Icelandair Has Record 2025; Still Short of Company Expectations

Icelandair closed out 2025 on a high with a record revenue of $1.7 billion USD and an increase of 11 per cent over last year and for the first time in its history, marked a record-high load factor, carrying more than five million passengers.

The airline also ranked among Europe’s most punctual carriers, posting an on-time performance rate of 83.9%. Its growth is being attributed to a strong Q4 which saw the airline mark a 17 percent increase alone.

While fourth-quarter performance was strong, management acknowledged that full-year financial results fell short of initial expectations. Despite the strong top-line performance, EBIT for the year remained negative at USD 17.2 million, down USD 3 million compared to 2024, though results improved by USD 2 million in Q4.

“The fourth quarter was strong in many ways, but the financial results for the year were not in line with our expectations at the beginning of the year,” admitted Bogi Nils Bogason, President and CEO. “We are, however, on the right track and in 2025 we generated record revenue, transported more than five million passengers for the first time in our history, and the load factor was at a record high. Furthermore, we delivered outstanding on-time performance, placing us among the most punctual airlines in Europe, and contributed to good customer experience. We continued to drive operational efficiencies with improve productivity and carried out initiatives under our transformation program that are expected to deliver over USD 100 million in annual impact when fully implemented.”

Bogason says external pressures—including geopolitical developments that weakened the U.S. dollar, softening North American demand, rising labour costs in Iceland, and a doubling of carbon emission costs—negatively affected profitability.

Icelandair plans to operate 41 aircraft in the summer of 2026, including 21 Boeing 737 MAX and six Airbus A321LRs, two of which will be delivered in the first quarter. The addition of Airbus enhances network flexibility, supports off-season growth, and contributes to the company’s sustainability efforts. As part of Icelandair’s transition to a more fuel-efficient fleet, four Boeing 757s were retired by the end of 2025, and all B767 widebody operations will end by 2026

Looking ahead, Bogason says with network growth planned, further transformation initiatives underway, and a clear operational focus, it is well positioned to return to profitability and build long-term value for shareholders.