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Mass lay-off at three companies

26.09.2019 - 10:16
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 Mynd: Birgir Þór Harðarson - RÚV
[UPDATED] The board of Arion banki has today decided to restructure the business and one of the consequences will be the loss of 100 jobs. Yesterday, Icelandair announced it is letting 87 pilots go.

Four out of every five job losses at Arion banki will be from its head office, and one-in-five job losses are at the bank’s branches. 

The news that Arion is shedding staff is not a surprise to business analysts, but became formal policy following this morning’s board meeting, where the new business plan was approved. The number of departments is being cut by two and their projects redistributed among other departments, it is reported. 

The bank hopes to boost profitability and bring costs to within 50 percent of revenue. The bank’s policy is to have a return on equity rate above ten percent—something which it has failed to achieve in recent quarters. 

Arion bank director Benedikt Gíslason says the bank’s capital position and liquidity are strong, but that its operating costs are too high. He blames, among other things, changes to the tax environment in recent years for the bank’s lack of competitiveness. He says customers should not notice any difference in the services the bank offers. 

Some of the lay-offs will be met by the non-renewal of short-term contracts, and some others with staff retiring. Many, however, are straightforward redundancies.

Update: A few minutes after this article was first published, another of Iceland's big three banks, Íslandsbanki, announced it is laying off 20 staff as part of "general streamlining". That brings its total for September up to 26 job losses.


Icelandair, meanwhile, announced late yesterday that it has decided not to transfer a group of full-time pilots into half-time roles, as previously reported. Instead it is laying off 87 of its pilots. The airline signed a new pay and conditions contract yesterday that lasts one year until 30th September 2020. 

A statement from Icelandair confirms that the new collective bargaining agreement pushes back the expected pay rises that were expected on 1st October until 1st April next year and that there will be no other pay rises during the contract period. The contract also agrees that stakeholders will form a working group to examine the role and working patterns of pilots with the aim of boosting Icelandair’s competitiveness. The contract will now be voted on by pilots’ union members. 

Icelandair announced last month that it needed to take action now it is known its grounded Boeing 737 MAX 8 jets will not fly before 2020 and that it was going to halve the hours of 111 full-time pilots between 1st December and 1st April next year. 

Now, the airline has decided to cancel this plan and instead cut the number of pilots it employs by 87. Most of them will be offered their jobs back again next spring, the company hopes. 

460 captains and first officers work for Icelandair overall.

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 Mynd: RÚV - Bragi Valgeirsson - RÚV