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March 3, 2024
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Icelandair plans to return to profitability this year as it grows back its network to eighty percent of 2019 levels, it said today during its 2021 results presentation. The final quarter ended at a loss, but EBIT was still at its best level since 2016. Icelandair targets 2022 profitability as it looks at 757 successor.

The carrier ended the year with a net loss of $104.8 million compared to $-376.2 million in 2020. The operating loss or EBIT was $135.9 million versus $-363 million. Total revenues were $584.9 million compared to $433.6 million. Icelandair carried 1.5 million passengers, of which 47 percent flew to Iceland and 23 percent used the island for transit. Capacity was up 87 percent from 2020 and back to 65 percent of 2019 levels in Q4 compared to just six percent in Q1. Income from Icelandair Cargo was up 38 percent.

In Q4, the airline reported a $39.4 million net loss (2020: $-83.3 million) as it benefitted from the reopening of the US for EU traffic and from cargo. an EBIT of $-35.7 million ($-60.2 million), and revenues of $192.5 million ($60.2 million). For the third consecutive quarter, net cash flow from operations was positive at $6 million, despite 35.7 percent higher fuel costs to $42.5 million. Icelandair has hedged 29 percent of fuel in the current first quarter and 23 percent in Q2.

Fuel prices and the volatility of the market will determine Icelandair’s targets, which include a return to EBIT margins of three to five percent this year. The airline has worked hard to streamline and simplify its organizational structure and improve operations, which according to CEO Bogi Nils Bogason has resulted in a stronger company. The past year saw the completion of the sale of Icelandair Travel. Domestic carrier Air Iceland Connect was fully integrated. It also added Tenerife and Alicante to the network which help it to increase revenues. Bogason said more destinations will be added that were previously sold via its travel agency.

On the fleet, Bogasen said that Icelandair has recently completed a review of its long-term requirements. The review concluded that the current composition of the Boeing MAX and 757 is very well-suited for its network, making it likely that it will grow the fleet with current types or more MAX. This year, it will take delivery of five MAX.

Aircraft campaign for 757 successor coming up 

2026 Will be the last year that Icelandair will operate its 757s on the passenger network. “The situation provides several options for our long-term fleet, which is a very good position to be in”, said Bogasen. “It could be a MAX fleet, with wide bodies, or we could start the transition into an Airbus fleet in the second half of this decade.” The Airbus A321LR definitely is an option for the carrier, he said, but the MAX remains an option too. Bogasen was unable to specify the number of aircraft that Icelandair plans to purchase.

Icelandair said last September that it planned to make a decision on the 757 replacement before the end of 2021, but Bogasen said today that this will be done in the coming twelve months. This will likely include a campaign between Airbus and Boeing. New and more efficient aircraft should contribute to the carrier’s sustainability plans and carbon emission reduction plans by thirteen percent, with 65 percent to come from using sustainable aviation fuels (SAFs), first on the domestic network.

Coming summer, Icelandair’s fleet will consist of 35 aircraft, including ten MAX 8s, four -9s, thirteen 757s, three 767s, and five De Havilland Canada Dash 8-400s and -200s on its domestic network. Including four cargo aircraft (plus two over 2021), and that of subsidiary Lofteider, the fleet includes 46 aircraft. Icelandair has been hiring and training pilots to fly the extra MAX’ that will be coming in via lessor DAE. Icelandair is in the process of repainting its fleet with the new livery.

New destinations are Raleigh-Durham, Salzburg, Nice, and Rome, which fit into its so-called two-banks structure with early-morning primary connections to Europe and the US and secondary departures a couple of hours later. Daily flights to Boston are additional to these two banks and connect to night flights to certain European destinations.

Icelandair ended 2021 with $435 million in liquidity, of which $205 million in cash and cash equivalents and $120 million in a government-backed credit facility. It has $52 million in undrawn revolving facilities. Interest-bearing debt and lease liabilities totaled $496 million, up by $99 million from 2020 due to the addition of four leased MAX aircraft.

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Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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