Icelandair said it carried 4.1 million international passengers in 2018, a 2% increase over the previous year, a record for the Iceland flag carrier. As a result, the airline is confident its “strong liquidity position” at the end of last year will enable it to seize any “opportunities that may arise,” Icelandair CEO Bogi Nils Bogason said.

His assertion follows Icelandair’s decision in November 2018 to abandon plans unveiled earlier that month to acquire Icelandic budget operator WOW Air and suggests the airline could be in the market for other consolidation opportunities.

The airline increased international capacity, measured in ASKs, by 7% in 2018, outstripping the 4% increase in RPK traffic. This resulted in a 1.7 percentage point drop in load factor to 81%.

Conversely, passenger numbers on Icelandair’s domestic and regional services dropped 9% to 319, 238 in 2018 as the carrier slashed capacity on these routes by 16%.

Icelandair Group announced in December that it had entered into a new $200 million financing facility with BOC Aviation covering pre-delivery payments on the Boeing 737 MAX aircraft that will join the carrier’s fleet in 2019 and 2020. This resulted in a $160 million increase in Icelandair Group’s liquidity.

The airline also signed a sale-and-leaseback deal with Singapore-based lessor BOC Aviation for two 737 MAX aircraft, adding to an earlier sale-and-leaseback agreement between Icelandair and Ireland-based lessor SMBC Aviation Capital for another two of the type.

“At year-end 2018, Icelandair Group had over $250 million in cash and cash equivalents. In addition, the company owned 40 unencumbered aircraft. Thus, the company is well-prepared to handle fluctuations in the business environment and seize the opportunities that may arise,” Bogason said.

Icelandair had issued a profit warning last August, based on lower-than-anticipated revenues for 2018, partly because of a misjudgment on the airline’s part of when average air fares would rise. In its last financial earnings report, the airline group announced that its 3Q net profit had fallen by more than a third.

Kerry Reals, kerry@realsreporting.com