Icelandair Group is preparing to issue new shares to shore up its liquidity and strengthen its financial position during the coronavirus-driven downturn.

The company has yet to disclose the size of the share issue planned.

But it says the intention of the offer is to ensure its “long-term competitiveness” after its flight schedule was cut by some 90% and it faces a possible “extended period of minimal revenue”.

Icelandair Group adds that it want to give itself the ability to respond rapidly to changes in the market once signs of recovery emerge.

As part of the financing plan the company is holding discussions with lenders, lessors and suppliers.

“Successful negotiations with the unions are essential as well as the approval of a shareholders’ meeting,” it adds.

Icelandair Group has also been holding talks with the Icelandic government.

The Icelandic ministry of finance has already agreed to increase the share capital of airport operator and air traffic management organisation Isavia by IcKr4 billion ($27.6 million) in order to advance infrastructure projects at Reykjavik’s Keflavik airport.

These projects include designs for construction work at the airport’s passenger terminal as well as runway and road modernisation.

Isavia says that, without the support from the government, it would have been unable to initiate the programmes under the current circumstances.

“Not only will such projects create new jobs in the construction itself but it will also make it possible for us to safeguard a large number of jobs within Isavia,” says chief executive Sveinbjorn Indridason.