The Icelandic government approved on August 18, along with state-run banks Íslandsbanki and Landsbankinn, a government-guaranteed credit facility to Icelandair Group amounting to up to USD120 million.

The loan will be subject to parliamentary approval and a successful public offering of shares in the company, the group said in a statement.

However, the Icelandair (FI, Reykjavik Keflavik) parent said it had shifted the timeline for the share offering from August to September, conditional on the approval of shareholders at a meeting that has now been scheduled for September 9.

At the meeting, shareholders will also have to give the board of directors authorisation to issue warrants, which will be stapled to the new shares issued following the offering, amounting to 25% of the nominal value of the total shares issued. Rights according to the warrants could be exercised for up to two years.

Icelandair Group aims to sell new shares worth ISK20 billion krona (USD148 million) at a price of ISK1 (USD0.0074) per share. In case of oversubscription, the board would be authorised to increase the offering by up to ISK3 billion (USD22 million), resulting in a maximum of ISK23 billion (USD170 million).

Also on August 18, the company released a memorandum on the share offering, to be followed by the publication of a prospectus in the next few days.

In it, Icelandair Group explained that although it entered the covid-19 pandemic with “a strong financial position”, it will need to strengthen its liquidity for an upcoming period where operations “are expected to be at a minimum level”.

It reiterated that in recent months it has been working on various mitigating measures including forging long-term collective bargaining agreements with pilots, cabin crew, and mechanics, plus agreements with creditors and vendors on concessions designed to minimise cash outflow.

Despite the pandemic, the company, which also includes regional carrier Air Iceland Connect (Reykjavik Domestic), “has managed to operate a limited but profitable flight schedule during the summer period [while] cargo and leasing operations have been successful during this period by ensuring profitable projects.”

In addition, as previously reported, Icelandair completed a deal with Boeing on further compensation for the grounding of the MAX, and Icelandair’s MAX purchase commitment has been cut by four aircraft.