Icelandair (FI, Reykjavik Keflavik) will convert two of its B767-300ERs into freighters and lease them back under a long-term deal with Titan Aircraft Investments.

"We are very pleased to partner with Titan Aircraft Investments and Atlas Air to further strengthen our cargo business. With a continued positive outlook for cargo operations post COVID, I am confident that the B767-300ER freighters will allow us to maximize new opportunities in our markets," Icelandair's Chief Executive Bogi Nils Bogason said.

The ch-aviation fleets module shows that Icelandair operates four B767-300(ER)s, of which it owns three and dry-leases the remaining one from GECAS. Three aircraft are active, while one of the owned units has been parked at Reykjavik Keflavik airport since early February 2021, Flightradar24 ADS-B data shows. Icelandair also owns a fourth B767-300(ER) which is dry-leased to Air Niugini (PX, Port Moresby) and has been in Guangzhou for maintenance since February 19, 2021.

The airline did not respond to ch-aviation's request for comment on the identity of the two B767s that will be sold, converted, and then leased back.

Icelandair's current freighter fleet includes one B757-200(PF) and one B757-200(PCF), both of which are dry-leased.

Titan Aircraft Investments is a joint-venture between Titan Aviation Holdings and Bain Capital Credit. Titan Aviation Holdings owns twenty-one B767-300(ER) freighters, of which 19 are dry-leased to fellow Atlas Air Worldwide Holdings unit Atlas Air and two to ATI - Air Transport International, according to the ch-aviation fleets ownership module.

In a separate announcement, Icelandair Group has confirmed that the operational merger of its domestic unit Air Iceland Connect (Reykjavik Domestic) with its mainline sister carrier will close on March 16, with all services branded and sold by Icelandair.

"The integration of Icelandair and Air Iceland Connect is an important step that will create a stronger and more streamlined airline with more options and improved customer service. Domestic flights are crucial for Icelanders and with this step, we can further strengthen our current network for all passengers with more accessibility and more competitive fares," Bogason said.

The Icelandic group announced the merger almost a year ago, in late March 2020. Air Iceland Connect will retain its own Air Operator's Certificate and its own staff, but will no longer use its separate brand or sales system. All sales and marketing will be done through Icelandair after March 16. Currently, tickets for domestic services are not sold on Icelandair's website and require a separate booking.

The merger will have no impact on the carrier's domestic network, which currently comprises services from Reykjavik Domestic to Akureyri, Egilsstadir, Isafjordur, and Vestmannaeyjar. The airline also has an interline agreement with Norlandair (FNA, Akureyri), covering services from Reykjavik to Bíldudalur and Gjögur, and from Akureyri to Grimsey, Vopnafjördur, and Thorshöfn.

Air Iceland Connect operates three DHC-8-Q200s and two DHC-8-Q400s. Icelandair itself does not ply any domestic routes and has no aircraft capable of landing at most of them, except for Akureyri and Egilsstadir which have runways capable of handling narrowbody jets.

Icelandair said the merger would lead to the development of "new products and services", which will be unveiled during spring 2021.