The price of Icelandair Group shares fell today by almost 24 percent, according to RÚV. The decrease can be attributed to this morning’s announcement from the company, predicting lower income this year than the last. CEO Björgólfur Jóhannesson stated that bookings are down, due to increased competition, and said the company is preparing measures to react.
Icelandair Group estimates that its earnings before interest, tax, depreciation and amortization (EBITDA) for 2016 amount to USD 210-220 million (EUR 195-205 million), which is at the higher end of the company’s forecast.
In a statement sent out by Icelandair Group this morning, it was revealed that due to slower bookings, caused by increased competition, less demand due to uncertainty in international politics, increased oil prices, and the Icelandic fishermen’s strike, the company predicts the EBITDA for 2017 to be between USD 140 and 150 million (EUR 130-140 million).
The announcement has had a negative impact on the trading of the company’s shares this morning. When markets closed, the share price was down by 23.98 percent at Nasdaq Iceland, the Iceland stock exchange. That represents a decrease of more than ISK 20 billion (USD 174 million, EUR 162 million) since the markets opened, but the company is owned mainly by Icelandic pension funds.
“That’s the situation we’re looking at now, and we wanted to let the market know right away what the situation is like, and we did so this morning,” Björgólfur stated. “On the other hand, as we note in the statement, we’ve pointed out that the long-time outlook is good. We’ve always assumed that fluctuations could occur, as we’re seeing right now. But the long-term outlook is good, and we’re, of course, working on various issues within the company, which, hopefully, can improve this situation.”
Among the options being considered to increase the company’s income is charging for baggage, and making the company more visible in booking systems. Björgólfur pointed out that Icelandair fares include much more than those of budget airlines, making price comparison less advantageous. That’s why a focus has to be put on increasing visibility in booking systems.