Icelandair prepares for tough times

REYKJAVIK, Iceland (eTN) – Icelandair is to lay off 240 employees this fall in preparation to meet expected reduction in demand. Among the unlucky employees are 133 flight attendants and 88 pilots.

The chairpersons of the Iceland Pilot’s Association, and the chairperson of the Iceland Air Hostess’ Association, were both shocked learning about the extent of the layoffs.

Typically, Icelandair has met seasonal reduction in demand by laying people off during shoulder and off-season. This fall, however, unusually many permanent staff is expected to lose their jobs.

More than a quarter of all regular air hostesses working for Icelandair have been informed of the company’s decision.

The number of full-time staff this coming winter is expected to be 1.040, down from 1.230 last year.

Icelandair CEO Birkir Holm Gudnason explained in a television interview that the expected reduction in demand this fall was more difficult do deal with than the crisis caused by 9/ll. This time, unlike 9/11, the demand is negatively affected by an increase in airfares, caused by an increase in the fuel price.

Icelandair will cut its winter schedule by 14 percent to save costs. A longer winter break on the Iceland-Minneapolis route, and Iceland-Berlin route are a part of the plan.

Icelandair won’t be flying to Minneapolis from end of October 2008 until March 2009. Further, random flights on some routes will be canceled.

The CEO of the Iceland Tour Operator Association, Erna Hauksdottir, stated in a radio interview that tour operators in Iceland are very worried about the world’s economic situation and its effect on the tourism industry in Iceland. She said there have already been tour group cancellations this summer and fewer travelers are making reservations far in advance.

Ms. Hauksdottir expects the reduction in flights to and from the country to have a negative effect on the tourism industry in Iceland.

Icelandair is one of 16 companies in the Icelandair Group, employing 3.500 people in total.