Wednesday, 17 June 2020

An update on Icelandair Group’s financial restructuring efforts

The future of Icelandair is by no means secure, however, the firm is putting in to practice some of its plans for a stronger tomorrow.  During a shareholders meeting on  22 May 2020, the firm's management presented some of the actions being taken to try to shore up losses and cut costs still further. 

Icelandair Group aims to complete a voluntary financial restructuring with the participation of its stakeholders and the Icelandic Government. These stakeholders include unions, Boeing, lenders, lessors, credit card acquirers, hedging counterparties and other vendors. Following the signing of all major agreements, the Company intends to raise new capital through a share offering. The goal of the financial restructuring is to secure current operations, strengthen the liquidity and ensure the future competitiveness of the Company.

Discussions with the Government of Iceland regarding a potential government-guaranteed credit line have been progressing according to plan. The Government has expressed its intent to participate in the restructuring of Icelandair Group contingent, among other things, on the participation of all stakeholders and the successful conclusion of the planned share offering.



Negotiations with the pilots and aircraft mechanics unions have been successfully completed. However, negotiations with FFÍ (The Icelandic Cabin Crew Association) stalled approximately three weeks ago without any significant progress having been made since then, which is of concern.

Negotiations with Boeing regarding future deliveries of the Boeing MAX aircraft and further compensation due to the grounding of the aircraft are progressing.

Negotiations with lenders, lessors, credit card acquirers, hedging counterparties and other vendors are ongoing. The objective of the negotiations is to restructure contracted cash outflows to match expected future cash inflows. 

The indicative timeline presented at the shareholder’s meeting called for a signing of agreements with key stakeholders by 15 June 2020. As discussions with stakeholders stand, this milestone has been revised to 29 June 2020. An updated timeline regarding the share offering will be presented when agreements with stakeholders are in its closing stages.

Icelandair Group views its current voluntary financial restructuring plan as the optimal course of action for all stakeholders, including its customers and employees, building a comprehensive solution that secures the long-term interests of all parties. If agreements with stakeholders, in accordance with the current voluntary financial restructuring plan, will not be reached, the Company will explore alternative options to continue its restructuring process.









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