Icelandair Group is expecting employee cuts to reduce its cash outflow by $12 million per month over the next three months, taking into account measures by the government to pay partial salaries.

The company is expecting to reveal a first-quarter loss of $208 million when it details its performance for the first three months of 2020 on 4 May.

It has taken a goodwill impairment of $115 million, owing to the adverse effect of the coronavirus crisis on near-term operations. Negative fuel-hedging impacts have cost $51 million and the company has transferred $18 million to margin accounts with counterparties in response.

Icelandic prime minister Katrín Jakobsdottir, speaking on 3 May, said the economic burden from the crisis was “profound” and its duration uncertain.

“The tourism industry is hit the most,” she says, pointing out that it accounted for 40% of the country’s export revenues. Iceland’s border will remain shut until 15 May.

“Air transport is down, borders are broadly closed, and people’s willingness to travel is low,” says Jakobsdottir.

The government, says Icelandair Group, is willing to consider granting the company a conditional credit line – or at least a guarantee for one.

Its financial performance for the first two months of the year had been in accordance with expectations but the situation deteriorated substantially in March, and first-quarter revenues were down 16% to $209 million.

Although its liquidity position is still above its $200 million internal minimum, the airline company expects to dip below this threshold “in the next few weeks” and has been working to prop up its finances.

Icelandair Group is aiming to issue new shares to raise $200 million if the measure is approved at a shareholders’ meeting on 22 May. Completing such a share offering is among the conditions for a government credit line.

“Successful negotiations with relevant unions are essential,” the company adds. It states that it is also holding, or preparing to hold, discussions with lenders, lessors and suppliers to strengthen its long-term competitiveness.