Category Archives: Icelandair Group

Icelandair loses $40.9 million in the second quarter mainly due to MAX grounding

Icelandair Group lost $40.9 million in the second quarter, an increase in losses by 63% from the loss of $25.1 million in the same quarter last year.

The grounding of its Boeing 737 MAX aircraft on March 12 has resulted in a significant impact for the company.

The company issued this statement:

  • Total revenue amounted to $402.8 million in the second quarter, up by 1% between years.
  • EBIT was negative by $24.1 million, down by $4.3 million from the preceding year.
  • EBIT was positive by $25.9 million without the estimated impact quantified to date of MAX aircraft suspension, up by $45.7 million from the preceding year.
  • Icelandair transported 39% more passengers to Iceland in the second quarter compared to the same period in 2018.
  • Equity ratio at the end of June was 25% compared to 28% at year-end 2018 based on the same accounting principles. Net of impact of IFRS 16 the equity ratio was 31%.
  • Cash and cash equivalents amounted to $175.0 million at the end of the quarter.
  • Day-to-day operations in the second quarter were marked by the suspension of the MAX aircraft, with the estimated negative impact quantified to date in the quarter at around USD 50 million.
  • EBIT guidance for 2019, net of the MAX suspension, is positive of USD 50-70 million. Taking the estimated impact quantified to date of the MAX suspension into account, the EBIT guidance for the year is negative of $70-90 million.
  • Share capital increase of 625.000.000 at nominal value took place in the second quarter in relation to the purchase of 11.5% of issued shares by PAR Capital Management for $47 million.

Bogi Nils Bogason, President & CEO

“The MAX aircraft were intended to cover 27% of Icelandair’s passenger capacity in 2019. For this reason, the position in which the Company now finds itself as a result of the suspension of the MAX aircraft is without any precedent and has a significant impact on the operations and performance of the Company.

In these circumstances, our key focus has been on minimising the impact of the suspension on the Company, our passengers and the Icelandic tourism industry by adding leased aircraft to our fleet during the summer. We have also placed emphasis on ensuring seating capacity to and from Iceland, with the result that the number of Icelandair’s passengers travelling to Iceland has increased by 39% in the second quarter compared to the same period last year. Despite these mitigating measures, which have prevented major cancellations of flights, the situation has caused considerable disruptions in our flight schedule and our operations. This has in turn impacted our passengers and presented us with complex challenges. Our employees have done an outstanding job under very difficult circumstances during the peak season, where they have joined forces to resolve matters for our passengers as successfully as possible.

The objective of the Company remains clear – to improve the profitability and operations of the Company. We have taken a number of measures over the recent months that are already beginning to return results. The Company’s performance, if the estimated impact quantified to date of suspension of the MAX aircraft is excluded, has improved between years, with EBIT positive by $25.9 million, up by $45.7 million from the preceding year.

Furthermore, an experienced international investor, PAR Capital Management, joined the Company’s shareholder base in April and, in addition, we signed an agreement on the sale of Icelandair Hotels  and related real estate in July. Both of these developments will strengthen Icelandair’s position further and provides an important confirmation of the favourable outlook for the Company and future opportunities in Icelandic tourism.”

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Loftleidir Icelandic’s subsidiary acquires majority of shares of Cabo Verde Airlines

Icelandair Group has issued this statement:

The binding offer submitted by Loftleidir Cabo Verde to acquire 51% of the shares of Cabo Verde Airlines has been accepted. The share purchase agreement was signed on Friday, March 1, 2019.

Icelandair Group believes that there are opportunities to build the company up as a strong hub and spoke airline with Cape Verde as a connecting hub between continents. Cabo Verde Airlines will benefit from the experience and knowledge within Icelandair which has a similar business model.

Loftleidir Icelandic, which is a subsidiary of Icelandair Group, holds a 70% stake in Loftleidir Cabo Verde, and other investors 30%.

The acquisition of Cabo Verde Airlines does not have a significant effect on Icelandair Group’s financial statements since Cabo Verde Airlines will not be reflected in the Group’s consolidated financial statements. The share will be classified as an associated company.

Cabo Verde Airlines issued this short statement:

Today marks the beginning of the new Cabo Verde Airlines. This is the result of a long process that took time, dedication and, essentially, reliance from the Cape Verdean Government and investors. We are looking towards the future and in making Cabo Verde a point of connection between continents. Thank you for your trust and come with us in this new journey!

