The Aircraft Fleet and Aircraft Market
The Icelandair Group Aircraft Fleet and Aircraft Market
Approximately 60 aircraft were involved in Icelandair Group’s operations in one way or
another at the turn of the year. They included, on the one hand, aircraft being operated by
airlines within the Group and, on the other hand, aircraft leased by the Company to
airlines outside the Group. Both categories involve a combination of aircraft which are
either owned by companies within the Group or leased from third parties.
The most prominent type of aircraft in the operation of the Group is the Boeing 757,
of which there are 19, five owned by the Group. These aircraft are involved in tasks
undertaken by Icelandair, Icelandair Cargo and Loftleiğir Icelandic. Icelease owns shares
in twelve Boeing 737-800 aircraft which are under lease in China and Germany. This is
the most recent generation of Boeing 737s, and also the most popular since the original
introduction of the model. Other aircraft which are prominent in the operation are
earlier versions of the Boeing 737, of which Bluebird had seven in operation at year-end,
and in addition, Icelease has interests in three aircraft of this type. Additional aircraft which
play a prominent role in the operation include the Boeing 767-300ER , which are mostly
involved in projects undertaken by Loftleiğir, in addition to the Fokker 50, of which Air
Iceland operates six.
General prospects in the aircraft market
The aircraft trade sector has been characterised in recent months by strong demand
for new aircraft, which reflects the growth and improving financial results of airline
companies. Looking at the composition of the backlog of undelivered aircraft reveals a
preponderance of orders from budget airlines in Europe, in addition to orders from Asian
airlines, particularly in China. The current situation is that the principal aircraft models
are sold out until 2010, and certain models are not available for delivery until 2013. In
particular, the demand for Boeing 787s has exceeded the most optimistic anticipations,
and Icelandair has four such aircraft on order, scheduled for delivery in 2010 and 2012.
Icelandair Group has adopted the strategy of taking advantage of the current situation to
cash in on any profit situations which have materialised through shares and/or lease
contracts. At the same time, opportunities are being sought for investments in used aircraft,
as orders for new aircraft may be expected to increase until the pressure of demand
The Boeing 757 market recovers
The market for Boeing 757 aircraft is now recovering its former strength after a sharp drop
in prices following the events of 11 September 2001, much like other aircraft models.
This was followed by reports that production of the aircraft would be discontinued, which
put even further pressure on prices. In recent months, however, prices have recovered
significantly, particularly as a result of the increase in the coast-to-coast use of this model in
the United States and on Atlantic flights, but also because of the strong demand for older
aircraft of this kind for conversion to cargo use. It is quite possible that Icelandair Group could
take advantage of the favourable state of the market in the coming months to enter into sale
and sale-leaseback contracts for its 757 aircraft.