The Keflavík based national flag carrier of Iceland, Icelandair has issued an update on its financial restructuring demonstrating how the airline is negotiating with its stakeholders in order to be able to initiate offering of new shares and complete the restructuring.
The airline has confirmed on Monday of this week that to date achieved positive progress with many of its stakeholders. New long-term collective-bargaining agreements have been reached with the unions of pilots, cabin crew and mechanics. Work on terms with the Icelandic Government, along with Íslandsbanki and Landsbankinn, regarding a government-guaranteed credit facility is in progress. However, the credit facility will, among other things, be conditioned upon the Company receiving sufficient concessions from creditors and successful conclusion of the planned share offering.
Icelandair Group has received positive feedback from most of its creditors, who remain willing to work with the Company through this process. However, negotiations with certain pivotal counterparties have not been concluded. Those counterparties include aircraft lessors and a credit card acquirer. Furthermore, the Company is still negotiating with Boeing regarding further compensation due to the Boeing 737-MAX grounding and the state of future deliveries of aircraft. The discussions with the aforementioned parties have progressed over the past weeks and might be concluded in the upcoming days if a constructive dialogue is maintained.
Conditioned that fully documented agreements will be completed with the remaining stakeholders in July, the Company intends to initiate the proposed offering of new shares in August. However, in case these negotiations will be unsuccessful, the Company will need to initiate a new phase of its restructuring process without the government guaranteed credit facility. Such process might extend for up to 12 months and the Company would be required to seek deferral of any payments to financial creditors during such process.
The cash position of the Company is currently around USD 150 million which is in excess of three months fixed operational cost in the current environment.
Icelandair Group views its current voluntary financial restructuring plan as the optimal course of action for all stakeholders, vendors, shareholders, customers and employees
Recommended for you...
