Upfront expenses hit Icelandair first-quarter result

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Icelandair attributes a widening of its first-quarter operating loss to "expenses arising out of the increased scope of our business in the peak period", which it says "accrue largely" in the year's first three months.

These include expenses related to advertising and marketing expenses, "implementation of aircraft" and the cost of bookings and agents' fees, says the airline.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was negative to the tune of $13.3 million, compared with a reverse of $8.3 million the same period of 2013.

The net loss rose from $18.3 million to $26.7 million. However, revenue climbed 11% to $191 million.

"Our first-quarter results were in line with management's expectations," says Icelandair president and chief executive Bjorgolfur Johannsson. "The increase in passenger revenues was most significant in the North Atlantic market, but the tourist market to Iceland also showed a considerable increase.

"The company's charter and freight operations were successful, with profitability increasing between years. The operation of other subsidiaries of the group also showed successful results in line with projections."

He adds that prospects for 2014 are "favourable", with tourism expected to hit record levels, but warns that "the company is facing some uncertainty" as pilot union FIA has imposed an overtime ban and is set to strike next month while negotiations have yet to be concluded with flight attendants and maintenance engineers.

Icelandair continues to forecast an EBITDA of $145-150 million for 2014.