Icelandair ends Covid-era gov’t-guaranteed facility

Icelandair Group has given formal notice to terminate the government-guaranteed credit facility that has been in place since September 2020 to help it navigate the ravages of the pandemic.

The facility, which made available up to USD120 million with a 90% government guarantee, was agreed with state-run banks Íslandsbanki and Landsbankinn as well as the Icelandic government, on condition it was used only for operations to and from the country conducted by group carriers Icelandair (FI, Reykjavik Keflavik) and Air Iceland Connect.

It came with a two-year drawdown period, to September 15, 2022, but as it happened the group did not actually have to make us of it.

Part of a broader financial restructuring the company implemented during 2020, this measure to ensure continued access to liquidity was conditional on a successful stock issue taking place, and this also went ahead in September 2020.

“The credit facility was vital to complete the financial restructuring, enabling the company to maintain valuable know-how and preserve the infrastructure necessary for an efficient ramp-up of its operations post-Covid,” Icelandair Group said in a statement on February 7.

Chief executive Bogi Nils Bogason commented that he was satisfied the government-backed facility could be terminated “almost eight months ahead of schedule and without ever having had to draw on it. […] As the aviation industry moves closer to normal operations, I am confident we have what it takes to reach our primary objective coming out of the pandemic – to return to sustainable operating results.”

Also on February 7, Icelandair Group released its traffic data for January. It saw around 113,000 passengers on international and domestic flights during the month, 100,000 of them international (40,000 to Iceland, 23,000 from Iceland, 37,000 transfer passengers). The load factor on the international flights was 60% compared to 39% in January 2021.

The Omicron variant negatively affected travel in January and its short-term impact has continued into February, but “due to the indications that the nature of this variant is less severe, the company has started to see a positive turnaround in booking development for the months ahead.”