Icelandair Group reports a “difficult operating year” due to over capacity and low yields, will focus on aircraft leasing

"Látrabjarg", delivered on April 4, 2018

Icelandair Group issued this report:

Difficult Operating Year

  • Total income $1.511 million, up by 7% year on year in 2018
  • Year’s EBITDA $76.5 million, as compared to USD 170.1 million in 2017
  • Year’s loss after taxes $55.6 million, as compared to profit USD 37.5 million in 2017
  • EBITDA in fourth quarter negative by $35.0 million, down between years
  • Low average air fares, increased oil prices and carbon emission allowances and poor results of the domestic operation explain reduced 4Q EBITDA between years
  • Equity ratio 32% at year-end.
  • Cash amounted to $299.5 million

Bogi Nils Bogason, President & CEO

“2018 was a difficult business year. Results fell short of our projections at the beginning of the year, which was characterised by strong competition, low and frequently irrational fares and significant fuel price increases. At the same time, changes in our sales and marketing operations and Route Network had a negative impact on our performance.

Our mission is clear: to improve the Company’s profitability and strengthen our operations for the future. Changes in the Company’s organisational structure have already been made to reflect our emphasis on our core operation, which is aviation. We are currently taking a number of measures, both on the revenue and expense side, which should result in improved operations in 2019. These measures include modifications in capacity to achieve a better balance in the Route Network between Europe and N-America, which will facilitate control and maximize revenue. We have also placed increased emphasis on ancillary revenue and on strengthening our sales and marketing activities, as well as an implementation of a new revenue control system is in its final stages. Furthermore, in the spring 2019, a new connection bank will be added alongside the current connection bank, which will improve resource utilisation as well as increase capacity and revenue. In addition, the Group’s domestic flight operations are currently under review.

It is clear that we are faced with uncertainty in our operating environment and our competitive environment is changing. However, our Company benefits from its strong foundations as well as our talented and capable people. The financial position of the Company is strong, and I am convinced that we are well positioned to take on the challenges and seize the opportunities that lie ahead.”

Top Copyright Photo (all others by the airline): Icelandair Boeing 737-8 MAX 8 TF-ICY (msn 44354) LGW (SPA). Image: 944878.

Icelandair aircraft slide show:

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Icelandair Group’s acquisition of Wow air is cancelled

Icelandair Group issued issued this statement:

The acquisition of Icelandair Group of Wow air, based on a purchase agreement signed on November 5t, 2018 has been cancelled. Both parties agree on this outcome.

Icelandair Group hf. issued a stock exchange release last Monday, November 26, 2018 stating that the company estimated that it would be unlikely that all of the conditions in the share purchase agreement would be fulfilled by the shareholders’ meeting on November 30, 2018. That situation remains unchanged.

Therefore, it is unlikely that the Board of Directors of Icelandair Group can recommend to the shareholders that they agree to the purchase agreement. Furthermore, the Board does not intend to submit to the shareholders’ meeting a proposal to postpone decision-making on the purchase agreement.

Due to this this situation, both parties agree to abandon the aforementioned purchase agreement.

Icelandair Group will hold its shareholders’ meeting on Friday, November 30, as previously announced. An authorisation proposal for the Board to increase the share capital of Icelandair Group is on the agenda of the shareholders’ meeting.

Bogi Nils Bogason, Interim President & CEO of Icelandair Group:

“The planned acquisition of Icelandair Group of Wow air will not go through. The Board of Directors and management of both companies have worked on this project in earnest. This conclusion is certainly disappointing. We want to thank WOW air‘s management for a good cooperation in the project during recent weeks . All our best wishes go out to the owners and staff of the Wow air. ”

Skúli Mogensen, CEO and Founder of Wow air:

“It was clear at the outset that it was an ambitious task to complete all the conditions of the share purchase agreement in this short period. We thank the Icelandair Group’s management team for this challenging project, and also wish the management and staff of Icelandair Group all the best.”

Icelandair Group acquires Wow Air

Wow Air Airbus A330-343 EC-MIN (msn 1607) LAX (Ron Monroe). Image: 944276.

Icelandair Group has made this announcement:

Icelandair Group has entered into a share purchase agreement to purchase all shares in the airline WOW air.

