00:19:06.509 own their planes. They lease them from giant 00:19:06.509 --> 00:19:09.890 leasing companies like AirCap or GFEs. It's just 00:19:09.890 --> 00:19:11.730 like renting an apartment. If you stop paying 00:19:11.730 --> 00:19:13.970 your rent, the landlord comes and changes the 00:19:13.970 --> 00:19:16.609 locks. And that's what happened on March 24th 00:19:16.609 --> 00:19:20.089 and 25th. Yes. A Dwaiwa W airplane that had landed 00:19:20.089 --> 00:19:22.769 in Montreal was grounded. Another one in Cuba 00:19:22.769 --> 00:19:25.309 was prevented from taking off. Not because they 00:19:25.309 --> 00:19:27.609 were broken, but... because the lessors, the 00:19:27.609 --> 00:19:30.250 owners of the planes, sent a legal order to the 00:19:30.250 --> 00:19:32.490 airport authorities. Do not let this plane take 00:19:32.490 --> 00:19:35.250 off. It's our property and the lease is in default. 00:19:35.450 --> 00:19:38.089 And WDOW put out a press release blaming technical 00:19:38.089 --> 00:19:41.529 failures. Which was, to be blunt, a lie. It was 00:19:41.529 --> 00:19:43.769 a financial failure. The pilots were ready to 00:19:43.769 --> 00:19:46.130 fly. The plane was perfectly fine, but it had 00:19:46.130 --> 00:19:49.390 been seized. They tried one last desperate maneuver. 00:19:49.750 --> 00:19:52.259 The bondholder pivot. What was that? It was a 00:19:52.259 --> 00:19:54.559 Hail Mary pass. They went to the people who held 00:19:54.559 --> 00:19:56.960 their corporate debt, the bondholders, and tried 00:19:56.960 --> 00:19:59.119 to convince them to convert that debt into equity 00:19:59.119 --> 00:20:01.500 in the company. Basically saying, look, you can 00:20:01.500 --> 00:20:03.579 either let us die and you'll get zero cents on 00:20:03.579 --> 00:20:05.319 the dollar, or you can become the new owners 00:20:05.319 --> 00:20:07.599 of the airline and maybe, just maybe, we survive. 00:20:07.980 --> 00:20:10.480 It didn't work. It was far too little, far too 00:20:10.480 --> 00:20:13.599 late. The morning of March 28, 2019, the email 00:20:13.599 --> 00:20:16.640 went out. The website was updated. YOW Air has 00:20:16.640 --> 00:20:18.799 ceased operations. All flights are canceled. 00:20:18.960 --> 00:20:21.220 Effective immediately. I want to talk about the 00:20:21.220 --> 00:20:24.059 scene at the airports that day. Because this 00:20:24.059 --> 00:20:26.420 wasn't an orderly wind down like when an airline 00:20:26.420 --> 00:20:28.319 announces it's shutting down in a month. This 00:20:28.319 --> 00:20:31.500 was a sudden death. It was absolute chaos. Thousands 00:20:31.500 --> 00:20:33.839 of passengers stranded in Gatwick, in Newark, 00:20:33.900 --> 00:20:36.700 in Keflavik, in Paris. People showing up for 00:20:36.700 --> 00:20:38.579 their honeymoon, for family reunions, for business 00:20:38.579 --> 00:20:41.319 trips, only to find out their ticket was a worthless 00:20:41.319 --> 00:20:43.920 piece of paper. There is one story that always 00:20:43.920 --> 00:20:47.069 sticks with me from that day. The pizza story. 00:20:47.230 --> 00:20:50.589 It's the most heartbreaking human detail of the 00:20:50.589 --> 00:20:53.430 whole saga. In one of the terminals, I believe 00:20:53.430 --> 00:20:57.369 it was Newark or maybe Boston, the WOW Airgate 00:20:57.369 --> 00:21:00.410 agents, the ground staff, they knew it was over. 00:21:00.549 --> 00:21:02.410 They'd gotten the internal memo. They knew they 00:21:02.410 --> 00:21:04.910 were about to be unemployed. Right. But there 00:21:04.910 --> 00:21:08.269 were hundreds of angry, confused, scared passengers 00:21:08.269 --> 00:21:10.670 waiting to board a flight that was never going 00:21:10.670 --> 00:21:12.769 to leave. So what did they do? They ordered pizza. 