Icelandair Group has now reached full agreements on concessions with all of its creditors and has completed a final settlement with Boeing on the impact of the suspension of the B737 MAX, it announced in a statement on August 11.
Icelandair (FI, Reykjavik Keflavik) originally ordered sixteen B737 MAX, taking delivery of five B737-8s and one B737-9 before the March 2019 grounding. The new Boeing settlement reduces the carrier’s MAX purchase commitment by four aircraft.
The deal also agrees a revised delivery schedule for the remaining six MAX to be delivered between the second quarter of 2021 and the first quarter of 2022.
In addition, it provides further compensation for Icelandair covering “a substantial portion of the damages incurred from the suspension” and will “mostly be realised” by the second quarter of 2021. Other details of the final settlement agreement with Boeing remain confidential.
The Boeing agreement “strengthens Icelandair Group’s liquidity position and allows for more flexible fleet planning in the upcoming years,” the company claimed in its statement. The MAX continues to be an important element of the company’s future fleet, it added.
The negotiations with creditors, meanwhile, have focused on “restructuring cash outflows to match expected cash inflows.” The agreements reached are conditional on the completion of an upcoming share offering and the company agreeing a government-guaranteed credit facility.
Discussions on the terms of the government-guaranteed loan facility, to be provided by state-run banks Islandsbanki and Landsbankinn, are in their final stages. This is also conditional on the successful share offering.
Icelandair Group now intends to publish an information memorandum and a timeline for potential investors in the upcoming share offering in the next few days.
