Can a collapsing operation still win awards? For WOW Air the answer is a resounding yes. The carrier took home the Low Cost Airline of the Year award at this year’s CAPA Aviation Awards for Excellence. The award announcement came as four of the carrier’s planes were en route to lessors, returned as the company faces a cash crunch and cuts operations, hoping to remain alive.

WOW air is downsizing its fleet by two Airbus A320 aircraft and two Airbus A330 aircraft in cooperation with its lessors. This is a part of necessary restructuring of the airline and to ensure maximum utility of its remaining fleet. This restructuring will not impact WOW air´s current plans to fly to India.

Here is the full text of the announcement from CAPA:

The Low Cost Airline of the Year Award is for the low cost or hybrid airline that has been the biggest standout strategically, has established itself as a leader, has been most innovative, and provided a benchmark for others to follow.

WOW air was selected for pioneering the long haul low cost connecting model, using its Reykjavik hub to offer one-stop services between Europe and North America.

WOW commenced operations in 2012 and has grown its seat capacity at an average of 28% pa over the past five years. WOW now operates a fleet of 17 narrowbody and three widebody aircraft from its Reykjavik hub to 10 destinations in Europe and 10 in North America. Delhi, its first destination in Asia, is launching on 6-Dec-2018.

WOW only entered the trans-Atlantic market in Mar-2015, but is now the second largest LCC in this market with a 1.7% seat share.

On 5-Nov-2018, Icelandair announced that it had agreed to take over privately owned WOW air in an all share purchase to create a bigger Icelandic competitive force on the North Atlantic, subject to shareholder and regulatory approval. “It is a mark of WOW air’s success that its biggest and closest competitor’s only response is to buy it,” CAPA Executive Chairman Peter Harbison said.

And roughly none of this makes sense. At all.

For starters, other carriers pioneered discounted service across the Atlantic using a hub-and-spoke model. Icelandair and Aer Lingus are two that come to mind. We can argue over whether they were truly LCC or not and even what LCC means today. But the model was hardly new in 2012 when WOW commenced operations.

Read More: Icelandair gobbles up WOW

Beyond that, WOW gains commendation for a significant increase in market share. The numbers are impressive but also come at a cost. A massive cost. Just flying seats across the Atlantic does not necessarily deserve an award. Developing a business model that can do so in a sustained and perhaps even eventually profitable manner is the sort of thing that should be rewarded. Alas, WOW never really figured that part out. It won the award anyways.

Finally, the quote in the release means that CAPA knew WOW Air had failed and sold out at a ridiculously low price even while evaluating whether to grant the award. Or it was forced to make up a ridiculous justification after the fact. Either way, CAPA kept that plan alive. Selling out for pennies on the dollar is hardly the sign of success for a company. Though I suppose it is better than simply closing up shop under a mounting pile of losses.

Perhaps it is simply a matter of needing to give the award out. The other winners from CAPA tonight make far more sense. But this one is certainly a head-scratcher.

More WOW Troubles

That the purchase remains pending is also bad news for both WOW and Icelandair. Icelandair no longer expects that WOW will meet certain conditions required for that transaction by the time a shareholder meeting is convened on Friday. This involves changes to the terms on the bonds tied to the Icelandair purchase, including revocation of outstanding warrants. It seems that getting bondholders to agree to the new terms is not a trivial task.

Adding to its woes, WOW saw a planned aircraft sale/leaseback transaction canceled shortly after Primera declared bankruptcy, cutting $25mm in capital inflow from the company’s expected balance this quarter. The company also notes that “lessors, creditors and authorities have been monitoring the situation even closer and demanded stricter payment terms then before further putting pressure on the Company’s cash flow.”

Oh, and the carrier may have already cancelled its initial Delhi operations slated for early December, though that remains unconfirmed. With only one A330 remaining and the LAX route still on the schedule it is hard to see how both remain viable. The LAX route has flown on an A321LR occasionally but as winter headwinds pick up that becomes a less viable substitution.

Roughly half of the carrier’s remaining fleet is flying from the US to Keflavik tonight. It is winter and WOW cut back its schedule significantly for the lower season. In part this makes the lease returns a smart play. But there are plenty of reasons to also see it as the beginning of winding down operations rather than just a financing game.