• EBIT: $83.5 million, representing a 15% EBIT margin, down from $112 million last year.
• Passenger Revenue: $497 million, a decrease of $12 million or 2% year-on-year.
• Cargo Revenue: $17 million, down by $4 million compared to last year.
• Leasing Revenue: $23 million, an increase of almost $10 million.
• Operating Expenses: $427 million, up by 4% year-on-year.
• Net Profit: $69 million, $15 million lower than last year.
• Net Finance Cost: $1.7 million, down from $5.4 million last year.
• Unit Revenue: $0.084, a 10% year-on-year decline.
• Average Yield: $0.093, 11% lower than last year.
• Unit Cost: $0.071, a decrease of 2% year-on-year.
• Fuel Cost: $125 million, up by 3% year-on-year.
• Net Cash from Operations: $209 million for the first nine months.
• Liquid Funds: $396 million at the end of Q3.
• Total Assets: Approximately $1.6 billion, an increase of $132 million from the beginning of the year.
• Equity Ratio: 18% at the end of the quarter.

• Warning! GuruFocus has detected 2 Warning Signs with OISE:ICEAIR.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Icelandair Group hf (OISE:ICEAIR) achieved a record on-time performance, leading to lower operational costs and improved customer satisfaction.
• The company successfully optimized costs, resulting in lower unit costs despite a high inflation environment.
• Icelandair Group hf (OISE:ICEAIR) expanded its global partnership network, including a significant partnership with Southwest Airlines, enhancing its market reach.
• The company is seeing a recovery in the market to Iceland, with stronger booking status compared to the previous year.
• Icelandair Group hf (OISE:ICEAIR) is implementing a fleet renewal strategy with the introduction of Airbus 321LR, expected to improve operational efficiency and open new market opportunities.

Negative Points

• The company reported lower profitability with EBIT of $83 million compared to $112 million last year, due to softer demand and increased capacity in the transatlantic market.
• Passenger revenue decreased by 2% year-on-year, amounting to $497 million.
• Cargo revenue declined by $4 million compared to last year, reflecting fewer dedicated cargo flights.
• The company experienced a 9% decrease in passengers traveling to Iceland, although it managed to increase via passengers by 31%.
• Net profit for the quarter was $69 million, which is $15 million lower than the previous year.

Q & A Highlights

Q: Will Icelandair put more emphasis on the leasing business given its higher EBIT compared to the route network? A: Bogi Bogason, CEO, stated that the leasing business at Loftleiir is performing well and is an important part of their core business. They plan to pursue gradual growth without any major expansions, focusing on utilizing excess winter capacity.

Q: Is the unsustainable capacity exiting the market only related to PLAY, or are other airlines involved? A: Bogi Bogason, CEO, mentioned that PLAY has announced capacity reductions, and they expect similar developments from other airlines, leading to a more rational capacity in the market.

Q: How has PLAY impacted Icelandair's competitive position, particularly in the transatlantic market? A: Bogi Bogason, CEO, explained that competition is mainly in the market to and from Iceland, with both airlines being relatively small players in the transatlantic market.

Q: What is the outlook for yields on the transatlantic markets over the next 12 months? A: Ivar Kristinsson, CFO, noted that while it's early to predict, the capacity and demand balance appears more favorable than last year, which could positively impact yields.

Q: Will the issues with Pratt & Whitney engines affect Icelandair's aircraft delivery plans? A: Ivar Kristinsson, CFO, confirmed that the issues do not impact the aircraft Icelandair is receiving, and they expect all deliveries before summer without significant delays.

Q: How is the implementation of Airbus aircraft progressing, and what impact will it have on unit costs? A: Bogi Bogason, CEO, stated that the implementation is on track, with some costs expected for training and ramp-up. The Airbus 321LRs are anticipated to reduce unit costs, especially in fuel and maintenance.

Q: Is there a forecast for EBIT guidance for 2025? A: Bogi Bogason, CEO, mentioned that while they haven't published specific guidance, they expect considerable operational improvement between 2024 and 2025.

Q: Do you expect the share of passengers traveling to Iceland to increase in 2025? A: Bogi Bogason, CEO, indicated that they see signs of recovery in the Icelandic market, expecting a higher share of passengers traveling to Iceland next year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.