Icelandair Group hf.: Steps taken to secure long-term capital structure

The demand for international travel has decreased significantly as a result of the global COVID-19 pandemic. During the past weeks, Icelandair has focused on continuing to keep vital air routes open to passengers and cargo, both to Europe and North America although its flight schedule has been reduced to less than 10% of the proposed schedule for this period of the year. The Company expects that the flight schedule for the summer period will be reduced by at least 25% but it is still uncertain when the demand for travelling will start to increase again. The liquidity position of the Company is still well above its USD 200 million minimum level, according to its internal liquidity management policy and, as previously announced, the Company has already taken significant steps to minimize the impact on cash flow in the past few weeks. However, assuming minimum revenue generation in April and May, the Company expects decrease of its liquidity which would result in a liquidity position under its above-mentioned USD 200 million minimum level. Therefore, the Company intends to assess options to strengthen its financial position further for the long-term in the upcoming weeks.

Icelandair Group has now engaged Kvika banki, Íslandsbanki and Landsbankinn as advisors to initiate the process of strengthening the long-term capital structure of the Company. The objective is to explore all possibilities to strengthen the Company’s competitiveness for the future by having a stronger financial position and lower unit cost when recovering from the COVID-19 pandemic. This will ensure that Icelandair Group will get through these difficult times as smoothly as possible and minimize disruption to the Icelandic tourism industry and economy, as well as being in a stronger position to react quickly when opportunities will arise again. The Company will also work closely with the Icelandic Government in the upcoming process.