00:21:13.480 --> 00:21:15.460 Maybe with their own money or with the last of 00:21:15.460 --> 00:21:17.779 the station's petty cash. We don't know. They 00:21:17.779 --> 00:21:20.039 started handing out slices of pizza to all the 00:21:20.039 --> 00:21:22.720 stranded passengers. They fed them. And then, 00:21:22.740 --> 00:21:25.039 after everyone had eaten, they got on the PA 00:21:25.039 --> 00:21:27.079 system and announced that the airline no longer 00:21:27.079 --> 00:21:30.130 existed and everyone had to go home. That is 00:21:30.130 --> 00:21:32.890 just it's such an incredible moment of grace 00:21:32.890 --> 00:21:35.230 under pressure. It reminds you that while Skuli 00:21:35.230 --> 00:21:37.549 Mogensen was playing this high stakes game with 00:21:37.549 --> 00:21:40.190 billions of dollars, there were real people on 00:21:40.190 --> 00:21:41.950 the ground just trying to do their jobs and be 00:21:41.950 --> 00:21:44.650 decent to each other. Absolutely. And the fallout 00:21:44.650 --> 00:21:46.529 wasn't just for the passengers and the staff. 00:21:46.630 --> 00:21:49.490 We have to talk about the economic blast radius 00:21:49.490 --> 00:21:52.009 this caused in Iceland itself. Because W .O .W. 00:21:52.150 --> 00:21:54.809 wasn't just another company. It was a macroeconomic 00:21:54.809 --> 00:21:58.160 engine for the entire country. It was huge. At 00:21:58.160 --> 00:22:01.599 its peak, WW Air was carrying more than 25 % 00:22:01.599 --> 00:22:04.240 of all visitors to Iceland. Think about that 00:22:04.240 --> 00:22:07.039 for a second. One quarter of the entire tourism 00:22:07.039 --> 00:22:09.319 industry depended on those purple planes landing 00:22:09.319 --> 00:22:11.940 at Keflavik. So when they stopped flying, the 00:22:11.940 --> 00:22:14.319 main tap for tourists just turned off overnight. 00:22:14.740 --> 00:22:17.140 Instantly. The official statistics are stark. 00:22:17.579 --> 00:22:20.420 Tourist visits to Iceland dropped 16 % overall 00:22:20.420 --> 00:22:22.500 in the year that followed. Visits from the U 00:22:22.500 --> 00:22:25.099 .S., which was W .O .W.'s biggest market, dropped 00:22:25.099 --> 00:22:28.220 by 20%. The construction industry in Reykjavik, 00:22:28.319 --> 00:22:30.579 which had been building hotels and Airbnbs like 00:22:30.579 --> 00:22:33.140 crazy, is suddenly ground to a halt. Unemployment 00:22:33.140 --> 00:22:36.119 rose. The Icelandic krona lost value against 00:22:36.119 --> 00:22:38.859 the euro and the dollar. It was a classic, painful 00:22:38.859 --> 00:22:41.859 case of putting all your economic eggs in one 00:22:41.859 --> 00:22:45.299 very volatile purple basket. You'd think that 00:22:45.299 --> 00:22:47.579 would be the end of the story. The airline died 00:22:47.579 --> 00:22:50.220 a spectacular death. The economy took a massive 00:22:50.220 --> 00:22:52.819 hit. Lesson learned. Move on. You would think, 00:22:52.839 --> 00:22:56.380 but WW era refused to stay dead. It entered what 00:22:56.380 --> 00:22:58.880 I call the zombie phase. This part of the story 00:22:58.880 --> 00:23:01.960 is just genuinely bizarre. In late 2019, a few 00:23:01.960 --> 00:23:03.539 months after the bankruptcy, a press release 00:23:03.539 --> 00:23:06.079 comes out of nowhere. Wow is back. Enter U .S. 00:23:06.079 --> 00:23:08.220 Aerospace Associates, a U .S. holding company 00:23:08.220 --> 00:23:10.559 led by a woman named Michelle Roosevelt Edwards. 