Icelandair Lays Off 82 Employees

Keflavík airport Icelandair

Icelandair, one of Iceland’s major airlines, laid off 82 employees Wednesday due to weaker demand in travel to Iceland, Vb.is reports. Bogi Nils Bogason, Icelandair CEO, said that the layoffs will not affect Icelandair’s schedule. Staff in Iceland and in European offices were let go, but no flight crew members.

Volcanic impact

The company went through a growth face after the Covid-19 pandemic with new hires and new aircraft. “The growth has slowed down, so we had more space to focus on efficiency and optimisation, and that’s where our focus is right now,” Bogi said.

Icelandair is expecting its earnings to drop in 2024, in part due to the ongoing seismic and volcanic activity in the Reykjanes peninsula. “When the demand for flights to Iceland has dropped, Icelandair has used the flexibility of our route map to focus more on cross-Atlantic flights, but prices have gone down there,” Bogi said.

Bullish on the long-term outlook

He adds that Iceland has proven an expensive destination for tourists. “We’re trailing in our competition with Norway and Finland, for example, and this has been the development for the last few months,” he said. “A tourist’s expenses after they arrive in Iceland have been high enough so that Iceland has fallen behind.

Overall, however, Bogi was bullish on Icelandair’s financial position and the long-term outlook on tourism in Iceland.

Unprecedented Mass Layoff at Efling Union

Efling Sólveig Anna Jónsdóttir

Efling Union’s decision to lay off all of its staff has stirred up conflict within the labour movement in Iceland. The union’s returning chairperson Sólveig Anna Jónsdóttir says the layoffs were inevitable, but she has received harsh criticism for the decision from the Icelandic Confederation of Labour and the Icelandic Confederation of University Graduates.

Letter of dismissal sent out at 2:00 AM

All employees of the Efling Union office received a letter of dismissal by email at 2:00 AM this morning. The letter states that their employment contract has been terminated due to “organisational and operational changes” that apply to all full-time positions at the union. It also states that the period of notice is in accordance with each individual’s employment contract, but employees are requested to fulfill their work obligations during the notice period.

Sólveig Anna has stated that the dismissals were an inevitable part of the changes that she is implementing as returning chairperson of the union. The dismissals are intended to support an acceptable gap between the lowest and highest wages at the union office and ensure equality and transparency in employee wages, according to Sóveig Anna. The dismissal letter says new positions at the union will be advertised and encourages laid-off employees to apply.

Both Drífa Snædal, the president of the Icelandic Confederation of Labour (ASÍ) and Friðrik Jónsson, the chairman of the Icelandic Confederation of University Graduates (BHM) have criticised the group dismissal. Friðrik called the layoff alarming and stated it was clear that the board of Efling wanted to get rid of unwanted employees.

Costly personnel issues

Sólveig Anna resigned as chair of Efling last October, in the wake of allegations of bullying within the Efling office. During Sólveig Anna’s four-year tenure, the union spent close to ISK 130 million [$1.04 million; € 909,063] on personnel-related matters and 40 out of 50 of the union’s employees (80%) resigned from their positions, according to a report prepared in collaboration with the union. Sólveig was re-elected as chair of the union in February.

Assistant Professor of History Sumarliði Ísleifsson, who has researched the history of Iceland’s labour movement, called this morning’s layoffs unprecedented and stated that they could impact the upcoming wage negotiations. According to Sumarliði, the Icelandic labour movement’s strength in recent negotiations has been based in solidarity between unions and confederations.

Icelandair Lays Off 88

Keflavík airport Icelandair

Icelandair laid of 88 employees yesterday, and the dismissals take effect tomorrow, October 1, RÚV reports. Most of the staff, or 68, are pilots. Over 180 have lost their jobs due to group layoffs this month. The Directorate of Labour’s preliminary figures show unemployment was as high as 10% in September.

As of tomorrow, Icelandair will have just 71 pilots on its roster. The layoffs came as a surprise to pilots, stated chairman of the Icelandic Airline Pilots Association Jón Þór Þorvaldsson. The company had just raised funding in a successful public stock offering, in which many of them participated. Jón pointed out that Icelandair will need to train pilots to fly the new Boeing MAX planes that it is expected to receive in the coming months. In his opinion, it would have been more constructive to use the coming period for training.

Unnur Sverrisdóttir of the Directorate of Labour stated six different companies resorted to group layoffs this month. “Five announcements came from the tourism industry. In total 155 who lost their jobs there. And then there is one group layoff in the construction industry.” All of the companies are based in the capital area or on the nearby Suðurnes peninsula, where Keflavík airport is located.

