Icelandair Can Hold Out Until 2022

Keflavík airport Icelandair

Icelandair’s net earnings have dropped by 81% since last year, RÚV reports. Their earnings from cargo transport have, however, risen by 16%. The figures come from the company’s third-quarter results, published recently on Nasdaq Iceland.

Icelandair has maintained minimum passenger flights between Iceland and a handful of destinations in Europe and North America through the COVID-19 pandemic. It has received government support in various forms since the pandemic began and held a successful public share offering in September as part of its financial restructuring.

The company’s CEO Bogi Nils Bogason has stated that the company can maintain minimum service and sales until 2022 thanks to its strengthened financial position. Icelandair Group’s equity ratio was around 26 percentage points at the end of the quarter, or around ISK 40.7 billion ($291 million/€246 million) and equity was around ISK 55 billion ($393 million/€333 million).

Icelandair Aims to Raise ISK 29 Billion Through Public Stock Offering


Icelandair hopes to raise up to USD 200 million [ISK 29 billion; €1.82 million] in equity through a public stock offering in June. The company’s board of directors announced their intentions, which they say is “an important part of the financial restructuring of Icelandair Group,” in a statement sent to the Icelandic Stock market on Thursday night.

If approved at the company’s shareholders’ meeting in May, the stock offering would “enable the Board to increase the share capital of the Company by up to 30,000 million new shares,” reads the statement. “The Board further proposes that current shareholders waive their pre-emptive rights to the new shares. The public, along with other investors, will thereby be given the opportunity to subscribe to new shares in the Company. Furthermore, the Board will have unilateral authority to determine the allocation of new shares, but efforts will made to provide full allotment to existing shareholders and employees.”

See Also: Icelandair Lays Off Record 2,000 Employees

The announcement comes in the wake Icelandair laying off 2,000 employees on Tuesday in the single largest layoff in Icelandic history.

“Icelandair Group has been in close contact with the Icelandic Government” during its restructuring process, concludes Thursday’s statement, which also notes that the Icelandic government “is willing to consider granting the Company a credit line or providing a guarantee for such credit line conditioned upon the completion of the share offering.”

Icelandair will publicly announce the price of the new shares, as well as related terms and conditions, following the proposal’s presumed approval at its upcoming shareholders’ meeting.

Icelandair: Boeing-737 MAX Not Expected to Return This Summer

Icelandair Boeing 737 MAX

In a press release yesterday, Icelandair stated that it did not expect the return of its Boeing-737 MAX planes this summer (the MAX planes were expected to return to service in February). The statement follows recent news from Boeing regarding ongoing cooperation with international aviation authorities to ensure the aircraft’s safe return to service. Icelandair Group, owner and holding company of the airline, also aims to seek further compensation for the grounding of the MAX planes.

In a press release from Icelandair yesterday, the airline stated that it does not expect the return of its Boeing-737 MAX planes this summer. Icelandair expects the continued delay to have a “minimal impact,” considering that the company had designed the 2020 flight schedule with the possibility of further delay in the lifting of the MAX suspension:

“The financial impact of this further suspension will be considerably less this year than in 2019. In addition to the above-mentioned mitigating measures [,] the current leasing agreements were made further in advance than in the year 2019 and are[,] therefore[,] on better terms. The additional aircraft will also be operated with Icelandair crews instead of external crews last year that were leased [on] short notice. The company has[,] therefore[,] been able to organise its operations in 2020 with this possible scenario in mind.”

The press release adds that Icelandair will continue to emphasise the tourism market to Iceland. The company expects to transport at least as many passengers to Iceland this year as in 2019.

As previously reported, Icelandair Group has reached two interim agreements with Boeing regarding compensation for the company’s financial loss resulting from the MAX suspension. “Continued discussions with Boeing regarding further compensation are ongoing,” the press release states.

Icelandair Secures Additional Compensation from Boeing

In an interim report published by Icelandair Group yesterday, Icelandair announced that it had secured a second partial compensation agreement with Boeing (the first agreement was reached in September), owing to the “unprecedented impact” of Icelandair’s five Boeing MAX aircraft having been grounded since last March. The conditions of the agreement are confidential. According to RÚV, Icelandair will continue to negotiate with Boeing for further compensation.

As Iceland Review reported last week, Icelandair does not expect its Boeing 737 Max planes to return to service until the end of February 2020. The airline has adjusted its flight schedule through February 2020. The decision will have a “minimum impact” on previously scheduled flights.

In the above-mentioned report, Bogi Nils Bogason, CEO of Icelandair Group, states that the company’s third-quarter results show improvements in Icelandair Group’s underlying operations despite the suspension of the MAX aircraft: “Operational improvements with EBIT amounting to USD 81.1 million in the quarter, up by USD 2.8 million.” The report also notes that the number of passengers who travelled to Iceland in the quarter increased by 27%.

Icelandair Group’s fourth-quarter results are also expected to improve compared to last year.