Isavia’s Interim Financial Statements 2020
Isavia Group’s Earnings Before Interest and Taxes (EBIT) in the first half of 2020 was negative by ISK 5.3 billion, compared to a negative operating result of ISK 942 million the year before.
The effect of the coronary virus was significant on the company’s operations in the first half of the year, and the decline in revenue from the same period last year amounted to ISK 9.6 billion or 53%. If we look only at the second quarter, the year-on-year decrease in revenue was about 77% for the Isavia Group and 97% if we look at the operations of the parent company that operates Keflavík Airport. The company has taken significant rationalization measures to meet the revenue decline, but its effect will be felt in the second half of the year. Nevertheless, operating expenses decreased by 12.4% between the first half of 2019 and 2020, largely due to actions taken by the company following the collapse of WOW air at the end of the first quarter of last year and the effects of the grounding of Boeing 737-MAX aircraft of Icelandair.
The total profit for the period was negative by ISK 7.6 billion, compared to a negative profit of ISK 2.5 billion for the same period last year, which included a write-down of ISK 1.9 billion due to the collapse of WOW air.
“The impact of the coronary virus on the operation of airports and air navigation services has been significant, and the results of the Isavia Group are significant,” says CEO of Isavia Sveinbjörn Indriðason. “We have taken extensive measures to meet this impact and unfortunately have been forced to lay off the number of employees at the parent company and in the Duty-Free Store as well as reduce the number of employees at the group. We do not expect air traffic to resume until the end of the first quarter of next year. This is what it looks like today. Our earnings forecast now assumes that the total profit of the Isavia Group will be negative by ISK 13-14 billion in the year 2020 and that the effect of the coronary virus can therefore amount to ISK 15-16 billion on the total profit. On the other hand, the company’s cash position is strong and we expect to be without income at Keflavík Airport until next spring without seeking additional funding. However, we anticipate our plans to raise new capital for the company in order to be able to maintain our business for the coming years.”
Despite the huge impact of the coronary virus on Isavia’s operations and the tourism industry as a whole, the company believes that there are great opportunities for Iceland and domestic tourism when flights resume: “We saw this summer that tourists are very interested in visiting Iceland and then it actually surprised us how fast the airlines increased the number of flights when they started screening for the virus at Keflavík Airport in June, ” says Sveinbjörn. “In our opinion, tourists will visit destinations that offer spaciousness and purity, so we believe that Iceland will be a sought-after destination when flights resume. We also see great opportunities to strengthen Keflavík Airport’s competitive position as a connecting airport between Europe and North America. It must not be forgotten that the airline that has used the airport as a connecting airport recently secured important funding. Although the situation now is very demanding, we must not lose sight of the great possibilities we have for the future,” says Sveinbjörn.
Key figures from the half-year results 2020
Revenue: ISK 8,607 million
Operating loss before financial items and taxes: – ISK 5,278 million
Total profit after taxes: – ISK 7,608 million
Cash: ISK 16,118 million
Investments in property, plant and equipment: ISK 1,517 million
Equity at the end of the period: ISK 32,829 million Equity ratio: 38.1%