Icelandair’s survival depends on agreements with pilots and cabin crew

Lowering wages is a prerequisite for Icelandair to get through the corona crisis.

Icelandair Boeing 757 taking off from Kansas City. Credit: Sigurjón Ragnar / sr-photos.com

“Whether we like it or not, investors are demanding new long-term agreements with flight crews that will make the company competitive over the next few years,” Icelandair Group CEO Bogi Nils Bogason wrote in a letter to the company’s employees on Saturday evening.

The deadline for concluding new collective bargaining agreements is May 22 when Icelandair will hold a shareholders’ meeting. The agenda is to raise more capital since Icelandair, like all other airlines in the world, is now fighting for its life due to Covid-19.

Negotiations with unions over the past few days have not given any results. According to recent news, Icelandair will demand that flight attendants take on an 18 to 35 % pay cut. While the airline itself said in a statement Wednesday that it is offering wages that are comparable to what competitors like SAS and Finnair are paying.

Icelandair’s largest shareholder is PAR Capital Management, a US hedge fund, with close to 12% ownership. Various Icelandic pension funds have almost half of the stock.

In recent weeks Icelandair flights have been limited to occasional departures to London Heathrow, Boston and Stockholm. These flights are financially supported by the Icelandic government since no other flights are operating to and from the island now during the corona crisis.