Icelandair shifts focus ‘towards more profitable routes and markets’ in 3Q2019

posted on 1st November 2019 by Eddie Saunders
Icelandair shifts focus 'towards more profitable routes and markets' in 3Q2019

CEO Bogi Nils Bogason stated (31-Oct-2019) the carrier’s 3Q2019 results show improvements in underlying operations “Despite the unprecedented impact of the suspension of the MAX aircraft”, adding its route network flexibility allowed optimisation of its flight schedule by “shifting our focus towards more profitable routes and markets”.

Continued Operational Improvements:

  • Operational improvements with EBIT amounting to USD 81.1 million in the quarter, up by USD 2.8 million despite the suspension of the MAX aircraft.
  • Total revenue amounted to USD 533.9 million in the quarter, down by 2%.
  • Flexibility of the route network resulted in 27% more passengers travelling to Iceland in the quarter.
  • Equity ratio at the end of September was 30%, up from 28% at the beginning of the year based on the same accounting principles. Excluding the impact of IFRS 16, the equity ratio was 37%.
  • Total liquidity amounted to USD 238.5 million at the end of the quarter.
  • The second partial compensation agreement was made with Boeing today, in addition to the interim agreement already reached in the quarter.
  • Q4 results expected to improve compared to last year.
  • The estimated net EBIT impact for 2019 quantified to date of the MAX suspension is still significant. Discussions on further compensation for the financial loss are ongoing.
  • EBIT guidance for 2019 has been narrowed to USD 35-45 million.

“The third quarter results show improvements in the Company’s underlying operations despite the unprecedented impact of the suspension of the MAX aircraft, Icelandair’s key strength is the flexibility of the route network which has allowed us to optimise our flight schedule by shifting our focus towards more profitable routes and markets. We have emphasised the tourist market “to” Iceland to meet increased demand and transported 30% more passengers to Iceland during the high season year-on-year and this focus will continue into 2020.” says Bogi Nils Bogason, President & CEO.

“We have managed to reduce the impact of the MAX suspension by implementing an extensive action plan to decrease costs and drive revenues. In addition to the optimisation of our route network, we have improved our revenue management and achieved better utilisation of employees. In the third quarter, we have also continued to make great progress in on-time performance which has significantly reduced disruption cost in the route network, despite the pressures on the network and our employees due to the MAX suspension. The prospects for the full year 2019 have improved. Our core operations are robust, equity position and liquidity are strong. We are therefore well equipped to achieve our goals of further strengthening our operations and improving the profitability of the Company going forward.”