Icelandair Group has disclosed that it is operating only 14% of its flight schedule and expects this to reduce further, and that it is taking steps to move 92% of employees to temporary part-time working.
But it is also cutting 240 personnel across its divisions. The group employs just over 4,700 staff. Salaries of remaining employees will be reduced by 20%.
Icelandair Group’s chief executive, Bogi Nils Bogason, and its board members will take 30% salary cuts while other executive management salaries will be reduced by 25%.
Switching to temporary working will limit lay-offs, it says, and assist short-term cash-flow.
“The effect of the [coronavirus] outbreak has also had a significant impact on the operations of other companies within Icelandair Group,” it says, notably its regional airline arm Air Iceland Connect and its hotel division.
While it has implemented measures to reduce expenditure, through supplier and financing negotiations, the company says salaries are its single-largest cost item. The overall financial impact of the situation is “still uncertain”, it adds.
Bogason says the measures it is taking are “difficult but necessary” but that the company is prioritising actions to mitigate impacts and secure its position for the future.