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Icelandair Outsourcing Operations to Estonia

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Icelandair Outsourcing Operations to Estonia

Icelandair plane

Photo: Páll Stefánsson.

Icelandair is outsourcing some of its operations to a subsidiary company based in Estonia, the airline’s interim CEO Bogi Nils Bogason told Viðskiptablaðið in an interview on Thursday.

Bogi Nils, Icelandair’s chief financial officer, is temporarily filling the role of CEO following Björgólfur Jóhannsson’s departure from the position on Monday. The airline experienced a sharp dip in its stock after it was revealed that “passenger revenues will be worse than projected” this year, namely 5-8% ($50-80 million) lower than expected.

“Iceland has become expensive in comparison with many other countries,” Bogi Nils stated in his interview with Viðskiptablaðið. “We’ve reached the size where it could be advantageous to outsource or transfer certain operations,” he continued. “We’re seeing airlines do that.”

Bogi Nils pointed out that it has operated a subsidiary company in Estonia for many years. “We’ve been building it up there and moving certain basic operations there. We’re going to continue on that path.” The Estonian subsidiary currently sees to revenue bookkeeping for Icelandair and other accounting and other back-office operations are set to be transferred there as well.

There are no plans to move Icelandair onboard crews to Estonia, however: Bogi Nils says that this staff will continue to be Icelandic.

Bogi Nils says that the company’s earnings are expected to improve but that “it will take a little time to fix these things.” The overall plan is to address internal issues within departments such as sales and marketing, as well as cost factors such as the better utilization of the airline’s workforce.

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