Icelandic Bank Loses Millions in Airline Bankruptcy

Arion Bank announced in its third quarter report that it lost 2.5 billion ISK ($20.7 million USD) in the bankruptcy of Primera Air, according to RÚV. The company intends to take a tax deduction which will lessen the loss.

The bank has lent and invested another 4.3 billion ISK to airlines, representing about 2.5% of the bank’s capital. They did not disclose which carriers they have business with nor how much they have invested in each. It has previously been confirmed that Arion is in business with WOW Air.

The bank earned a profit of 1.1 billion ISK in this quarter, which is less than the same quarter last year. Primera’s bankruptcy is stated to be the primary reason. Höskuldur Ólaffson claims in a statement that the bank’s performance was strong otherwise.

This is not the first bankruptcy to significantly impact the bank’s profitability this year. At the beginning of the year, the spectacular failure of the United Silicon factory cost the bank some 71 million ISK.