Icelandair net losses widen in first quarter

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Icelandair Group’s first quarter net losses have widened by 36.5%, although the company describes its operational performance as above expectations in the current climate.

During the three months ended 31 March, Reykjavik-based Icelandair’s turnover rose 18% to IcKr14 billion ($189 million). Group fuel costs were 56% higher at IcKr2.6 billion and total operating expenses rose a quarter to IcKr14.9 billion.

Seasonal fluctuations in flights and tourism led Icelandair to post a first quarter EBITDA loss, although it deteriorated sharply to IcKr857 million from IcKr81 million. EBIT losses deepened to IcKr1.7 billion from IcKr833 million.

Icelandair’s net loss fell 36.5% for the period to IcKr1.7 billion – though the firm notes the corresponding period included a IcKr1.2 billion gain from an aircraft asset sale.

Group CEO Bjorgolfur Johannsson says: “Icelandair’s operation in the first quarter was somewhat better than anticipated in much more difficult conditions than last year. Our backlog in charter operations is good, and the same is true of the booking position in scheduled airline.

“However, we foresee continued high fuel prices, and we are working on the assumption that these prices, together with the uncertain economic climate, will impact demand in airline services and tourism. One of our principal challenges now is to react to the changed circumstances and prepare the company for a new future.”

Icelandair has revamped it management structure, recently appointing former group chief operating officer Sigthor Einarsson as group deputy CEO and Birkier Holm Gudnason as Icelandair CEO. It has re-entered the travel agency market, put Icelandair Cargo’s growth plans on ice and negotiated a new short-term wage contract with its airline staff.

Johannsson says: “Through these and other actions we are solidifying our core operations, reducing risk and strengthening Icelandair Group for the future.”