Icelandair Group has reached a second agreement with Boeing regarding partial compensation for the 737 Max suspension.

Icelandair Group has reached a second agreement with Boeing regarding partial compensation for the 737 Max suspension.

The company disclosed the agreement during a third-quarter financial results briefing.

It had previously reached a partial compensation pact with the US airframer, which it mentioned in September.

"This was recognised partially as increased passenger revenue and partially as decreased aircraft lease expenses in aviation expenses," says Icelandair Group.

The company adds that a second agreement was reached on 31 October, the details of which are confidential.

But it says the estimated net earnings impact from the 737 Max suspension is "still significant" and the company remains in discussion with Boeing over the financial losses.

Icelandair Group had expected to have nine 737 Max jets in its fleet this year, accounting for 25% of its fleet and 27% of available seats.

Suspension of the type has "created imbalance" in the Icelandair route network, it says, adversely affecting load factors and average fares.

"Icelandair's key strength is the flexibility of the route network which has allowed us to optimise our flight schedule by shifting our focus towards more profitable routes and markets," says group chief Bogi Nils Bogason.

The company has focused on the tourism market, he adds, which has shown increasing demand.

Its latest forecast assumes the aircraft will return to its schedules in March 2020. But the company says the delivery dates of its remaining 737 Max orders are "uncertain at this point in time".

Icelandair has already secured financing for the three aircraft still to be delivered this year, as well as one planned to be delivered in 2020, through sale-and-leaseback agreements.

Bogason says the company's underlying operations have shown financial improvement despite the impact of the Max suspension, after cost-cutting and revenue-enhancement efforts.