Tourism companies Iceland Travel, which is owned by Icelandair, and Gray Line Iceland have agreed to merge, reports RÚV. Icelandair will own 70 percent of the new entity, while the remaining 30 percent will belong to Allrahanda GL ltd., one of Gray Line Iceland’s parent companies. It’s estimated that the combined turnover of these companies will total just under ISK 18 billion (USD 170 million, EUR 145 million) this year.
In a statement made to the GlobeNewswire, Björgólfur Jóhannsson, president and CEO of Icelandair Group and chairman of the board of directors of Iceland Travel, praised the step, saying, “Both companies are at the forefront in the Icelandic tourist sector, and the merger will enable them to offer their customers even better services. The competition in the market is fierce, and Iceland and Icelandic businesses are engaged in intense international competition. It is therefore extremely important for operating units to be efficient and for companies to seek all possible ways of streamlining their operations. As a unit, the merged companies will extend over a larger segment of the value chain in the tourist industry than the two separate companies could manage separately. This translates into exciting opportunities for continued progress, as there are numerous interesting developments that are occurring in the Icelandic tourist industry.”
Earlier in the year, Icelandair published an earnings warning, reporting that their 2017 earnings would be around ISK 17 billion (around USD 161 million, EUR 137 million), compared to ISK 25 billion (USD 237 million, EUR 201 million) during the previous year. In June, 115 Icelandair pilots were then laid off, and another 70 captains demoted to pilots, effective this coming winter. The layoffs and demotions were attributed to “seasonal fluctuations in demand.” The company’s second quarter earnings report, published at the end of June, showed profits of ISK 1.1 billion, with an 11 percent increase in total earnings between 2016 and 2017.
