Icelandic flag carrier Icelandair has long operated a narrowbody fleet of aging Boeing 757s. Its plans to retire the aircraft have been thwarted, first by the grounding of the 737 MAX, then by the financial impact of the pandemic. As the airline now has the option to cancel some of its MAX order, it could make sense to hold on to the faithful old servant a little longer than intended.

Icelandair had planned to replace its aging Boeing 757s with brand new, state-of-the-art, more cost-efficient aircraft. While previously in talks with both Boeing and Airbus gauging what would be the best fit in the future, now might not be the most encouraging time for investing in new planes.

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Indefinitely idle 737 MAX

Icelandair did have some new narrowbodies on order from before the crisis that were intended to take the place of some of the 757s. Sixteen 737 MAXs, to be precise, of which it has taken delivery of six. All of the six, like everyone else's MAXs, were sitting idle even before the pandemic, as a result of the grounding of the model in March last year.

The purchase agreement between Icelandair and Boeing states that, should the manufacturer delay delivery more than 12 months past the scheduled date, the carrier is no longer obliged to buy the aircraft.

Since the plane's grounding in 2019 following two deadly crashes caused by a malfunctioning software known as the Maneuvering Characteristics Augmentation System (MCAS), Boeing has not delivered a single unit.

Could potentially cancel orders penalty-free

Last year, Icelandair was expecting to receive two MAXs by the end of March and one in April. Since the deadline has long since passed, the airline is no longer obligated to take delivery of them. However, while Icelandair is seeking compensation from Boeing for the grounding, it is yet to cancel its remaining order.

Five Icelandair MAXs were scheduled for delivery no later than March this year, and the remaining two for 2021, and so they are not yet up for potential penalty-free cancellations.

But, until any of the MAXs, completed or not, can fly again, or circumstance allows for new purchases, keeping hold of the 757s, which makes up the backbone of the Icelandair fleet, remains the obvious choice.

An aging fleet of an out-of-production model

The Icelandair 757 fleet is old. Its 25 757-200 have an average age of 24.8 years and its two 757-300 of 19.3 years. The model itself went out of production in 2004 as it was eschewed for newer, more fuel-efficient aircraft.

However, with the fuel prices reaching mind-bogglingly low points over the last months, they are quite cost-effective to operate. Sources have told Iceland's Morgunblaðið that the airline now expects to keep its old narrowbody workhorses for longer than expected.

MAX pilots laid off last year

Meanwhile, Icelandair did choose to let go of 24 of its MAX pilots in June last year. To rehire them at this stage when airlines everywhere, including the island-nation flag-carrier, are looking desperately to downsize their staff, might not be at the top of the list. Given the dismal forecast for the return of passenger demand, this would be true even if the plane was to secure recertification this summer.

When did you last fly on an Icelandair 757? Let us know in the comments.