Icelandair to phase out wide-body fleet, and warns of crucial wage talks

Icelandair will end its wide-body aircraft operations by the end of next year, CEO Bogi Nils Bogason announced in the airline’s third-quarter report, describing the move as part of a broader effort to reverse an unsustainable operational position after eight challenging years.

The carrier, which currently operates two Boeing 767 aircraft introduced in 2016, will retire them in 2026 as part of a fleet simplification and cost-reduction plan. Icelandair earned ISK 7 billion in Q3 — down ISK 1.5 billion year-on-year — despite a 6% revenue increase and 2% rise in passenger numbers to 1.7 million. The airline still expects a full-year loss of ISK 1.2–2.4 billion, though liquidity remains strong at ISK 61.3 billion.

Bogi said the results were “below expectations” and stressed that profitability must be restored no later than next year. Cost-saving measures already underway are expected to generate ISK 12 billion in annual savings.

However, he warned that upcoming wage negotiations with flight crews could prove decisive for the company’s future.

“We are now beginning important wage negotiations with flight personnel, which will have an impact on the future of Icelandair,” Bogi said. “New collective agreements must strengthen competitiveness, support investment in a new fleet, and ensure continued attractive jobs and a good working environment.”

Looking ahead, Icelandair plans to expand services to southern Europe and Scandinavia while reducing capacity to North America, aligning its network with demand and cost efficiency goals.