Category Archives: Icelandair

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.”

Is Icelandair ready now to jump to Airbus?

Icelandair extends the grounding of its Boeing 737 MAX aircraft to September 15

"Látrabjarg", delivered on April 4, 2018

Icelandair has made this announcement:

Icelandair has made changes to its flight schedule until September 15, 2019 as it is expected that the suspension of Boeing 737 MAX aircraft will last longer than anticipated.

To minimize the impact on its passengers, Icelandair has already added three leased aircraft to its fleet for the summer season. Furthermore, the Company is now working on the leasing of an additional Boeing 767-300 aircraft.

Icelandair will start implementing these changes in the next few days and Icelandair’s service representatives will contact the passengers affected.

With these changes, the total seat capacity from July 15  to September 15 will decrease by 5% from what the Company had estimated. However, following these changes the number of available seats during the period will still increase by 10% year-on-year. Icelandair’s emphasis will continue to remain on increasing the number of passengers to and from Iceland and as of today, the number of bookings by passengers traveling to Iceland during the period June-August has increased by over 30% compared to the same period last year.

The financial impact of the suspension of the Boeing 737 MAX aircraft is uncertain as the amount of compensation from the aircraft manufacturer is still under review.

Top Copyright Photo: Icelandair Boeing 737-8 MAX 8 TF-ICY (msn 44354) LGW (Antony J. Best). Image: 944339.

Icelandair aircraft slide show:

Boeing could lose Icelandair to Airbus

"Surtsey"

The affects of the Boeing 737 MAX grounding could be felt for years. The expensive grounding is forcing some carriers to question their allegiance with Boeing as they seek compensation for the grounding.

Icelandair has been a staunch supporter of Boeing and has Boeing 737-8 MAX 8s both on the ground and additional MAX aircraft on order including the MAX 9.

Now the carrier is reconsidering a replacement for its large Boeing 757 fleet. The new MAX aircraft were the planned replacement but that may now be in doubt.

Now the carrier is considering other options as it discusses compensation from Boeing for the expensive grounding. Is this a bargaining strategy or does Airbus have an opening to sell its Airbus A321neo aircraft?

Top Copyright Photo: Icelandair Boeing 757-208 WL TF-FIJ (msn 25085) LIS (Ton Jochems). Image: 946478.

Icelandair aircraft slide show:

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Icelandair adjusts its schedule due to MAX 8 grounding, will drop Cleveland and Halifax

Icelandair has made this announcement:

Icelandair’s flight schedule has been updated based on the assumption that the Boeing 737 MAX 8 aircraft will be suspended until June 16, 2019. The decision to add wet-leased aircraft to the fleet has reduced the impact of the suspension on Icelandair‘s flight schedule. As announced on April 1, 2019, the Company entered into a leasing agreement regarding two Boeing 767 aircraft. Today, Icelandair has finalized a leasing agreement of the third aircraft, a 184-seat Boeing 757-200, which will be in operation from May 15 until the end of September 2019.

During the period April 1 to June 15, 2019, Icelandair will reduce its frequency of flight trips by around 3.6%, which accounts for around 100 trips. In most cases, these are flights to destination where more than one flight is available on the same day. Despite these changes, the total seat capacity during the period will essentially remain the same since the Company will use Boeing 767 aircraft that are larger than the Boeing 737 MAX. Therefore, these changes will not have significant effects on the total number of passengers during the period.

Image: Boeing.

Furthermore, Icelandair has decided to cancel its flights to Cleveland in the US and Halifax in Canada this year. This is partly due to the suspension of the Boeing 737 MAX aircraft but also because of a decision to focus on meeting increased demand for flights to and from Iceland by moving supply from destinations that focus on travel between North America and Europe via Iceland.

The financial impact of the suspension of the Boeing 737 MAX aircraft is uncertain at this time as the amount of compensation from the aircraft producer is still under review.

Changes to Icelandair’s flight schedule following changes in the competitive environment

Because of changes in the competitive environment, Icelandair has decided to add flights to Southern Europe. Icelandair will offer three flights a week to Alicante in cooperation with Icelandair Group’s subsidiary, VITA, a travel agency that organises trips from Iceland.

Furthermore, Icelandair has started working towards adding aircraft to its fleet that will be fitted as economy only. These aircraft will have a larger number of seats than the Company‘s current aircraft, which lowers unit cost and therefore strengthens Icelandair’s competitiveness in this market. These aircraft are better suited for certain destinations that are not part of Icelandair‘s core route network, such as Alicante and Tenerife, and therefore present opportunities for growth. Icelandair expects the first aircraft of this type to be in operation in the beginning of the year 2020.

