Thursday, 14 February 2019

A difficult year....Icelandair reflects on 2018

Icelandair reflects on what it calls a 'difficult year' that saw the carrier rack up losses after tax of more than $55 million, down from a profit of $37.5 million the year before.

“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." Explains the company's boss, President & CEO 
Bogi Nils Bogason.

The airline group has already had to embark on a cost-cutting and reorganisation programme to return the firm to profitability. The airline has also had to secure extra funding on the new deliveries of 11 Boeing 737 Max aircraft it expects to be delivered this year. This has mostly been done on sales and leaseback arrangements. 

"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." Bogason says.

The firm has started to change capacity and cut out some destinations in North America it serves to stem losses and capitalise on high-value routes.  "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 maximise 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." Bogason explains.

"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.”

Icelandair presentation

(Images Icelandair)