Icelandair Group swung to a full-year net profit of $11 million for 2023, despite volcanic activity contributing to a deeper loss in final three months of the year.
The 2023 profit was driven by a 20% increase in revenue to $1.5 billion, and came after a loss of $6 million 2022. The group’s full-year operating profit was $21 million, while it saw “record high” unit revenues and a 17% rise in passenger numbers to 4.3 million.
Icelandair reports strong demand in all passenger markets, but particularly on North America to Iceland services, adding that challenges on the air cargo side of the business have been “acted on”.
In the final quarter of 2023, however, a net loss of $38 million and an operating loss of $50 million were both much deeper year on year and came amid challenges created by volcanic activity in Iceland. That setback followed “one of the strongest third quarters” in the company’s history and was not enough to send the business into the red for the 12 months.
Still, the impact of challenging end to the year was “significant”, the carrier states, and while operating revenue was still up year on year by around 8% in the three months, it lagged the full-year performance by some distance. The challenges are also expected to have a negative effect on Icelandair’s first-quarter 2024 results.
“The seismic activity in southwest Iceland started in November with the consequent global media coverage; demand weakened and, thereby, revenue generation was negatively affected,” says Icelandair chief executive Bogi Nils Bogason.
In December, that seismic activity became an eruption – a further negative development exacerbated by industrial action among air traffic controllers, Bogason says.
Moreover, capacity increases seen in “key markets” weighed on unit revenues as 2023 ended, Bogason adds.
Still, the demand outlook for summer is “good”, the carrier says, with indications that demand for travel to Iceland is improving following the recent setbacks.
