Icelandair Group (ICEAIR) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 revenue of $347 million, up 21% year-over-year, with strong load factor and yield improvements; EBIT margin improved by 6.3 percentage points, marking the best Q1 EBIT margin since 2016.

• EBIT loss narrowed to $53 million, improving by $9 million year-over-year, despite negative FX impacts and higher costs.

• Transformation program delivered $8 million in Q1 cost savings and is expected to reach $117 million annual impact when fully implemented, with 283 initiatives launched since 2024.

• Net loss increased to $46 million, up $2 million year-over-year, mainly due to unfavorable FX developments, but total comprehensive income reached $16.7 million due to hedging gains.

• Maintained strong liquidity at $616 million, up $107 million from Q1 2025, reaching an all-time high.

Financial highlights

• Passenger revenue rose 21% to $258 million, with a 13% capacity increase and 9% yield growth; cargo and leasing segments delivered strong results, with leasing EBIT margin at 18%.

• Operating expenses rose 16% year-over-year, mainly from salaries and fuel, totaling $358.1 million.

• Net cash from operations was ISK 201 million, with liquidity at ISK 660 million including undrawn credit facilities.

• Equity improved to $303 million, with an equity ratio at 13.5%.

• Asset sale of one 767 aircraft contributed $8 million as a one-off cost reduction.

Outlook and guidance

• Q2 profitability expected to be lower than last year due to higher fuel prices, despite improved unit revenues; double-digit reduction in fuel prices needed for Q2 profitability to be flat year-on-year.

• Fuel price volatility remains a significant risk, with 41% of 2026 fuel consumption hedged at $660/ton.

• Full-year results subject to uncertainty from volatile fuel prices linked to geopolitical events, especially Middle East conflict and Strait of Hormuz closure.

• Fare increases and a 2% capacity reduction in Q2 are being implemented to mitigate fuel cost pressures.

• Strategic network adjustments and fare increases implemented to mitigate volatility.