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.