Icelandair's Airbus Order Largest Transaction in Airline’s History Skip to content

Icelandair’s Airbus Order Largest Transaction in Airline’s History

By Ragnar Tómas

Keflavík airport Icelandair
Photo: Golli.

Icelandair has signed an agreement with Airbus for the purchase of 13 A321XLR aircraft with purchase rights for additional 12 aircraft. The purchase is the largest in the company’s 86-year history. With the order, it is clear that the Airbus A321XLR aircraft will replace the airline’s Boeing 757-200 fleet.

Largest purchase in airline’s history

In April of this year, Icelandair and Airbus signed a memorandum of understanding for the purchase of 13 Airbus A321XLR aircraft with purchase rights for additional 12 aircraft. Yesterday, Icelandair announced that it had signed the aforementioned agreement. The purchase is the largest in the company’s 86-year history.

As noted by Flight Radar, the A321XLR is set to be certified in 2024, and the first aircraft delivered to Icelandair is expected to enter service in 2029. However, the company intends to have four A321LRs in operation before the summer of 2025, via a long-term lease through SMBC Aviation Capital Limited.

In an interview with RÚV, Bogi Nils Bogason, the CEO of Icelandair, was quoted as saying: “This is a very big contract and a major turning point for us. And the biggest contract that Icelandair has made in the company’s 86-year history.” While the purchase price is confidential, the transaction will, as noted by RÚV, likely run into hundreds of billions of ISK.

Asked how the company intended to finance the purchase, Bogi explained that Icelandair was a very sought-after entity by financiers, both by lessors and banks that are financing aircraft. “And we will use the financing that is most favourable at any given time,” Bogi added.

Set to replace Boeing 757-200 aircraft

Icelandair currently operates 17 Boeing 757-200 aircraft, which form the backbone of its fleet. Given the size of the airline’s investment in Airbus, it is clear that A321XLR is set to be a replacement product.

“Operators have been reluctant to let go of their ageing 757 fleets in recent years due to the lack of a replacement that could match its performance, range, and capacity,” Flight Radar notes. However, the new A321XLR aircraft offers three primary advantages (as noted by Flight Radar):

Range: “The A321XLR can fly around 800 nautical miles further than the 757-200.”

Capacity: “Icelandair’s 757-200 aircraft currently seat 184 passengers in two classes, whereas the A321XLR fitted with the ‘Airspace Cabin’ will typically seat around 220.”

Sustainability: “Though figures are not yet available for the A321XLR, the currently available A321LR represents up to a 19% CO2 saving per seat per kilometre compared to a Boeing 757-200 on a similar sector according to data from IBA NetZero.”

Switching aircraft manufacturers entails several challenges: “This is a challenge,” Bogi told RÚV. “But at the same time, this is a very exciting and fun project. All of our staff are happy and excited about it. This will, of course, require training for our flight crew, which will begin to do soon.”

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