Despite operational challenges and significant losses in the first half of 2019, Icelandair’s profits appear to be on the way up, RÚV reports. The airline is reporting rising average revenue per passenger and rising fares for the first time since 2015.
Icelandair lost almost ISK 11 billion ($89.6 million/€80.7 million) in the second quarter this year, according to the financial report published by the company last week. Much of its losses are attributed to costs and lost revenue from the grounding of its three Boeing 737 Max 8 planes this spring due to safety concerns.
WOW bankruptcy proves beneficial
Nevertheless, the airline has several reasons to look on the bright side. Besides higher revenue per passenger and rising fares, and its number of passengers has also increased dramatically. In July, Icelandair transported 564,000 passengers, a 9% increase compared to July 2018. In particular, the number of passengers the company flew to Iceland reached a record high, increased by a third compared to July last year. The company’s number of passengers from Iceland also increased by one quarter, whereas the number of transfer passengers decreased by 10%.
In a press release, the company attributed these numbers to a deliberate shift in operations, which prioritised passengers flying to and from Iceland rather than those stopping over in the country as a response to the grounding of the three Boeing planes. The company has also prioritised improving the punctuality of their flights, as it has had to pay high amounts in compensation due to delays. Those efforts are showing results, as 71% of the companies landed punctually in July compared to just 51% in the same month last year.
Cash injection
US hedge fund PAR Capital Management bought an 11% stake in Icelandair Group in April. The additional capital is expected to solidify Icelandair’s financial situation and better prepare it for growth in the near future.
