This year Icelandair was projected to deliver profit of 170-190 million USD in EBITDA. The expectations were lowered last week to USD 120-140 million and the day after the company lost ca. quarter of its value on the Icelandic stock Exchange.
The main reason for less profit is the fact that Icelandair´s projections of rising average fares in the second half of the year have so far not materialised. „This is in spite of a 50% rise in fuel prices over the past 12 months. As a result, the Company has decided to reduce its revenue forecast for the second half of the year“.
According to a company statement, Icelandair is seeing growth in most markets, it is financially strong and enjoys a solid market position. At the time of publication of the interim financial statement for the first quarter, the Company presented its goal of returning an EBIT ratio of over 7% in the long term, as of the year 2019. That target remains unchanged.
“The situation we are confronted with at present is a considerable disappointment. The average fare trends we assumed for the second half of the year do not appear to be materialising and for this reason we are lowering the Company’s revenue forecast. The fare trends to important destinations have not been in line with our expectations, which has negatively impacted our forecast. Prospects have been deteriorating in the Icelandic tourist service segment, in particular for Iceland Travel. The extensive structural changes that the Company has been through in recent months have mostly been successful and a number of actions have been undertaken to strengthen the Company for the future. The year 2018 is a year of profound changes and extensive investment, which will enable the Company’s future growth and prosperity,” says Björgólfur Jóhannsson, President and CEO of Icelandair Group.