Icelandair is guiding for capacity growth of around 8% in 2025 based on a flat fleet size, amid a continued push for efficiencies after a loss-making in 2024.

Outlining its fourth-quarter and full-year earnings on 31 January, the Keflavik-based carrier says it plans to operate 42 aircraft during its summer peak this year, as it did in 2024, but still grow its capacity. That reflects a focus on what chief executive Bogi Nils Bogason describes as better “resource utilisation” and recovery from the dampening effect on passenger demand of seismic activity in Iceland last year.

Capacity growth in the first quarter of 2025 will largely be driven by the carrier regaining ground lost amid the seismic activty in 2024, Bogason says. Growth will then be focused outside the peak travel months of July and August, he explains, with Icelandair planning to begin operating its second bank of connecting flights in April this year, rather than in May, and to extend its operation further into September.

In the quieter fourth quarter of the year, growth will be driven by Icelandair tapping “new opportunities” created by its Airbus A321LRs, Bogason says.

Icelandair took its first A321LR – which is also the business’s first Airbus jet – at the end of last year and expects to add three more ahead of the summer, Bogason notes. The type is replacing its ageing fleet of Boeing 757 twinjets.

As the business continues to overhaul its fleet, the Icelandair chief has been leading the group’s “One” transformation programme over the past 12 months, focused on achieving efficiencies across the business – largely through cost-reduction measures that also include cutting headcount and consolidation of its office space – as it works towards a long-term goal of an 8% EBIT margin.

Icelandair was some way off its target last year, recording a full-year EBIT loss of $14 million and a net loss of $20 million, on revenue of $1.57 billion.

But Bogason cites an improving performance in the fourth quarter, after a spring and summer period in 2024 when demand – particularly for travel to Iceland – was hit hard by that seismic activity. He sees that improving trend continuing into 2025, when the group is guiding for a full-year EBIT of $40-60 million.

Lower fuel costs and capacity “rationalisation” among other carriers at Keflavik are also helping the group’s finances, he adds.

Alongside a single A321LR, Icelandair’s fleet as of 31 December 2024 featured 21 Max jets – 17 Max 8s and four Max 9s – eight 757s, three 767s, six De Havilland Canada Dash 8s and a single 767 freighter.

Uzbekistan-based Fly Khiva is currently wet-leasing a further two 757s from Icelandair.