00:23:10.880 --> 00:23:13.440 They bought the assets of WOW Air from the bankruptcy 00:23:13.440 --> 00:23:15.259 estate. When you say assets, what does that even 00:23:15.259 --> 00:23:17.539 mean? Did they buy the planes? No, absolutely 00:23:17.539 --> 00:23:20.920 not. The planes were long gone, back to the lessors 00:23:20.920 --> 00:23:22.819 who had already repainted them and leased them 00:23:22.819 --> 00:23:24.779 out to other airlines. They bought the brand 00:23:24.779 --> 00:23:27.380 name, the logo, the uniforms, maybe some old 00:23:27.380 --> 00:23:30.000 computers and spare beverage carts from a... 00:23:30.029 --> 00:23:33.150 They bought the ghost of the airline. But Michelle 00:23:33.150 --> 00:23:35.829 Roosevelt Edwards started making some incredibly 00:23:35.829 --> 00:23:40.009 bold claims. Oh, yeah. She held a press conference 00:23:40.009 --> 00:23:42.390 in Reykjavik where she claimed they would launch 00:23:42.390 --> 00:23:45.670 flakes from Washington Dulles Airport to Iceland 00:23:45.670 --> 00:23:50.380 in October 2019. Which was like. A month away. 00:23:50.500 --> 00:23:53.079 A month away. So journalists naturally called 00:23:53.079 --> 00:23:55.039 the officials at Dulles Airport and the airport 00:23:55.039 --> 00:23:57.240 officials said, we have no record of this. No 00:23:57.240 --> 00:23:59.279 one has applied for a landing slot. We have no 00:23:59.279 --> 00:24:01.140 contract. We don't know who these people are. 00:24:01.400 --> 00:24:04.539 Lefts. That is a very bad sign. A very bad sign. 00:24:04.720 --> 00:24:06.619 So then she pivoted. She said, OK, we're going 00:24:06.619 --> 00:24:08.579 to start with cargo first. We're going to fly 00:24:08.579 --> 00:24:11.339 fresh Icelandic fish to restaurants in America. 00:24:11.680 --> 00:24:14.750 Did they fly any fish? Not a single cod. Then 00:24:14.750 --> 00:24:17.869 came the Wow Italy announcement. She claimed 00:24:17.869 --> 00:24:20.390 they were setting up a new European base in Rome 00:24:20.390 --> 00:24:23.349 or maybe Sicily. She even gave an interview to 00:24:23.349 --> 00:24:26.710 Ravi, the Icelandic national broadcaster, where 00:24:26.710 --> 00:24:30.450 she claims they had 10 Airbus A321s ready to 00:24:30.450 --> 00:24:33.130 go and that two were already painted in the new 00:24:33.130 --> 00:24:36.029 Wow Law W livery. And Rav, being good journalists, 00:24:36.170 --> 00:24:38.509 tried to verify this. They did. They tracked 00:24:38.509 --> 00:24:40.630 the aircraft registration numbers she hinted 00:24:40.630 --> 00:24:43.930 at. The planes didn't exist. Or, rather, they 00:24:43.930 --> 00:24:46.029 belonged to completely different airlines and 00:24:46.029 --> 00:24:48.470 were flying routes in Asia. She also claimed 00:24:48.470 --> 00:24:50.829 to own a massive controlling stake in their rival, 00:24:51.029 --> 00:24:53.930 Icelandair, which was easily disproven by just 00:24:53.930 --> 00:24:55.829 looking at the public shareholder registry. So 00:24:55.829 --> 00:24:57.369 it was a ghost airline. It was all smoke and 00:24:57.369 --> 00:24:59.869 mirrors. It was pure vaporware. Eventually, her 00:24:59.869 --> 00:25:02.369 own lawyer in Iceland publicly quit, telling 00:25:02.369 --> 00:25:03.990 the press that the headquarters was moving out 00:25:03.990 --> 00:25:05.470 of the country and there were no staff left. 00:25:05.509 --> 00:25:07.339 The whole thing just evaporated. into a cloud 00:25:07.339 --> 00:25:10.160 of strange, unfulfilled press releases. But while 00:25:10.160 --> 00:25:13.099 the zombie W .O .W. was grabbing all the headlines, 00:25:13.440 --> 00:25:18.240 the actual people who used to run W .O .W., the 00:25:18.240 --> 