Low Icelandair Share Price Highlights Risks in Iceland’s Investor Landscape

2026-03-08 - 14:26

The falling share price of Icelandair is prompting fresh warnings about the health of Iceland’s stock market. Meanwhile, economists urge the government to take the issue seriously. As reported by RÚV, shares in the airline are currently at their lowest level on the Iceland Stock Exchange in five years, having dropped by nearly 20% since the start of the year. What's This Story? Icelandair share price at a five-year low on the Icelandic Stock Exchange Shares down nearly 20% since the start of the year Pension funds hold about 55% of the Icelandic stock market Market described as largely unchanged for four years and not following global market movements Keflavík Airport. Photo: Golli The decline has renewed debate about how the country’s relatively small market operates and who is investing in it. Economist Snorri Jakobsson said the airline’s situation reflects broader structural issues rather than immediate fears about foreign ownership. Instead, he pointed to the dominance of cautious institutional investors. According to the expert, pension funds own 55% of the stock market in the country. They are, in Jakobsson’s words, “risk-averse investors, and investing in an airline is a high risk.” Iceland’s market has remained largely stagnant for the past four years and has not mirrored the movements seen in global markets. Limited participation from other types of investors is a concern, the expert believes. Meanwhile, public administration expert Haukur Arnþórsson has suggested the state could consider buying a stake in Icelandair to prevent overseas buyers from acquiring and breaking up the airline. Jakobsson believes such a takeover is unlikely, but says policymakers should still review the overall structure of the market.