Icelandair expects its EBIT profit margin to increase to between 2-4% this year on revenues rising to $1.6 billion after firming its financial guidance for 2024.
The carrier had previously stopped short of issuing guidance for the year ahead, citing market uncertainty stemming from increased seismic activity in Iceland – media coverage of which it has been highly critical of and blamed for having a compounding impact on travel demand to the country.
In disclosing a full-year profit for 2023 at the start of February, Icelandair said only that it expected to generate improved EBIT and net profit in 2024.
”Uncertainty in the operating environment has decreased with diminishing impact of inaccurate international media coverage of the volcanic activity in southwest Iceland on bookings and the conclusion of the collective bargaining agreements in the private sector in Iceland,” the company said in issuing updated guidance on 2 April.
Icelandair says that, based on the first two months of 2024 and current bookings, it expects revenues to increase this year to $1.6 billion. The airline generated turnover of $1.52 billion in 2023.
It expects an EBIT margin in the range of 2-4% this year – an improvement on 1.4% on 2023 – and for net profit to increase year on year.
The outlook is based on the carrier lifting capacity 10%, as measured in available seat kilometers (ASKs) – including capacity more than one-fifth higher in the first quarter compared with 2023.
Despite firming a brighter prognosis for the current year, Icelandair does note that the combination of the impact on demand from coverage of the Icelandic volcanc activity and increased capacity in some markets – notably the UK, Frankfurt and Amsterdam – means it expects its EBIT result in the first quarter to be ”slightly weaker” than 2023.
Icelandair reported an EBIT loss of $62 million in the first quarter of 2023.
