Icelandair targets 2024 growth in North America

Icelandair plans to grow the passenger network next year by around ten percent compared to 2023. Growth will come from increased frequencies to existing destinations and the launch of new routes, which the airline hopes to announce soon. North America will be the main focus of growth in 2024, CEO Bogi Nils Bogason said during the Q3 earnings presentation on Friday. Icelandair expects North America to be even stronger next year than it is now. In Q3, 56 percent of the point-of-sale revenues came from North America, ahead of Europe (27 percent), Iceland (14 percent), and other markets (3 percent). The number of passengers from North America increased by thirteen percent, while the load factor on the network was a solid 87 percent. Icelandair celebrated in August that it operated 75 years in the United States, launching services in 1948 through its predecessor Loftleidir Icelandic. Further improving connectivity at its Reykjavik hub during three ‘connecting banks’ during the day, higher frequencies and closer collaboration with partner airlines should grow revenues even more next year. Bogason mentioned the new route to Seattle, which will launch next summer. It will connect with Alaska Airlines and give Icelandair a triple-daily schedule. In 2023, Icelandair already operated the largest network in its history, with 390 weekly flights to 45 destinations in Q3. It carried 1.5 million passengers in the quarter or 3.3 million for the year to date, which is up nineteen percent year on year. The ‘to Iceland’ grew by sixteen percent year on year to 686K passengers. It currently has a fleet of 35 aircraft, but this will grow to 42 next summer, of which 21 Boeing MAX after the delivery of three more MAX 8s. Thanks to more aircraft, better utilization, and a wider network, Icelandair should improve its unit revenues, costs, and margins. In Q4 2024, the first two leased Airbus A321LRs are expected, with two more scheduled for Q1 2025. Deliveries of thirteen A321XLRs will start at a later date. Leasing business doing well Another area where Icelandair Group will grow is with aircraft leasing of its subsidiary Loftleidir. The airline has three Boeing 737-800s on operating lease and recently extended contracts, with a fourth leased out through 2029. The fourth 737-800 will arrive this quarter and a fifth in Q1 of 2024. A CIP leasing project has been very successful and will be extended with the introduction of a third aircraft next year. Leasing revenues grew to $52.2 million in the first nine months of this year compared to $40.9 million in the same period of last year. North America is the single-biggest market and generated $19.8 million in revenues, but other markets outside Europe and Iceland contributed with $26.9 million. Q3 profit up year on year Icelandair reported a $84.5 million net profit in Q3 compared to $57.9 million in the same quarter last year. Total revenues were $560.4 million, up from $486.7 million. Passenger revenues contributed by $508 million versus $433.4 million, cargo by $21 million versus $20.2 million, leasing by $13.7 million versus $13.5 million, and other revenues by $17.7 million, down from $19.6 million. The operating expenses totaled $412.3 million, up from $360.3 million last year. Staffing costs increased 27.5 percent to $102.2 million thanks to more production and higher salary costs, with the weaker US dollar versus the Iceland Kroner also having an impact. Fuel was 15.4 percent cheaper to $121.4 million. The operating income was $112 million, up from $92.7 million. Icelandair cargo had a challenging quarter due to difficult market conditions. Despite higher revenues, EBIT was negative at $-6.7 million in Q3 and is at $-15 million for the first nine months. The airline is responding by adjusting capacity to demand and has returned one Boeing 757 to the lessor. By wet-leasing out one of the two 767-300Fs, the objective is to raise additional revenues. Icelandair ended September with $423.7 million in liquidity, with $90.1 million in net-interesting bearing debt.

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