00:25:20.599 operations guys, the network planners, the finance 00:25:20.599 --> 00:25:23.339 people, were quietly meeting in coffee shops 00:25:23.339 --> 00:25:25.519 in Reykjavik. They were, and they looked at the 00:25:25.519 --> 00:25:28.240 spectacular failure of W .O .W. and they thought, 00:25:28.299 --> 00:25:31.650 the core idea wasn't wrong. The execution was 00:25:31.650 --> 00:25:34.470 wrong. The hubris was wrong. If we do it again, 00:25:34.630 --> 00:25:36.890 but do it strictly, do it by the book, without 00:25:36.890 --> 00:25:40.130 the insane expansion, it will work. And so they 00:25:40.130 --> 00:25:42.210 founded a new airline. Originally, and you have 00:25:42.210 --> 00:25:44.970 to love this, it was called WB Air. We are back! 00:25:45.309 --> 00:25:47.450 A little on the nose, maybe, but they quickly 00:25:47.450 --> 00:25:50.880 rebranded it to Play. PLAY, they raised money, 00:25:51.039 --> 00:25:52.880 they got certified, and they launched in June 00:25:52.880 --> 00:25:56.000 2021, right as the world was cautiously starting 00:25:56.000 --> 00:25:58.160 to travel again after COVID. And for a few years, 00:25:58.180 --> 00:25:59.640 it really looked like they'd cracked the code. 00:25:59.759 --> 00:26:02.539 I remember seeing their planes bright red this 00:26:02.539 --> 00:26:05.240 time, not purple. A very different vibe. They 00:26:05.240 --> 00:26:07.119 were incredibly disciplined. They flew only the 00:26:07.119 --> 00:26:10.539 Airbus A320neo and A321neo, a single, efficient 00:26:10.539 --> 00:26:13.160 fleet type. They didn't buy any widebodies. They 00:26:13.160 --> 00:26:15.359 didn't fly to India or the West Coast. They stuck 00:26:15.359 --> 00:26:18.480 to the core, original mission, to connect the 00:26:18.480 --> 00:26:21.319 U .S. East Coast to core European cities via 00:26:21.319 --> 00:26:24.160 Iceland. They grew steadily, not exponentially. 00:26:24.640 --> 00:26:27.500 They seemed to be the sane version of Girl IW 00:26:27.500 --> 00:26:29.730 Air. That's the perfect way to put it, but we 00:26:29.730 --> 00:26:32.869 are recording this in February of 2026, and we 00:26:32.869 --> 00:26:34.849 have to update the history books. Because play 00:26:34.849 --> 00:26:37.150 has gone too? According to the public bankruptcy 00:26:37.150 --> 00:26:40.349 filings, play ceased all operations on September 00:26:40.349 --> 00:26:44.150 30, 2025. Just five months ago. Citing insurmountable 00:26:44.150 --> 00:26:46.289 financial difficulties. They ran out of cash, 00:26:46.490 --> 00:26:48.589 just like Rally OW did. So this is the core of 00:26:48.589 --> 00:26:50.289 it. We have two major failures in less than a 00:26:50.289 --> 00:26:53.170 decade. Rally OW failed in 2019. Play failed 00:26:53.170 --> 00:26:55.609 in 2025. Both tried to do the exact same thing. 00:26:55.809 --> 00:26:57.789 Both burned through hundreds of... millions of 00:26:57.789 --> 00:26:59.849 dollars of investor money and this brings us 00:26:59.849 --> 00:27:02.109 to the core question of this entire deep dive 00:27:02.109 --> 00:27:07.150 why if play fixed all the obvious mistakes if 00:27:07.150 --> 00:27:09.230 they didn't expand too fast if they didn't buy 00:27:09.230 --> 00:27:11.210 the wrong planes if they were run by seasoned 00:27:11.210 --> 00:27:14.609 professionals why did they still die is it possible 00:27:14.609 --> 00:27:17.430 that the hub in the north model just fundamentally 00:27:17.430 --> 00:27:20.670 doesn't work in the 2020s. I think the answer 00:27:20.670 --> 00:27:23.509 lies in how aviation technology has changed in 00:27:23.509 --> 00:27:26.049 just the last