Icelandair at the Table with State, Staff, and Shareholders

Keflavík airport Icelandair

The Icelandic state has agreed to extend its sponsorship of Icelandair flights to and from the country until at least June 27. Meanwhile, the airline is in the middle of wage negotiations with its cabin crew, who rejected a contract offer from the company last week. Like many airlines in the world, Icelandair has discontinued most of its flights due to the COVID-19 pandemic and is facing an uncertain future. The airline is hoping to raise USD 200 million (ISK 29 billion/€1.82 million) through a public stock offering in June.

State ensures minimal flights to and from Iceland

Since late March, the Icelandic state has sponsored minimal Icelandair flights to and from the country. Last week, it agreed to extend the sponsorship of flights between Keflavík and Boston, London, and Stockholm until June 27. The airline will operate two flights to each destination weekly, and flights to New York and Copenhagen during the period are also being considered. The state will pay a maximum of ISK 300 million ($2.1 million/€1.9 million) for the flights between May 17 and June 27, and Icelandair’s earnings from the flights will count against the subsidy. The contract has the potential to be extended until September.

While other countries’ governments have directly subsidised struggling airlines, the Icelandic state has taken a fairly hands-off approach to Icelandair’s financial woes. Icelandair’s Minister of Transport Sigurður Ingi Jóhannsson has said it is the responsibility of the company’s board and shareholders to address the challenges the company faces. Opposition MPs and economists have criticised the government for not doing more to support the airline, which many consider to provide an essential service.

Stiff negotiations with staff

In the middle of the pandemic, Icelandair has also found itself in contract negotiations with three groups of staff: pilots, mechanics, and cabin crew. While the airline has signed new contracts with both its pilots and mechanics, it has yet to reach an agreement with the Icelandic Cabin Crew Association, whose members rejected an offer from Icelandair last week. A meeting between the association and the airline was broken off just before 1.00am last night without an agreement.

Icelandair laid off 240 of its 3,400 employees at the end of March. In April a further 2,000 employees followed, constituting the largest mass layoff in Icelandic history. The company’s remaining staff is either subject to a reduced employment ratio or salary cuts.

Shareholders to decide on 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 as “an important part of the financial restructuring of Icelandair Group.” The stock offering is subject to the approval of shareholders, which are scheduled to meet on May 22.

Iceland is set to reopen its borders to tourists no later than June 15, providing COVID-19 tests to arriving travellers.

“These Are Black Times:” Reykjanes Hard Hit By Group Layoffs

Reykjanesbær

A total of 4,200 employees lost their jobs in group layoffs in just two days this week, RÚV reports. Thirty-six companies announced group layoffs on Thursday. The Reykjanes peninsula in Southwest Iceland, where tourism is the primary industry, has been particularly hard hit; labour leader Guðbjörg Kristmundsdóttir estimates that unemployment will exceed 30% in the region by the end of May.

Over half of the laid-off individuals, or 2,140 people, were Icelandair employees. The remaining 2,070 worked for other companies.

“In terms of the number of layoffs, this is the worst month I can remember,” said Unnur Sverrisdóttir, head of the Directorate of Labour. “About 99% of them are in the tourism sector.”

Most of the layoffs have been in the capital area and Reykjanes region.

“The outlook is really bad,” remarked Guðbjörg Kristmundsdóttir, chair of the Labour and Seamen’s Union of Keflavík (VSFK). “I think over the last two days, 400 people from my union have lost their jobs. That’s a significant proportion of a 5,000-person union. These are black times.” Guðbjörg said that her union has received little information from car rental companies and hotels in the region, which she expects will lay off additional members in the up-and-coming.

While the group layoffs of the last few days have certainly been difficult for Reykjanes locals, they are by no means the first. The Blue Lagoon, also located in Reykjanes, laid off 164 employees in late March, days after closing amidst the coronavirus crisis. Reykjanes was also hit hard by WOW air’s bankruptcy last year. Locals haven’t completely lost hope amidst the current difficulties, says Guðbjörg, but there’s a far greater degree of uncertainty now. “Now, there’s little likelihood that people who lose their jobs will get another one,” she said. “There are no jobs to be had.” Currently, unemployment in Reykjanes is around 24%, but Guðbjörg fears that it will exceed 30% by the end of May.

Icelandair Aims to Raise ISK 29 Billion Through Public Stock Offering

icelandair757

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 Lays Off Record 2,000 Employees

icelandair757

Icelandair laid off over 2,000 employees yesterday, representing the vast majority of their staff. RÚV reports that nearly 900 of the airline’s 940 flight attendants have been let go, as well as 421 pilots, with only 26 pilots remaining in the company’s ranks. It is the biggest mass layoff in Icelandic history, exceeding the number of layoffs resulting from WOW air’s bankruptcy last year (both direct and indirect).

