Saturday, 1 August 2020

Icelandair updates on financial restructuring

As previously reported a number of times, the troubled Icelandic carrier, Icelandair is currently negotiating a financial restructuring of the group with its stakeholders, mainly so it can offer new shares to raise more funds to help see it through the continuing crisis in the aviation industry.

The airline says the negotiations are in the final stages and fully documented agreements have been completed with the majority of creditors. The negotiations with the remaining creditors are at an advanced stage and final agreements are expected to be fully documented next week.

The agreements will be conditioned upon the completion of the upcoming share offering and the airline getting a government-guaranteed credit facility. The negotiations with creditors have focused on restructuring cash outflows to match expected future cash inflows. The creditors concessions will be vital in ensuring the flexibility of the Company for a strong resurgence when markets start to open up again.

Recently announced, Icelandair has just completed long-term collective-bargaining agreements with the pilot-, cabin crew- and aircraft maintenance unions which cuts costs for the company and adds a little flexibility moving forward.

Negotiations with Boeing regarding additional compensation for Icelandair’s loss due to the grounding of the Boeing 737-MAX aircraft and future deliveries are at an advanced stage. The Company expects to receive further compensation for its loss due to the grounding and that changes will be made to the delivery schedule of future Boeing 737-MAX orders. It is expected that the airline will further delay the delivery of the remaining aircraft. 

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