02 November, 2020

Icelandair's financial results continue to be affected by Covid-19

Icelandair's financial results continue to be affected by the coronavirus COVID-19 pandemic as demonstrated in the carriers latest results publications.  During the year up to the end of September, its comprehensive income, loss for the period from 1 January to 30 September 2020 amounted to USD 292.9 million, of which USD 224.6 million in one-off COVID-19 related cost. Total comprehensive loss for the period was USD 340.1 million.

The carrier says it has reached a final agreement with Boeing over the grounding of the 737 MAX aircraft, which involves financial compensation, as well as the permanent cancellation of four out of the ten aircraft Icelandair, is yet to take delivery of. The six aircraft still on order are expected to be delivered from the second quarter of 2021 to the first half of 2022. Of course,  that is subject to the aircraft being certified in the next two months.  Icelandair hopes the 737 MAX will be back in commercial service before the end of January 2021. 


Total revenue USD 103.6 million decreasing by 81% from last year
Cargo revenues increased by 16%
Financial restructuring successfully completed with USD 166.9 million share offering in September
Equity USD 293.1 million at Q3 2020 end and equity ratio 26%
Total liquidity USD 399.1 million at Q3 2020 end, thereof cash and marketable securities USD 227.1 million
EBIT USD 3.5 million in Q3 2020 compared to USD 81.1 million in Q3 2019
Capitalized tax loss as deferred tax assets and reclassification of jet fuel hedges, which became effective post agreements with counterparties, positively affected net profit which amounted to USD 38.2 million
The operations will continue at minimum levels in the coming weeks

Bogi Nils Bogason, President & CEO  said: “Our operations continued to be negatively affected by the COVID-19 pandemic in the third quarter. Our efforts mitigated the impact during the summer where we were able to ramp up quickly when travel restrictions in some of our markets were eased temporarily. In addition, we continued to pursue opportunities within our cargo and leasing operations, increasing cargo revenue by 16%. Overall, however, we only operated nine per cent of our passenger flight schedule and the number of passengers decreased by 90% from the year before.

While we have used our flexibility to react quickly to changes in demand in the short term, we completed the financial restructuring of Icelandair Group in the quarter, strengthening the long-term competitiveness of the Company. The final step was a successful share offering in September where we raised USD 167 million in new share capital. We are thankful for the strong participation in the offering that demonstrated important support from our shareholders, new investors and the Icelandic public.

In the coming weeks, we are expecting our operations to continue to remain at minimum levels. We have minimized cash burn and strengthened the liquidity position to be able to weather the storm into 2022 if needed. However, we are focused on being well prepared to act as soon as the situation in the world improves and travel restriction in Iceland will be eased. With a broad investor base, strong balance sheet, flexible route network, robust infrastructure and great employees, we are in a good position to scale up quickly as soon as markets open again.”

Just missing out on the latest stats was the fact that on 7 October 2020, Icelandair reached an agreement on the sale of three Boeing 757-200 aircraft. These aircraft will be converted into cargo aircraft. The net sale price of the three aircraft is approximately USD 21 million which is USD 2-3 million above book value. Two of the aircraft were manufactured in 1994 and one in 2000.   In addition to the sale, the carrier will be retiring four additional B757-200 aircraft in the coming weeks, which is pretty much in line with previous plans the airline had to the gradual phase-out of the 757-200s. According to the report,  Icelandair plans to part-out these aircraft, whereby some parts will be utilized to keep the remaining 757-200s flying. Other parts of the aircraft will be recycled where possible this will reduce the airlines operational fleet of the venerable 757-200s by 7 to leave a total of 15 aircraft. 

The full report is available here
Icelandair webcast of the results.

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