Icelandair remains bullish on full-year profit

Icelandair is hopeful that it will achieve a full-year profit despite a now-slowing market
Bradley Caslin /

Icelandair remains confident it will still generate a full-year profit, despite facing a series of challenges in the past few weeks.

In an investor update, the de facto flag carrier of Iceland said it has finalized the accounts for July and August 2023, which demonstrate strong financial performance within the passenger and leasing operations segments.

“However, the cargo operation has remained challenging, and the profit improvement expected at the time of publication of the Q2 financial results has not been realized,” Icelandair added, noting that since the publication of its Q2 2023 results in July 2023, fuel prices have risen by 30%.

As a result, the company has updated its guidance, estimating that the total revenue will be $1.5 billion, with earnings before interest and taxes (EBIT) between $50 million and $65 million, which is a margin of between 3.3% and 4.3%.

“The Company still expects to deliver net profit for the full year,” Icelandair noted.

Detailing its current situation, the Icelandic carrier said that its passenger business “remains positive, with strong bookings for the remainder of the year”, adding that its leasing business also has a favorable outlook for the full year.

But Icelandair was forced to take action to turn its cargo business around, as demand for cargo has weakened, resulting in lower rates for shipments.

“Icelandair’s financial position is strong, and the Company is well positioned for further profitable growth,” the airline stated, adding that it would bring in three more aircraft in 2024, allowing Icelandair to expand its capacity by around 10%.

The updated guidance was based on an average weighted fuel price of $990 per metric ton, with Icelandair hedging around 43% of its expected fuel usage between September and December 2023 at an average price of $864 m/t.

“The USD/ISK exchange rate is estimated to be, 134 on average during the period,” Icelandair added.

During its Q2 2023 results announcement, Icelandair estimated that its EBIT margin would be between 4% and 6%, with the average fuel price being $785 m/t.

“The booking outlook is currently strong, and bookings for the next six months are well ahead of last year due to the late booking trend coming out of the pandemic,” the airline said in its Q2 2023 report.

At the same time, it warned that “some European markets are starting to show signs of capacity outpacing demand, resulting in some softening of yields”.

In early September 2023, the airline announced it had carried 547,000 passengers in August 2023. Year-To-Date (YTD) passenger numbers were around 3 million, which is an increase of 21% compared to the same period in 2022.

Throughout the three summer months, it carried 1.6 million passengers.

Reviewing the airline’s August 2023 traffic data, Bogi Nils Bogason, the chief executive officer (CEO) of Icelandair, commented that its “passenger numbers are getting closer to what they were in 2019”.

“The North American markets continue to show the strongest performance and in that light it is interesting to remember how it all started,” Bogason added, mentioning that it has been 75 years since Icelandair began flying to the US.

Related Posts

AeroTime is on YouTube

Subscribe to the AeroTime Hub channel for exclusive video content.

Subscribe to AeroTime Hub