The acquisition is subject to, approval by Icelandair Group‘s shareholders, the approval of the Icelandic competition authorities and a due diligence. As consideration for the shares, the shareholders of WOW air will, subject to conditions, receive a total of 272.341.867 shares or the equivalent of 5.4% of Icelandair Group‘s shares after the transaction. Thereof, 178.066.520 shares or 3.5% of the shares as consideration for the sold shares. The consideration can increase to 4.8% or decrease to 0.0% in accordance with certain conditions set forth in the share purchase agreement.  94.275.347 shares or 1.8% of the shares will be paid due to conversion of a subordinated loan into equity. All of sellers’ shares in Icelandair Group will be subject to restrictive covenants for 6 months and half of the shares will be subject to restrictive covenants to further six months.

The companies will continue to operate under separate brands. Their combined market share on the transatlantic market is around 3.8%. The acquisition creates opportunity for both companies to become even better prepared to provide international carriers with strong competition in the international airline market.

Bogi Nils Bogason, Interim President & CEO, Icelandair Group: „WOW air has in recent years built a strong brand and enjoyed great success in the company‘s markets to and from Iceland and across the Atlantic.. There are many opportunities for synergies with the two companies but they will continue to operate under their own brands and operating approvals. The tourism industry is one of the cornerstones of the Icelandic economy and it is important that flights to and from Iceland will remain frequent.“

Skúli Mogensen, CEO and founder of WOW air: „I am very proud of the success and development that we at WOW Air have enjoyed in the past few years and I am thankful for the response we have received since our very first flight. We have created a strong team that has reached remarkable success and has been a pioneer in low cost flights across the North-Atlantic. A new chapter now starts where WOW air gets an opportunity to grow and prosper with a strong backer like Icelandair Group that will strengthen the foundations of the company and strengthen its international competitiveness even further.“

In the upcoming days, Icelandair Group‘s will convene a shareholders‘ meeting where Icelandair Group‘s shareholders will cast their vote on the acquisition. A shareholders’ meeting shall be convened with at least three weeks‘ notice.

Top Copyright Photo (all others by the airlines): Wow Air Airbus A330-343 EC-MIN (msn 1607) LAX (Ron Monroe). Image: 944276.

Wow Air aircraft slide show:

Icelandair route map:

Wow Air route map:

Icelandair to operate two Boeing 767-300s, Air Iceland to become a new Bombardier Q400 operator

Icelandair Group (Icelandair and Air Iceland) (Reykjavik) has announced Icelandair will operate two Boeing 767-300s. The Group has also announced plans to replace Air Iceland’s aging Fokker 50 fleet with newer Bombardier DHC-8-402 (Q400) aircraft. The Group issued this statement:

Icelandair Group logo

The Board of Directors of Icelandair Group has decided to update the fleet policies of the subsidiaries Icelandair and Air Iceland.

All five Fokker 50 aircraft that Air Iceland operates will be sold and three Bombardier Dash 8 Q400 will replace it. After that Air Iceland will operate five aircraft, three Bombardier Q400 and two Q200. The Q400 aircraft can seat 74 passengers while the Fokker 50 takes 50 passengers.

Air Iceland logo

The airline’s operations will be simplified and optimised as number of aircraft decrease and synergies will increase as all aircraft will be from the same manufacturer. As the Q400 is faster and has a longer range,

Air Iceland 3.2015 Route Map

Air Iceland Route Map: Air Iceland flies domestically in Iceland and adjacently to Greenland.

Air Iceland sees opportunities in new markets. The company will be better equipped to service the domestic market as the aircraft are larger and travel time will be shorter. The airline aims to increase the number of foreign tourists on board its aircraft going forward.

Icelandair logo-1 (LRW)

In 2015 Icelandair will operate 23 Boeing 757-200 that take 183 passengers and one 757-300 that takes 220 passengers. The company owns 22 of those aircraft and leases two that will be redelivered this autumn.

Above Copyright Photo: Boeing 757-208 TF-FIN (msn 28989) taxies at London (Heathrow). LHR is a likely place where the larger Boeing 767-300 would be utilized along with New York (JFK).

 

It has been decided that they will be replaced with two Boeing 767-300 aircraft that take 260 passengers that will be added to the route network as of the spring of 2016. Larger aircraft are more feasible due to high load factors on many routes all year round and limited number of landing slots on certain airports. The increase of the fleet in the last few years has made it more economical to have more than one size of aircraft in the fleet. The Boeing 767 aircraft is similar to the 757 in terms of maintenance and crew training and the airline has experience in operating that type.

