Icelandair Reaches Settlement with Boeing for 737 MAX

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Icelandair's first Boeing 737-8 MAX, TF-ICE, is on final approach to Newark Liberty International Airport. Photo: Adam Moreira CC BY-SA

Icelandair announced that the airline reached a final settlement with Boeing regarding the impact of the suspension of the Boeing 737-MAX aircraft.

“While the details of the final settlement agreement with Boeing are confidential, it reduces Icelandair’s MAX purchase commitment by four aircraft. The parties have agreed to a revised delivery schedule for the remaining six MAX aircraft that are expected to join Icelandair’s fleet from the first quarter of 2021 to the first quarter of 2022,” said the airline.

“Furthermore, the settlement provides additional compensation for Icelandair which covers a substantial portion of the damages incurred from the suspension and will mostly be realized by the secon quarter of 2021. This agreement strengthens Icelandair Group’s liquidity position and allows for more flexible fleet planning in the upcoming years. The MAX aircraft continues to be an important element of the Company’s plan to strengthen its business and increase flexibility and capability for growth”.

The airline previously announced that long-term collective bargaining agreements had been completed with the pilot, cabin crew and aircraft maintenance unions. The airline expects that these agreements will increase the company’s flexibility and competitiveness going forward.

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Boeing 737 MAX 7 at the 2018 Farnborough Airshow. Photo: Steve Lynes from Sandshurst, United Kingdom / CC BY

Icelandair Reaches Agreements with Creditors

In addition to the 737 MAX agreement with Boeing, the airline also settled with creditors to restructure the company’s cash outflows and cash inflows. However, the agreements are subject to the completion of the upcoming share offering. Additionally, Icelandair has to enter into an agreement regarding a government guaranteed credit facility to complete the agreement with the creditors.

“Discussions on a term sheet for a credit facility guaranteed by the Icelandic Government and to be provided by Islandsbanki and Landsbankinn are in its final stages. The facility will among other things be conditioned upon the completion of the upcoming share offering,” said the airline.

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