Icelandair will end widebody operations in 2026, after bringing forward the timeline for phasing out its Boeing 767-300ER twinjets by several years amid an effort to address ”unsustainable losses”. 

It made the announcement while forecasting a full-year loss for 2025 during its earnings briefing for the July-September quarter on 23 October.

Having earlier this year indicated that it would end 767 operations by 2029, Icelandair now says it plans to phase them out next year as part of a plan to reduce its fleet size by two aircraft in 2026 versus 2025. 

Four of its Boeing 757-200s and one 767 will be retired by the end of this year, leaving the group with 35 mainline aircraft in summer 2026: 21 Boeing 737 Max jets, seven Airbus A321LRs, five 757s and two 767s. Three of those A321LRs are due to be delivered before next summer, partially offsetting the loss of the 757s and 767 this winter.

The move to reduce its fleet size comes despite the recent exit of rival Play from the Icelandic market.

Icelandair chief executive Bogi Nils Bogason explains that the business has been through “eight years of unsustainable financial losses” and that its actions on fleet and in other areas – including via a transformation programme – reflect an urgent need for the group to prove it can stabilise its fortunes in 2026. 

Icelandair’s focus will be on point-to-point markets in 2026, it says, amid fare softness in the highly competitive transatlantic market. Despite the projected smaller summer fleet, it forecasts year on year capacity growth of 2% in 2026 – following 8% growth this year – based partly on expanding its operations in the “low season”.

Icelandair Group saw its operating profit fall slightly to $74 million in the third quarter, on revenue up 6% at $585 million. Its net profit of $57 million was also down slightly year on year.

Rising costs were blamed on factors including the strong Icelandic krona, salary increases and other cost inflation.