Icelandair (FI, Reykjavik Keflavik) has announced in a stock market filing that it has launched negotiations with bondholders as it faces the risk of breaking the terms of financing, amounting to USD190 million.

"Due to the revised EBITDA forecast, there is a risk of non-compliance with the gross leverage covenants in clauses 12 (b) and 12 (c) of the terms and conditions for the Bonds, which will be measured by reference to the Company's interim accounts for the third quarter to be published by the end of November 2018. Today, the Company initiated discussions with bondholders representing more than 50% of the Bonds," the Icelandic carrier said on October 3, 2018.

Under the terms of the bonds, the carrier's gross debt can only reach 3.5 times EBITDA. It currently has USD343 million in interest-bearing liabilities, while its EBITDA for 2018 is forecasted to be USD120-140 million.

Icelandair further said it was "reviewing a number of options, including requesting a temporary waiver of covenants from its bondholders, amending the financial covenants of the Bonds or a partial repayment of the Bonds or its other financial indebtedness".