FL Group, the Reykjavik-based parent of Icelandair Group, Sterling Airlines and other aviation and tourism businesses, yesterday reported a second-quarter net profit of just ISK118 million ($1.7 million), narrowed from a profit of ISK1.9 billion in the year-ago period.CEO Hannes Smarason cited "extremely turbulent" capital markets in the quarter as well as "difficult market conditions and seasonality in operating companies" through the first half of the year to explain the reduced results. But Icelandair Group had its best-ever first half, with net income of ISK3.86 billion for the six months ended June 30, including a second-quarter net profit of ISK1.56 billion.

Danish LCC Sterling, acquired officially by FL Group in the first quarter (ATWOnline, Oct. 26, 2005), reported a pre-tax loss of ISK2.53 billion for the first half but pre-tax income of ISK320 million for the three months to June 30. "The Sterling turnaround is moving according to plan while record high fuel prices and increased competition remain challenging," Smarason said.

FL Group decreased its investment in air transport somewhat in the quarter by selling its 16.9% stake in easyJet (ATWOnline, April 6).

Separately, Icelandair yesterday announced a winter reduction of its US services, including suspension of four-times-daily service from Reykjavik to Baltimore/Washington International and Minneapolis-St. Paul from Jan. 9 to March 15. Also as of Jan. 9 it will decrease weekly flights to Boston from seven to four and New York JFK from five to four. "Icelandair's success on the transatlantic route from the US since 1948 has been due to our ability to quickly and easily adapt to fluctuations in the market," GM-Americas Gunnar Eklund said, adding that projections of reduced yields and load factors on transatlantic routes during the period forced the decision.