Icelandair has enough cash left to run for three months
Icelandair planned to launch a new round of shares for investors to improve liquidity. However, the offering of new shares was postponed from June 29 to August 2020, as negotiations with the Icelandic airline’s stakeholders have stalled.
The Reykjavik-based airline planned to raise as much as $200 million (ISK30 billion) through the issuing of new shares in a public offering to increase the company’s liquidity. The plans were announced on May 22. Icelandair planned to conclude negotiations with various parties by June 15, but the company has struggled to do so. The airline signed a new agreement with the Icelandic Cabin Crew Association (FFI), one of the skeptical parties, on June 25, 2020.
The newest update pinpoints that Icelandair still has to shake hands with aircraft lessors and a credit card acquirer to issue the new shares. In addition, the airline is in active discussions with Boeing over compensation regarding the 737 MAX groundings and the delivery schedule of the remaining MAX aircraft.
Initially, the airline signed up for 16 of Boeing’s state-of-the-art narrow-body aircraft, with an additional eight options. So far, the manufacturer delivered six jets to the Icelandic airline, planespotters.net data indicates.
Icelandair stated that it has $150 million of liquidity left or enough cash to run for three months under fixed costs in the current environment. The airline was forced to cut as many as 2,300 jobs, while the majority of the remaining 1,400 employees are working part-time.
If negotiations are unsuccessful, the airline will be forced to come up with a new restructuring plan and possibly seek deferrals on payments to its creditors.
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