Isavia Interim Financial Statements 30 June 2020
Operating results for the Isavia Group before financial items and taxes (EBIT) in the first half of 2020 was negative to the tune of ISK 5,3 billion, as compared to a negative outcome amounting to ISK 942 million the year before.
The effects of the coronavirus were significant during the first half of the year and reductions in income, as compared to the same period last year, were approximately ISK 9.6 billion or 53%. If account is taken of only the second quarter, the reduction in income was around 77% for the Isavia Group while being 97% if account is taken of the parent company that is responsible for the operation of Keflavík Airport. The company has undertaken extensive measures to combat the loss of income, the effects of which will have an impact on the latter part of the year. Nevertheless, the cost of operations decreased by 12.4% between the first half of 2019 and 2020. This can, for the most part, be traced to the actions taken by the company following the failure of WOW air at the end of the first quarter in 2019 and the grounding of the Boeing 737-MAX aircraft of Icelandair.
The total comprehensive income for the period were negative by ISK 7.6bn as compared to the negative results of ISK 2.5bn for the same period in 2019. Included in that figure, however, was a write-down of approximately ISK 1.9bn due to the failure of WOW air.
“The effects of the coronavirus on the operation of airports and air navigation services have been significant and the results of Isavia Group reflect this fact,” says Sveinbjörn Indriðason, CEO of Isavia. “We have taken drastic measures to meet these effects and have unfortunately been forced to dismiss a large number of the employees of the parent company and the Duty Free operation together with cutting back the employment proportion of some of the remaining employees. We are preparing for the scenario that air traffic may not return until the end of the first quarter next year. This is the what we are working with today. We expect that the total comprehensive income for the Isavia Group will be negative by ISK 13-14bn in 2020 and that the effects of the coronavirus may, therefore, amount to around ISK 15-16bn in total. On the other hand, the company’s cash position is good, and we can continue to withstand no revenues from Keflavík Airport until next spring without seeking additional funding. We do, however, anticipate seeking new funding for the company to be able to maintain our scope of operations over the next few years.”
Despite the enormous effects of the coronavirus on the operation of Isavia, and on the tourism industry as a whole, the company considers that there will be considerable opportunities for Iceland and the Icelandic tourist industry when flights return: “During the summer, we saw that there was substantial interest for travelling to Iceland and were in fact surprised how quickly airlines increased the number of flights when virus scanning began at Keflavík Airport in June,” says Sveinbjörn. “Travellers will, in our opinion, seek destinations that offer wide open and clean spaces so we think that Iceland will be a sought-after destination when flight schedules resume. We also see considerable opportunities to strengthen the competitive position of Keflavík Airport as a hub between Europe and North America. One must also not forget that the airline that has used the airport as a hub recently secured important funding. Although the situation at present is grave, we cannot lose sight of the considerable opportunities we will have in the future,” says Sveinbjörn.
Key figures from the 2020 interim financial statement
- Income: ISK 8,607 million
- Operating loss before financial items and taxes: ISK 5,278 million
- Comprehensive results after taxes: – ISK 7,608 million
- Cash and cash equivalents: ISK 16,118 million
- Investments in property, plant and equipment: ISK 1,517 million
- Equity at end of period: ISK 32,829 million
- Equity ratio: 38.1%