LONDON – Icelandair (FI) has reached an agreement with Boeing (NYSE:BA) over 737 MAX compensation.

The airline has also made agreements with all of its creditors as well as it aims to get over the COVID-19 pandemic.

737 MAX Settlement

The deal will see the order-book of 737 MAX aircraft reduced by four units.

Icelandair has delayed deliveries of the remaining six to a varied timeline of Q2 2021 and Q1 2022 respectively.

Both parties have agreed on Compensation regarding suspension of the aircraft type.

According to information by, the airline has five 737 MAX-8 aircraft and just one 737 MAX-9.

This means by the time all aircraft have been delivered, the airline will have a fleet of 10 MAX units.

Photo: Brandon Farris

Icelandair’s Comments

It is unclear what the amount is but FI commented on the damages in particular.

“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 Q2 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.

Photo: Icelandair

Other Agreements

Icelandair has reached agreements with creditors to restructure cash outflows to match cash inflows.

The agreements are subject to completion of share offerings and the airline entering into a government-guaranteed credit facility.

The upcoming share offering is expected to be announced and finalized in the next few days.

It is understood that the Islandsbanki and Landsbankinn will be the two banks in question offering such facilities to FI.

Icelandair has made long-term bargaining agreements with Pilots, cabin Crew and aircraft maintenance unions.

The aim of the agreements is to increase the airline’s flexibility and competitiveness going forward.

Such agreements took place after the airline had initially fired all of its cabin Crew and replaced them with its current Pilots.

Looking Ahead

It remains clear that FI is currently implementing solid plans in what is a very dangerous time for the Icelandic air industry.

Even before COVID-19, that particular area of the world was volatile for aviation competitiveness.

This ultimately resulted in the demise of WOW Air (WW) earlier last year.

Even though WOW Air had restarted operations later in that year and rebranded as PLAY, COVID-19 would provide a harder platform to thrive.

Until passengers travel again properly, it is unclear how the industry will move on from this.

Featured Image: Icelandair Boeing 737MAX wingtips. Photo: Roberto Leiro