According to Icelandair Group’s updated forecast for the year 2018 the Company’s results will be worse than projected. Based on current assumptions, the Company is projecting its EBITDA for the year 2018 to be in the range of USD 80-100 million.
Björgólfur Jóhannsson, President & CEO: “The updated forecast is mainly based on the fact that the Company’s revenue will be lower than anticipated. There are primarily two reasons for the lowered revenue forecast; Firstly, we still expected rising average fares during the final months of the years, in the updated EBITDA forecast published on July 8th, due to cost increases of airlines. Now, we expect the rising of average fares to occur later, that is not until in 2019.
Secondly, the structural changes at the Company’s sales and marketing department, which were made in the summer of 2017, have not been implemented well enough and changes in the Company’s route network have resulted in an imbalance between Europe flights and North America flights. Due to this, our revenue forecasts, which are among other things based on historical development, have not been providing accurate results and thus the current revenue forecast has been lowered.
We estimate that the results of the said changes is that Icelandair´s passenger revenues will be 5-8% (USD 50-80 million) lower than expected this year. The Company has taken various measures to respond to this development, as stated when the Company published its second quarter results. These measures have already proven successful, but we estimate that it will take some months for the positive effects of the changes to be reflected in the Company’s results. We estimate that the negative impact of this year will be a one-time-event.
The decisions described above were made during my shift and it is clear that they have had negative financial impact on the Company this year. As the President & CEO of the Company, I am responsible towards the Board of Directors and the Shareholders. Earlier today, I submitted my letter of resignation to the Board of Directors. Although the above-mentioned problems have been addressed, it is a matter of responsibility that the said changes at the Company were not implemented in a sufficient way and that the problems created were not reacted to more quickly.I will assume that responsibility and will thus resign as the President & CEO of the Company.
The recent 10 years have been rewarding, challenging and a valuable experience. We have experienced an economic collapse, volcanic eruption and gone through a great growth in a short time. Aviation is by nature a volatile business sector. We have enjoyed a lot of success but also experienced challenging conditions. Times like these are challenging for companies and their employees and we have seen during recent years how powerful the Company can be when it is most needed. I have strongly felt this kind of power during recent weeks after we reacted to the problems mentioned above.
I am proud of our success in recent years and grateful for having had the opportunity to work with a lot of extraordinary individuals. In my opinion, the future of Icelandair Group is bright; the company is financially strong, has excellent employees and has a good position in its markets. I want to thank my fellow employees and the Board of Directors for an excellent cooperation which has always been positive.”
Úlfar Steindórsson, The Chairman of the Board: “Björgólfur has been the President & CEO of Icelandair Group for more than 10 years during a period of the Company’s largest growth. He led the Company’s financial restructuring and has emphasized responsible management and that the company’s growth will be profitable for the long run. He leaves the company in a good financial condition; Icelandair Group’s cash and cash equivalents were USD 251 million the end of the second quarter and the equity was USD 530 million. It shows Björgólfur’s strength of character to assume responsibility when the Company’s operations could have been better. Upon the Board of Directors’ request, Björgólfur will consult with Board and Management as needed. Bogi Nils Bogason, the Company’s CFO, has accepted to be the Interim President & CEO of the Company upon the request of the Board of Directors. The Board will spend as much time as needed to find the Company’s future President & CEO.
On behalf of the Board of Directors, I want to thank Björgólfur for a great cooperation and wish him the best of luck in the future.”