From Iceland – Icelandair’s financial situation up in the air

From Iceland - Icelandair's financial situation up in the air

In the midst of a pandemic and economic uncertainty, it seems that Iceland’s only airline, Icelandair, will be OK, at least so far.

The Icelandic government agreed to provide the airline with a state guarantee on a credit line in the amount of up to ISK 16.5 billion, or USD 120 million, RÚV reports.

Negotiations on a credit line for the airline from the government have been ongoing recently between Icelandair Group and the Icelandic government in collaboration with Íslandsbanki and Landsbankinn, the company’s commercial bank. The loan is subject to the agreement that has been agreed between the parties, the approval of Althingi and the company that achieves its financial goals.

The announcement assumes that flights will be at least until mid-2021 due to the coronary heart disease epidemic. The number of passengers will gradually increase, but they are not expected to reach the same level as for COVID until 2024.

In addition to the loan, a new agreement with the aircraft manufacturer Boeing will lead to a reduction in the airline’s financial obligations RÚV reports.

New Boeing MAX aircraft play a major role in the company’s future plans, although these aircraft have been grounded since March last year. The company expects to start flights at the end of 2020. Of the 16 that were ordered, six have been delivered. The airline intends to cancel orders for four aircraft and demands compensation for the grounding of the aircraft they received. An agreement with Boeing is said to reduce Icelandair’s future liabilities by ISK 30 billion or USD 260 million.

Creditors’ agreements, such as the deferral of repayment of loan principal, are valued at USD 103 million or ISK 14 billion. Even after all this, it is expected that Icelandair will not start making a profit again until 2022.

As always, those seeking further information or advice should contact the Icelandic government COVID-19 help page.

Source: The Nordic Page




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