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Icelandair reports Max grounding's second-quarter impact

Icelandair remained loss-making in the second quarter, as the grounding of the Boeing 737 Max fleet took a $50 million toll on the carrier's operating result.

EBIT was negative to the tune of $24 million in the quarter, widening a $20 million reverse in the same period last year. The net loss rose from $26 million to $34 million.

Passenger numbers were up 16%, on capacity lifted 8%, and the load factor improved by 4.7 percentage points to 85%.

The effective fuel price was 5% higher than in the same period last year, notes the carrier. It says aviation costs excluding fuel were cut by 5% and other expenses by 17%.

It gives a figure of 72% for on-time arrivals in the first half, versus 60% in the same period of last year, and says it expects to cut last year's disruption costs, which totalled $45 million, by "at least 40%" this year. The first-half figure was reduced by $7 million.

Across the full year, Icelandair expects the Max suspension to have a $140 million impact on operating profit.

The airline lists a range of ways in which the grounding has affected revenues and costs.

Cited in the revenue category are the reaccommodation and "re-protection" of passengers, lost network connections, lost ancillary revenues and yields, lower net promoter scores (NPS), and "imbalance in the route network".

The impacts on expenses meanwhile span ACMI costs, fuel savings not realised, higher finance costs, idle crew, costs associated with aircraft replacement and grounded resources, the "short-term reactive mode" into which the airline has been forced, rerouting costs, extra claims, and additional crew training.

Cirium's Fleets Analyzer shows that Icelandair has six Max jets in storage – five Max 8s and one Max 9 – and three on order: two -8s and a -9.

The airline says it is wet-leasing three 767s, a 757 and an A319. These, it adds, are "less efficient" than the Max. Discussions with Boeing on compensation continue.

With the $140 million Max effect factored in, the airline is projecting that full-year EBIT will be negative to the tune of $70-90 million.

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