At the beginning of March, Icelandair had 3,400 employees. The airline laid off 240 at the end of March. The company’s remaining staff is either subject to a reduced employment ratio or salary cuts.

Minimal operations continue

The Icelandic government made a short-term contract with Icelandair to sponsor a number of flights to London, Stockholm, and Boston, which ends May 5. The airline also recently signed a contract to operate 45 cargo flights from Shanghai, China to Germany and the US.

Opposition MPs have criticised the government for not doing more to support the airline, which many consider to provide an essential service. Government ministers have pointed to the airline and its shareholders as responsible for the company.

Icelandair CEO hopes to rehire staff in future

Icelandair CEO Bogi Nils Bogason expressed his hope that the company would be able to rehire the staff soon. “Of course we hope so, these are all great employees and when the country starts to rise again and markets open, then we will be ready to jump in […] and we hope it will happen sooner rather than later, but at this point in time we cannot make any promises when and how that will happen.”

Extensive Layoffs ‘Unavoidable’ at Icelandair

Icelandair

Icelandair CEO Bogi Nils Bogason says that the airline will have to resort to “painful measures” at the end of April in order to respond to the devastating economic impact the COVID-19 pandemic has had on the company, RÚV reports. Bogi Nils has stated that further layoffs are “unavoidable” and will be announced as soon as next week.

“Today we’re operating about 5% of our flight schedule and we don’t know how long this situation will last, whether it will be three, six, or nine months,” Bogi Nils stated. “As such, we’re just preparing ourselves for this period of uncertainty and the enormous revenue shortfall that we’re going to have to address by lowering our costs in order to get through this and be in a stronger position when the demand resurges again.” He continued that the airline expects to operate a very sparse flight schedule over the summer months.

In light of the expected layoffs, Icelandair executives have met with shop stewards and union representatives. Bogi Nils emphasized that Icelandair hopes to rehire most of the employees that have been or will soon be laid off, but this may be a rather long time coming.

Icelandair laid off roughly 500 employees during the 2008 banking collapse, the most extensive mass layoff in the company’s history. Bogi Nils says that the airline is currently looking at layoffs on that scale, extending across all divisions of the company. “These are really painful measures,” he said. “As we have fantastic employees working for us, many with extensive work experience who have done a great job and worked for the company for a long time.”

Bogi Nils repeated, however, that the company fully intends to rehire staff when the market improves, and that Icelandair does not intend to sell off any part of its fleet at this time. “We are fully confident that the market will recover again and that Iceland as a destination has great potential in the future and that the airline hub in Keflavík, between North America and Europe, will have a lot of potential when this uncertainty ends. That’s our assessment. So we intend to use our fleet in the future, to get through this strong and seize our opportunities at the end of all this uncertainty.”

Lay-Offs at Blue Lagoon “Unavoidable”

The Blue Lagoon laid off 164 employees on Thursday. Mbl.is was the first to report. The popular tourist destination closed on March 23 out of precautions surrounding the coronavirus pandemic and will remain closed until at least April 30.

Prior to the lay-offs, Blue Lagoon employed 764 employees. In order to avoid additional lay-offs, the company intends to take advantage of the government’s COVID-19 response package, which allows part-time employees to claim up to 75% of unemployment. Blue Lagoon will offer 400 employees reduced hours.

See also: Icelandic Government Presents Economic Response Package to COVID-19 Crisis

“These are grievous measures,” wrote Blue Lagoon CEO Grímur Sæmundsen in a statement on the lay-offs, “but are unavoidable in light of the circumstances.” Grímur continued by saying that “it’s clear that the short-term effects of the COVID-19 pandemic are enormous, but what they will be on the company’s future operations are unclear at this time.”

 

Icelandair Lays Off 240 and Reduces Employees’ Hours

Icelandair

Icelandair will lay off 240 employees and temporarily reduce the working hours of 92% of its remaining staff, RÚV reports. The measures are intended to increase the company’s ability to cope with the impact of the COVID-19 pandemic.

The total number of full-time positions at Icelandair Group averaged 4,715 in 2019. The wages of those employees who remain in full-time work will be reduced by 20%. The company’s executives will receive a 25% pay cut and the CEO and board members will receive a 30% pay cut during this time.

The company has temporarily closed several of the hotels in its nation-wide chain, both in Reykjavík and in the countryside, in response to a sharp reduction in the number of guests. Hilton Reykjavík Nordica, which is part of the chain, remains open. A staff member at the chain’s Mývatn location was diagnosed with COVID-19, leading to that hotel’s closure.

Icelandair stated that the company had recently explored all possibilities to reduce its outflow of capital, such as renegotiating agreements with suppliers and financers.