 

Above Copyright Photo: Daniel White – Bruce Drum Collection. Icelandair is very familiar with the Boeing 767-300 as subsidiary Loftleidir Icelandic has been a past operator of the type. Boeing 767-3Y0 ER TF-FIA (msn 24953) taxies at Sanford (SFB).

Loftleidir Icelandic logo

Icelandair Group’s subsidiary, Loftleidir Icelandic, has operated 767 aircraft in leasing projects that have been maintained by Icelandair. The aircraft has longer range than the 757 which will create new opportunities for the route network.

It has not been decided whether the new aircraft will be purchased or leased.

Bjorgolfur Johannsson, President and CEO of Icelandair Group: “Operating one type of aircraft has been very economical for Icelandair but when the route network and the fleet reaches a certain size it becomes more feasible to have a broader range of aircraft in the fleet. High load factors all year round and limited number of landing slots on certain airports also support this decision. In terms of Air Iceland a simpler and more economical fleet will make the operations better as crew training will be simpler.

We foresee further growth opportunities in the coming years with these changes to the fleet policy for passenger aircraft. Both the Boeing 767 and Q400 aircraft can service markets that the current fleet cannot, which will enable us to go into new markets and connect them to the current route network.”

Top Copyright Photo: Wingnut/AirlinersGallery.com. The five Fokker F.27 Mk. 050s (Fokker 50s) will be sold. Flugfelag Islands-Air Iceland Fokker F.27 Mk. 050 TF-JMO (msn 20205) lands at the Reykjavik (RKV) base.

Air Iceland aircraft slide show: AG Airline Slide Show

Icelandair aircraft slide show: AG Airline Slide Show

Air Iceland video:

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Icelandair Group’s 2014 net profit increases 18% to $66.5 million

Icelandair Group (Icelandair, Air Iceland and Loftleidir) (Reykjavik) reported a 2014 net profit of $66.5 million, up 18% from the previous year. The airline issued this statement:

Björgólfur Jóhannsson, President and CEO commented:

“The Group’s performance in 2014 exceeded management projections from the beginning of the year, with EBITDA at the upper limits of the Company’s most recent earnings estimate. Net profit amounted to $66.5 million, up by 18% from last year. EBITDA amounted to $154.3 million, up by 7% between years. Results for the fourth quarter were in line with the earnings estimate published at the end of last October. The strong performance was the result of a number of interacting positive factors, including falling fuel prices, increased demand in the North Atlantic market – which was met by increased supply – and good results from charter operations. The depreciation of the euro against the US dollar had a negative impact on the Group’s operations, and in addition the maintenance cost of cargo aircraft was significantly higher than anticipated.

As of 2010 Icelandair Group’s operations have shown growing momentum. Income has grown by $395 million, amounting to $1.1 billion in 2014. In recent years we have continued to close the ranks of our staff and secured a steady growth of our infrastructure in preparation for the future. Prudence is and will continue to be the key to long-term profitable growth for the Company. A strong equity position and underlying cash flow will underpin our ability to undertake profitable investments to improve our competitiveness for the long term. We have a clear future vision and an outstanding staff, to whom I attribute first and foremost the good results we achieved last year.

We are assuming continued profitable organic growth in Icelandair Group’s operations in 2015. The Group’s international flight schedule will be 14% larger than in 2014, and a significant development in the Company’s hotel operations in Central Reykjavik is foreseeable. On the whole, prospects in the Icelandic tourist industry are positive, and we also believe that the outlook for cargo and charter operations in 2015 is encouraging.

The EBITDA forecast for 2015 has been raised in comparison with 2014, with EBITDA now projected in the range of $160-165 million. The fall in fuel prices is the single cost item most responsible for the rise in EBITDA. It should be noted, however, that external factors, like fluctuations in fuel price and on FX markets along with the outcome of collective-bargaining agreements in the labour market can affect the Company’s performance significantly.”

Read the full report presentation: CLICK HERE

Copyright Photo: SPA/AirlinersGallery.com. This summer Icelandair will operate 24 Boeing 757 aircraft, one aircraft more than was previously announced. Boeing 757-208 TF-FIN (msn 28989) climbs away from London (Heathrow) bound for Keflavik near Reykjavik.

Icelandair aircraft slide show: AG Airline Slide Show

 

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