Icelandair Group is to issue new shares and press ahead with union and supplier negotiations as part of its financial restructuring triggered by the COVID-19 outbreak.

Earlier this month, Icelandair announced that it had appointed three financial advisors—Kvika banki, Íslandsbanki and Landsbankinn—to evaluate all possibilities to cut unit costs and strengthen the group’s long-term financial position.

In its latest market update, Icelandair said: “The company is preparing to issue new shares. The prerequisite for the share offering is to ensure the company’s long-term competitiveness. As a part of that, successful negotiations with the unions are essential, as well as the approval of a shareholders’ meeting.”

Icelandair added that talks are “ongoing, or being initiated” with lenders, lessors and other key suppliers, as well as the Icelandic government.

“The focus of the company is to improve the liquidity and equity position, as well as securing its long-term profitability,” Icelandair said.

As a result of COVID-19, Icelandair is operating less than 10% of its planned schedule, flying only essential air routes in cooperation with the Icelandic government.

“There is still considerable uncertainty as to when global travel restrictions will be lifted and when demand for air travel will return to pre-COVID levels. Therefore, the company is preparing to be able to withstand an extended period of minimal revenue,” Icelandair said.