Icelandair returns to profitability for 2023

Icelandair has reported a profit of US$11 million for the full year 2023, a turnaround from the US$6 million loss reported in 2022. “It is an important milestone to turn a profit after taxes in 2023 following many challenging years. Revenue generation was very strong during the year with strong demand in all our markets, especially from North America to Iceland,” said Bogi Nils Bogason, president and CEO of Icelandair. The airline credits strong revenue generation during the year, reaching US$1.524bn, with record unit revenue at 8.4 cents. Earnings before Interest and Tax (EBIT) was negative in the fourth quarter by  US$50.3 million, with reach US$21 million for the full year. Seismic activity in Southwest Iceland, volcanic eruption and labour action by air traffic controllers significantly impacted the fourth quarter results. Bogason added that the core business performed well in 2023, “especially in light of impacts of external challenges and negative results in the cargo operation that we have already acted on”. He added that following one of the strongest third quarters in the airline’s history, the fourth quarter “started off well” but was impacted by seismic activity in Southwest Iceland started in November when the “consequent global media coverage” weakened demand and revenue generation. He also adds that the impact of labor actions by air traffic controllers in Iceland and a volcanic eruption in December was “significant” and as a result fourth quarter were “below expectations and impacted the full-year results”. During the year, Icelandair carried 4.3 million passengers, an increase of 17% over the prior year, while load factor of the year was 81.5%, up by nearly two percentage points. Capacity increased 13% in the fourth quarter; with the number of passengers up by 12%. During 2023, Icelandair revenues were boosted by leasing unit income of $71.3 million, with $88.3 million from cargo revenue although it was down slightly – 2.6% - over 2022. Icelandair maintained a strong liquidity position at year-end at US$323 million, comprising $52 million in undrawn revolving facilities, $71 million in marketable securities, and the remainder in cash and cash equivalents. Bogason promises “exciting times ahead”, although recognises that the first part of the year will be challenging due to the continuing challenges in Iceland. “We are in a good position to respond to the challenges and seize the opportunities ahead with our flexibility to adapt to the situation at any given time,” he said. “The outlook for the summer is good. The demand for travel to Iceland is recovering, following last weeks’ events, with Iceland continuing to be a popular destination. We are also seeing a higher proportion of bookings on the via market than before.” Icelandair’s fleet comprises 21 737 MAX aircraft, 12 757s and three 767s, with an average fleet age of 13 years. Icelandair has negotiated long-term lease agreements for four A321LRs to be delivered before summer 2025, and three more before summer 2026. The airline also has a firm order for 13 A321XLRs from Airbus to be delivered in 2029, in addition to 12 options. The A321 enables the retirement of Icelandair’s 757 fleet by 2027.