Icelandair must have a massive surplus of pilots. For a 757 they will need at least 4 FAs maybe more depending on Iceland's regulations. Typically, they would only need 2 pilots for the 757. They need at least 5 FAs for the 767 and 757-300. Only 2 pilots usually needed for those. Pilot groups are usually much smaller than flight attendant.
If Icelandair is using line pilots as FAs, I wonder regulatory wise how time working as an FA would count against their monthly and yearly pilot duty regulations if Icelandair wanted to also use them as pilots as needed.
I wonder if they'll be rotated through the flight deck on a regular basis, say every 6th flight or so. That way they won't time out on certifications etc.. I can't imagine this is very popular with the pilots though. There's also a chance it will detoriate their mental "sharpness" that's required in the flight deck. I also wonder what looks best on a CV, being fired as a pilot and finding different employment, or working as a pilot/flight attendant in a rotating schedule. That being said, there are tens of thousands of pilots who have to find other work these days, so any employer will look at that and not find it strange considering what happened.
I also wonder what pay they'll retain. If they'll be paid as flight attendants or as pilots.
I hope it is as pilots, it should be if they are required to keep them on. Actually quite smart as it keeps pilots certified (if they rotate thru the cockpit) and ready when traffic picks back up.
The FA contract is likely to be expired and with no new contract getting approved, it is likely there is no current contract to enforce labor law wise. So it falls to the laws of the country(s) where the airline has operations. Usually a higher skill trade that is unionized can fill union positions, in particular if the wages paid exceed the scale of the position.
Flight attendants are a skilled position, pilots even more so. But yes specific training required to serve needs to be satisfied. These pilots are on payroll anyway, the company probably has the right for them to do any job its sees fit. So they go to training for a while.
It might be very good for pilots to do this FA work, it is always brought up in Business School how important for managers to be able to do every job in the company. Dealing with passengers may improve their people skills, same with opening the doors, evac training, etc.
Iceland is mostly Intl flights, likely running around 10% of flights, possibly 20%. That means 80% of pilots and FA are not flying. So for every 2 needed in the cockpit, there are 8 that are not. Getting 4 in as FA's means 6 are employed, only 4 are sitting home.