Icelandair achieves record quarterly revenue despite weak cargo results

Icelandair achieved its highest-ever quarterly revenue during the seasonally strong July-September period, even as the weakness of cargo markets weighed on its results. Total Q3 revenue of $560m was up 17% year on year amid “continued strong demand in the tourist market to Iceland, especially from North America”, said Icelandair CE Bogi Nils Bogason during an earnings call on 20 October. Yield improvements were seen in all passenger markets and cabins, he says. Bookings data indicates that the “good” passenger demand is continuing to the end of this year and into 2024, he adds, with no signs of that demand or fares softening. The strong passenger revenue performance in Q3 helped it achieve EBIT of $112m and a net profit of $84m for the period, with both measures up significantly year on year. Icelandair says the 1.5m passengers it flew during the quarter also represent a record performance, as did the 49 destinations it served. The airline acknowledges higher fuel and staffing costs – notably since securing fresh agreements with pilot and cabin crew unions in recent months – but says these are factored in to its projections. The carrier expects to grow its passenger capacity by around 10% next year, with expansion focused on high-performing North American markets. It notes that higher North American traffic should also boost demand on its European network, through more connecting passengers. Cargo is a different story, however, with that sector weighing on the airline’s profitability and capping its full-year EBIT margin forecast at 3.3-4.3%, having contributed an EBIT loss of $15m across the first nine months of the year.<br/>