From Iceland — Dark Days For Icelandair: Layoffs, Losses, Possibility Of Government Takeover Floated

Dark Days For Icelandair: Layoffs, Losses, Possibility Of Government Takeover Floated

Published April 29, 2020

Andie Sophia Fontaine
Photo by
Arpingstone/Wikimedia Commons

Icelandair, Iceland’s best-known airline and the lifeblood of the country’s tourism industry, is facing considerable challenges due to the coronavirus. The company has embarked in one of the largest round of layoffs in Icelandic history, with 95% of its workforce being let go for the time being.

While the third government rescue package announced yesterday will go a long ways to helping the tourism sector, Minister of Social Affairs Ásmundur Einar Daðason told reporters that Icelandair will be left to its own devices. However, the push for the government to take over Icelandair is already gathering momentum.


“There are about 2,000 people who will, unfortunately, be let go today,” Bogi Nils Bogason, Icelandair’s director, told RÚV yesterday. The airline had laid off 421 pilots, leaving 26 remaining. Nearly 900 of Icelandair’s 940 flight attendants were also let go. “This is about 95% of our staff who are losing their jobs today. This is a tragic day in the history of Icelandic aviation.”

Bogi does hold out hope, however, that a large number of those laid off will return to their jobs at a later date.

“We certainly hope [to rehire them],” he said. “These are all fine employees, and when the country rises back up and the market opens again, we will be ready to leap at the chance and we will need our people back, hopefully most of them, and we hope to do so sooner rather than later. But we unfortunately cannot promise anything regarding when and how that might happen.”

Not enough

Given Icelandair’s vital importance to Iceland’s tourism sector—and given Iceland’s tourism sector’s importance to its economy—members of Parliament and economists alike are raising the issue of the government possibly taking over Icelandair, in whole or in part.

Oddný G. Harðardóttir, an MP for the Social Democrats, criticised the ruling coalition in session for not doing enough to help Icelandair. Prime Minister Katrín Jakobsdóttir responded by pointing out that the third government rescue package—which includes reimbursing companies who have had to lay off employees—can also be utilised by Icelandair.

For his part, Bogi told reporters that he does not believe that such reimbursements are going to stave off any layoffs, but that “it matters a lot to us financially speaking, no question”.

Nationalisation as an option

Ágúst Ólafur Ágústsson, another Social Democrat MP, has gone so far as to suggest that the government could secure a majority stake in the company to effectively rescue the airline, comparing the situation to the 2008 financial collapse.

“We as a people are facing an emergency situation like the banking collapse,” he wrote on Facebook. “And at that time, [the government] took over the banks, the lifeblood of the economy. Now another nationally important company is failing, a company which is the lifesblood of our transport.” He pointed out further that the governments of numerous countries—including Denmark, Sweden and Finland—have some ownership over their largest airlines.

Economist Katrín Ólafsdóttir told RÚV that nationalisation is certainly one of the options that should be explored.

“We know that airlines across Europe have received assistance from the public sector,” she said. “In reality, if we consider the other possibility—that Icelandair goes bankrupt—that is naturally an unthinkable possibility. It is definitely a very important company for the country.”

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