Continued grounding of Boeing 737 MAX hits Icelandair hard

End-of-year figures for airlines are beginning to reveal the full extent to which many of them have been hit by the ongoing grounding of the Boeing 737 MAX since March last year.

Icelandair Group has now estimated that the impact the 737 MAX problems has had on its business will result in a US$100 million negative impact on its EBIT. According to the Nordic carrier’s CEO, Bogi Nils Bogason, the Max Grounding has had “an unprecedented negative impact on Icelandair’s operations, resulting in lost revenue, increased expenses and restricted utilisation of the company’s fleet and crew.”

For the last nine months Icelandair has been doing its best to minimize the grounding’s impact on the business as, prior to the grounding, it had planned for its 737 Max jets to provide 27% of passenger capacity in 2019. As opposed to having a planned fleet of 36 aircraft – including nine 737 Max jets – available, Icelandair operated 33 aircraft over 2019’s peak holiday season, including 22 757, two 757-300s, four 767-300s, and up to five wet-leased aircraft.

On top of leasing costs, the airline faced increased expenditure due higher fuel consumption and higher ground, navigation and maintenance costs as a result of operating older aircraft. Icelandair has confirmed it has reached two agreements with Boeing for “partial” compensation of the airline’s losses and is in ongoing discussions regarding further compensation. Icelandair has made it clear that the MAX grounding was the main reason for its “negative results” for 2019. The group reduced its EBIT loss to US$39.3 million in 2019, from just below US$57 million in 2018, though the Group’s net loss grew $2.2 million to $57.8 million. Revenue declined by $6 million to $1.5 billion as Icelandair adjusted its network to concentrate on more profitable routes. Icelandair also confirmed that the number of passengers it carried to its home country grew 25% in the year, but the number of transatlantic transit passengers declined by 9%.