five or six years. We have to talk 00:27:26.049 --> 00:27:30.170 about a very specific airplane, the Airbus A321XLR. 00:27:30.369 --> 00:27:33.130 The extra long range. Exactly. When WOWW started 00:27:33.130 --> 00:27:36.509 in 2012, if you wanted to fly from a secondary 00:27:36.509 --> 00:27:39.009 city in Europe to a secondary city in the U .S., 00:27:39.009 --> 00:27:41.329 say, from Hamburg to Baltimore, from Lyon to 00:27:41.329 --> 00:27:43.730 Boston, you couldn't do it directly with a small, 00:27:43.730 --> 00:27:45.809 efficient plane. The narrowbody planes just didn't 00:27:45.809 --> 00:27:47.920 have... the range. So stopping in Iceland was 00:27:47.920 --> 00:27:50.319 a geographic necessity. It was the only way to 00:27:50.319 --> 00:27:52.859 do it cheaply. While W's entire business model 00:27:52.859 --> 00:27:55.200 was built on that technological limitation, they 00:27:55.200 --> 00:27:59.119 were the bridge. Now, the A321XLR allows airlines 00:27:59.119 --> 00:28:02.220 like JetBlue, Aer Lingus, American, United, all 00:28:02.220 --> 00:28:05.559 of them to fly those exact same routes directly, 00:28:05.900 --> 00:28:08.900 nonstop. You can put a small, fuel efficient, 00:28:09.019 --> 00:28:11.779 narrow body plane on a transatlantic route and 00:28:11.779 --> 00:28:14.289 just skip the stop in the middle. So the bridge 00:28:14.289 --> 00:28:16.269 that Iceland provided is no longer needed. The 00:28:16.269 --> 00:28:18.529 planes can just fly right over it. The bridge 00:28:18.529 --> 00:28:21.339 is obsolete. Why would a passenger choose to 00:28:21.339 --> 00:28:23.799 stop in Keflavik at 5 in the morning, drag their 00:28:23.799 --> 00:28:26.619 tired kids through customs, wait two hours in 00:28:26.619 --> 00:28:28.539 a crowded terminal, and get on another plane 00:28:28.539 --> 00:28:31.500 when they can fly direct for maybe $50 or $100 00:28:31.500 --> 00:28:34.039 more? The stopover becomes a bug, not a feature. 00:28:34.279 --> 00:28:36.940 At the same time, the legacy carriers, Delta, 00:28:37.099 --> 00:28:39.680 United, British Airways, got much, much better 00:28:39.680 --> 00:28:42.240 at competing on price. They all introduced their 00:28:42.240 --> 00:28:45.079 own basic economy fares to fight the low -cost 00:28:45.079 --> 00:28:47.759 carriers. So the price gap between Row W or Play 00:28:47.759 --> 00:28:50.460 and a legacy carrier sh— shrank, but the convenience 00:28:50.460 --> 00:28:52.880 gap remained enormous. That is a fascinating 00:28:52.880 --> 00:28:56.039 irony. The same technological progress that allowed 00:28:56.039 --> 00:28:58.880 WW to exist in the first place, these super efficient 00:28:58.880 --> 00:29:01.640 twin engine jets, eventually evolved to the point 00:29:01.640 --> 00:29:03.720 where it made their Iceland hub model completely 00:29:03.720 --> 00:29:06.440 obsolete. The bridge got too long and the planes 00:29:06.440 --> 00:29:09.200 got too good. Iceland went from being a necessary 00:29:09.200 --> 00:29:13.279 stepping stone to just being a detour. So Scully 00:29:13.279 --> 00:29:15.819 Mogensen's dream of creating the Dubai of the 00:29:15.819 --> 00:29:18.650 North. Yeah. It was always doomed by physics 00:29:18.650 --> 00:29:21.289 and engineering advances. I think so. You see, 00:29:21.349 --> 00:29:23.769 Dubai works because it connects huge markets 00:29:23.769 --> 00:29:26.150 that cannot be flown directly easily, like London 00:29:26.150 --> 00:29:29.190 to Sydney until very recently, or Beijing to 00:29:29.190 --> 00:29:33.410 Johannesburg. It sits at a true global crossroads 00:29:33.410 --> 00:29:36.210 of billions and