Monday, 9 March 2020

Icelandair Group - dropping flights as it releases details of its February 2020

The Icelandair Group has continued to operate robustly during a pretty turbulent time for the Icelandic carrier and the aviation industry as a whole. During the month of February, Icelandair reported passengers to Iceland increased by 27%, whilst passengers on the home market from Iceland increased by 4%. Yet,  once the big money-spinner for the airline,  via passengers,  those that choose to just change planes in Iceland, decreased by 17%. This, according to the carrier, to be in line with its latest shift in priorities as the firm wishes to focus on the markets to and from Iceland to respond to changes in the competitive environment in these markets. 

The load factor on Icelandair’s flights was 76.3% compared to 75.6% in February 2019, while the total capacity increased by 3%. In line with recent trends, on-time performance in February 2020 was 77%, a decrease by 5.8 ppt from the year before, which is mainly due to weather condition.

The number of passengers on domestic and regional flights was around 17,600 in February 2020, decreasing by 10% from the year before. Seat capacity was down by 12%, due to adverse weather in Iceland in February. The load factor increased by 4 ppt, to 70% from 66%. The number of sold block hours in charter flights increased by 10% and freight increased by 3% year to year. The number of sold room nights at Icelandair Hotels increased by 7% from 2019, with room occupancy at 75.7% compared to 79% in the same period last year.

With response to the change in demand on international flights, due to the COVID-19 virus, Icelandair has decided to cancel around 80 flights in March and April, which is about 2% of its flight schedule for the two months. The Company’s total scheduled flights in March and April are 3,500.

As previously announced, Icelandair Group is currently analysing possible scenarios and mitigating actions with regards to the COVID-19 outbreak, and will inform the market of the possible effects on its financial outcome and operations when further certainty has been reached. The Company will continue to monitor the situation and is working closely with all relevant authorities and follows its guidance to ensure the health and wellbeing of its customers and employees.

At a recent board meeting, due to the poor financial performance of the airline,  there would be no dividend for the 2019 year and the board also elected to keep the same remunerations for board members as last year. Each Board Member will receive ISK 330,000 per month, the Chairman will receive ISK 660,000 per month, the Deputy Chairman will receive ISK 495,000 per month, Sub-Committee Members will receive ISK 120,000, the Chairman of the Audit Committee will receive ISK 275,000 per month and the Chairman of the Remuneration Committee will receive ISK 150,000 per month. The Board of Directors will decide on compensation for the members nominated by shareholders in the Nomination Committee.  Compensation will be paid on hourly basis.

Five new people joined the board,  including  Guðmundur Hafsteinsson - previously working for Google, management consultant John F. Thomas, Nina Jonsson an aviation analyst and fleet management guru, Svafa Grönfeldt andÚlfar Steindórsson. 

Úlfar Steindórsson was elected the Chairman of the Board and Svafa Grönfeldt was elected as Vice Chairman. Úlfar Steindórsson will be the Board’s representative in the Nomination Committee. The Sub-Committees of the Board will be composed as follows:

Audit Committee

Alexander Eðvardsson, Chairman
Guðmundur Hafsteinsson
Svafa Grönfeldt
Remuneration Committee

Úlfar Steindórsson, Chairman
Guðmundur Hafsteinsson
A new Sub-Committee, the Strategy Committee, will be introduced and is composed as follows:

Svafa Grönfeldt, Chairman
John F. Thomas
Nina Jonsson

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