Icelandair introduces its Buddy Hotline

Icelandair has made this announcement:

  • 69% of Americans have a desire to get more information first-hand from locals as they believe they have more knowledge than any other source
  • Over one quarter of Americans (27%) feel ‘overwhelmed’ when planning a holiday, due to the amount of sources of reviews and recommendations
  • Over half even feel ‘anxious’ (23%), ‘stressed’ (16%) or ‘confused’ (13%) about what they should and shouldn’t book
  • New Buddy Hotline allows passengers to directly speak to or message an Icelandair Buddy for personal travel advice and recommendations when planning or on their trip
  • All Buddies are Iceland locals and members of the Icelandair team

Transatlantic airline Icelandair has launched its new Buddy Hotline service to connect passengers with Icelandair Buddies for personalized travel recommendations. The service aims to support travelers during or in the planning of their trip by providing trusted advice from locals.

Travelers can directly connect with a Buddy by phone or via an online messenger, to receive the ultimate ‘insider’ advice to make the most of their time away. From where to find the best fish restaurant in town, to where to discover a beautiful hidden spot for a picnic or enjoy a secluded geothermal hot pool, Icelandair’s Buddies will have the answer.

All Buddies are members of the Icelandair team who are knowledgable and passionate about promoting responsible tourism in the country.

A new global study conducted by Icelandair revealed that over one quarter of Americans (27%) feel overwhelmed by the travel planning process, and  52% feel ‘anxious,’ ‘stressed,’ or ‘confused’ about what they should see or do during their trip.

These feelings are further exacerbated with trust in reviews and recommendations at a new low. Research reveals that 71% of Americans are more aware of the existence of fake reviews than five years ago, which has resulted in 82% trusting reviews considerably less.

From discovering hidden gems to experiencing authentic local culture, there is a growing appetite among travelers to explore the ‘real’ location they’re visiting, and 68% of Americans expressed interest in having direct access to local knowledge for a more authentic experience. In addition to seeking advice from locals, many like to feel like a native while in another country, with over one third (36%) eating like a local and 43% shopping locally in an attempt to travel more sustainably.

Bogi Nils Bogason, President & CEO Icelandair Group, comments, “We know travelers are seeking more unique experiences guided by advice from trusted local sources.

“Our new Buddy Hotline service feeds this consumer appetite for ‘insider’ knowledge and is a great fit with our staff who, as Icelanders, have such a passion for warmly welcoming and hosting travelers from across the world.”

The Icelandair Buddies have a diverse range of personal passions and hobbies which will shine through with their advice for passengers.

  • Have an appetite for adventure? Guðlaug, a project manager, loves to get outdoors for a morning hike and can tell you where to enjoy some of Iceland’s breathtaking landscapes
  • In search of authentic Icelandic cuisine? Auður, a travel consultant, has his finger on the pulse of the hottest new spots to eat in town
  • In need of some peace and tranquillity? Sigríður, a flight attendant, is excited to share some of her favorite geothermal pools for passengers to relax and reenergize the Icelandic way
  • Want to immerse yourself in Icelandic culture? Edda, a customer service supervisor, loves to pass on her passion for traditional Icelandic culture, partaking in knitting lopapeysa (a traditional Icelandic sweater) in her spare time

The Buddy Hotline launches today and is available to all Icelandair passengers to enjoy from April 10May 8, 2019. To find out more about Icelandair’s Buddy Hotline and to take advantage by booking now visit icelandair.com/BuddyHotline.

Icelandair leases two Boeing 767 aircraft until end of September due to MAX grounding

Icelandair Boeing 767-319 ER WL TF-ISP (msn 26971) AMS (Ton Jochems). Image: 946142.

Icelandair has made this announcement:

In case of minimizing interruption to Icelandair’s flight schedule following the suspension of the Boeing 737 MAX aircraft, Icelandair has entered into a leasing agreement regarding two Boeing 767 aircraft.

The first aircraft comes into operation mid-April but the second at the beginning of May and both aircraft will be in operation until the end of September. These are 262-seat aircraft with two classes and an entertainment system. Icelandair is currently working on leasing the third aircraft that would be added to its fleet in the summer 2019.

Furthermore, Icelandair is reviewing its flight schedule for the summer 2019 following significant changes in the competitive environment. If the Boeing 737 MAX aircraft come back into operation in June or earlier, Icelandair has the possibility of increasing its flight frequency during hightseason from its original plans due to the above-mentioned addition to the fleet.

Top Copyright Photo: Icelandair Boeing 767-319 ER WL TF-ISP (msn 26971) AMS (Ton Jochems). Image: 946142.

Icelandair aircraft slide show:

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