billions of people. Iceland, 00:29:36.369 --> 00:29:39.190 on the other hand, sits between two very mature, 00:29:39.450 --> 00:29:41.809 very wealthy markets, Europe and North America, 00:29:42.029 --> 00:29:44.049 that are already perfectly well connected by 00:29:44.049 --> 00:29:46.529 thousands of direct flights. It was solving a 00:29:46.529 --> 00:29:48.750 problem that technology was about to erase. So 00:29:48.750 --> 00:29:50.779 what is the final takeaway here? We've watched 00:29:50.779 --> 00:29:53.220 the purple comet rise and crash. We've watched 00:29:53.220 --> 00:29:55.339 the red comet play, follow it right into the 00:29:55.339 --> 00:29:57.460 ocean. For the business listener, I think it's 00:29:57.460 --> 00:30:00.279 a powerful lesson in moats. A geographic advantage 00:30:00.279 --> 00:30:03.579 is not always a permanent defensive moat. Technology 00:30:03.579 --> 00:30:06.240 can and will bridge your moat. Just because you're 00:30:06.240 --> 00:30:08.019 in the middle doesn't mean you are essential. 00:30:08.259 --> 00:30:10.259 And for the traveler, for you listening? I think 00:30:10.259 --> 00:30:12.539 it's a pretty stark reminder that when you see 00:30:12.539 --> 00:30:15.599 a fare that looks truly too good to be true, 00:30:15.759 --> 00:30:19.680 like $99 to fly to Europe. you are looking at 00:30:19.680 --> 00:30:22.579 a subsidy. You aren't paying the true cost of 00:30:22.579 --> 00:30:24.940 that flight. You are flying on a ticket that's 00:30:24.940 --> 00:30:27.420 being paid for by venture capitalists and bondholders 00:30:27.420 --> 00:30:30.019 who are betting on endless growth. So take the 00:30:30.019 --> 00:30:31.980 cheap flight while it exists. Take the flight, 00:30:32.079 --> 00:30:35.599 absolutely. But maybe buy the good travel insurance. 00:30:35.839 --> 00:30:37.839 Definitely buy the insurance. And have a backup 00:30:37.839 --> 00:30:39.839 credit card with a high limit in case you need 00:30:39.839 --> 00:30:42.359 to buy a last -minute one -way ticket home on 00:30:42.359 --> 00:30:44.900 Iceland Air. Because Iceland Air, the old boring 00:30:44.900 --> 00:30:48.299 legacy carrier, is still flying. They are the 00:30:48.299 --> 00:30:50.680 survivor. They have a diversified model. They 00:30:50.680 --> 00:30:52.559 have business class. They fly cargo. They have 00:30:52.559 --> 00:30:54.599 corporate contracts. They have a frequent flyer 00:30:54.599 --> 00:30:57.599 program. They are robust. And it seems that to 00:30:57.599 --> 00:30:59.900 survive the brutal economics of the North Atlantic, 00:31:00.079 --> 00:31:03.579 you need to be robust, not just cheap. Here's 00:31:03.579 --> 00:31:05.599 a final thought for you to mull over as we sign 00:31:05.599 --> 00:31:09.720 off. We tend to look at maps and see logic. We 00:31:09.720 --> 00:31:11.640 see a dot in the middle of an ocean and think, 00:31:11.700 --> 00:31:13.799 oh, Iceland is in the middle. It must be a natural 00:31:13.799 --> 00:31:17.670 hub. But maps are static and the world is dynamic. 00:31:18.170 --> 00:31:20.470 Maybe the Dubai of the north wasn't just a failed 00:31:20.470 --> 00:31:23.190 business plan. Maybe it was a geographic trap, 00:31:23.410 --> 00:31:25.990 a kind of siren song that lured two different 00:31:25.990 --> 00:31:28.410 groups of very smart investors to their doom. 00:31:28.910 --> 00:31:31.250 Both of them convinced that this time they could 00:31:31.250 --> 00:31:33.769 beat the map. The map, as they say, is not the 00:31:33.769 --> 00:31:36.309 territory. Indeed. Thanks for listening to The 00:31:36.309 --> 00:31:37.809 Deep Dive. We'll see you next time.