Loftleidir Icelandic is a capacity solution provider for airlines and tour operators, concentrating mainly on AM (Aircraft, Maintenance) projects, VIP Private Jet services, ACMI (Aircraft, Crew, Maintenance, Insurance), part trading and consulting services. Loftleidir Icelandic operated five B757 200s, two B767 300s, one B737 800s and one B737 700 aircraft in 2020.
In 2020, Loftleidir Icelandic’s operations were heavily affected by the COVID-19 pandemic like many other players in the aviation industry. The industry has had to reduce capacity as global demand has plummeted severely. Almost all governmental entities have taken drastic measures to contain the outbreak by imposing physical distancing, movement restrictions and nationwide lockdowns. In the AM market, operations slowed down in the first quarter of 2020 and were low to none for the rest of the year. The VIP Private Jet market has also suffered from the global pandemic. Loftleidir Icelandic added the second B757 aircraft to the VIP Private Jet fleet at the start of the year. With two aircraft, only a handful of VIP Private Jet flights were completed in the first quarter before the operation came to a grinding halt.
It was soon apparent that there was tremendous demand for cargo aircraft when the pandemic started spreading across the world. “Preighters” is a new word in aviation, meaning passenger aircraft operating as freighters, with Personal Protection Equipment (PPE) cargo in the passenger cabin, usually with seats removed. Loftleidir Icelandic teamed up with Icelandair Cargo and acquired projects for four Boeing 767 and two Boeing 757-300 passenger aircraft in these preighter configurations, moving PPE from China to Europe and North America. Due to various restrictions and tremendous congestion at all major Chinese airports and cargo handling, this was quite a logistical challenge. In three months, over 80 flights were operated from five destinations in China. Subsequent to this massive boom in the PPE market, the demand soon stabilized with other means of lower-priced transport coming into play, namely land transport, making preighters uncompetitive.
Loftleidir Icelandic maintains a strong partnership with Air Niugini with two B767 and two B737 on AM contracts. The operation in 2020 was relatively high compared with some of the largest airlines in the Oceana region. The airline managed to fly half of 2019 flight hours in 2020, which is quite an accomplishment.
Through a subsidiary and an investing partner which hold a majority stake (51%) in Cabo Verde Airlines (CVA), Loftleidir Icelandic holds an effective 36% share. In 2019, CVA’s fleet grew from two aircraft to five, which led to new challenges when new destinations were added in Brazil, Nigeria, the USA and Europe. From the offset of 2020, when there were signs of achieving scale in the operation, COVID-19 struck and all operations were shut down in March after the government closed the borders completely on the 18th of March. That has undermined CVA’s financial foundations and shareholders’ negotiations on securing future financial sustainability are at an advanced stage.
In 2020, Loftleidir Icelandic continued with aircraft part trading, which started in 2019, focusing on procurement, teardown projects and commission-based sales for a third party, to provide its customers with an even wider range of solutions.
In 2020 the full charter and ACMI market came to a standstill. At the start of the pandemic, Loftleidir Icelandic did a rescue flight on a Boeing 767 from Mexico to Germany, with stranded German cruise ship passengers. Also, Loftleidir Icelandic supervised over a dozen direct passenger and cargo flights between Yerevan in Armenia and Los Angeles. There is a significant Armenian community in Los Angeles, with strong ties to Armenia. Usually, these passengers fly with various airlines through multiple transit airports which have shut down, leaving thousands of stranded passengers. These flights were quite complex in operation, due to various pandemic travel restrictions. Loftleidir Icelandic and Icelandair received considerable praise for resourcefulness during this operation. These flights came to a halt due to the Ngorno-Karabakh conflict.
One of the biggest challenges of 2020 has been managing and preserving long-standing customer relationships by renegotiating lease terms, providing support and flexibility to customers. On the same token, many suppliers have been supportive in these challenging times.
The forecast for 2021 shows a gradual improvement in the company’s markets. Aviation has been undergoing a historical global downturn with many passenger and charter airlines retiring from the market, leading to excess capacity of aircraft. That will create new opportunities in filling the void when the market recovers. Loftleidir Icelandic maintains its strong foothold in the VIP Private Jet market segment with customers in Europe, North America and Oceania and flights are expected to resume later in 2021. There will be a continued focus on promoting AM, VIP Private Jet, ACMI and full charter products. In addition, Loftleidir Icelandic will offer potential customers a plethora of consulting services as a total capacity solution provider. Leveraging Icelandair Group’s resources of extensive aviation experience, the services provided include operational optimization, network development, revenue accounting, ticket sales, market strategy, etc.