In its May 2020 Semi-Annual Index Review for its equity indexes, leading index provider Morgan Stanley Capital International (MSCI) announced that Icelandair Group Holding will be removed from the MSCI Iceland Small Cap Index as of the close of Friday 29th May 2020.

The decision to remove Icelandair Group from the small cap segment of the MSCI Iceland Index has been accelerated due to the company’s current struggles during the ongoing Global Coronavirus Outbreak, which could push the airline close to bankruptcy if it does not cut the wages of its flight attendants and pilots by up to 65%. The ongoing pandemic has plunged it into a financial crisis that has led to 90% of the staff being laid off.

Iceland is currently on MSCI’s review list for potential inclusion in the Frontier Market Indexes this year. The consultation is ongoing, though some believe that it is likely that it will achieve Frontier Market status before the end of the year. It is anticipated to have, if included, to have two companies – Marel and Arion Banki – with a combined weight of 4.7% in the MSCI Frontier Markets Index.

The removal of Icelandair Group means that only nine Icelandic companies will be eligible for inclusion in small cap indexes.