Icelandair to Retire Widebody Fleet by 2029, Shifting Fully to Narrowbody Strategy
Icelandair confirms its plan to operate exclusively with narrow-body aircraft by 2030, phasing out its Boeing 767s, while reporting year-over-year improvements in its financial and operational results for the first quarter of 2025.
Icelandair has confirmed a strategic shift in its fleet composition, announcing plans to gradually phase out its widebody aircraft and operate exclusively with narrowbody jets by the end of this decade. The decision follows an internal strategic review, coinciding with improving financial and operational results for the first quarter of 2025.
The Icelandic carrier currently operates three Boeing 767s, which it plans to keep in service until fall 2029, when their final retirement will begin. The move to an all-narrowbody fleet aligns with Icelandair’s core strategy: leveraging Iceland’s geographic location to operate cost-efficient narrowbody aircraft on longer transatlantic and European routes.
Fleet modernization is already underway. This summer, Icelandair will operate 42 passenger aircraft, including four new Airbus A321LRs and 21 Boeing 737 MAX aircraft. The airline highlights that these next-generation aircraft offer greater operational efficiency and sustainability. The long-range capabilities of the A321LR are also expected to open up new route opportunities.
According to Icelandair, this decision will not only optimize cost structure and operational efficiency, but also reinforce Iceland’s role as both a tourism destination and a strategic hub connecting Europe and North America.
Q1 2025 Performance Highlights
First-quarter 2025 results showed year-over-year improvement. EBIT (earnings before interest and taxes) improved by $6.6 million, though remained negative at -$62.3 million. The net loss also narrowed by $15.3 million, totaling -$44.1 million. All business segments reported year-over-year gains.
Operating revenue reached $286.5 million, driven by a 7% increase in passenger network capacity (ASK) and strong leasing division performance. Unit revenue (RASK) grew by 1% year-over-year, supported by a record Q1 load factor, up 3.6 percentage points. Passenger numbers increased by 9%.
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On the cost side, Icelandair benefited from a more fuel-efficient fleet and lower fuel prices, leading to a 3% year-over-year drop in unit cost (CASK). Ex-fuel CASK decreased by 1%. Continued investment in 737 MAX and A321LR aircraft positively impacted cost performance. CO2 emissions per available ton-kilometer (ATK) fell by 6%.
The airline closed the quarter with $510 million in total liquidity. While it expects improved profitability in Q2 and Q3 compared to last year, Icelandair notes some softening in long-term bookings due to economic uncertainty.
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