Consolidated
Icelandair Group hf. • Reykjavíkurflugvöllur • 102 Reykjavík, Iceland • Reg. No. 631205-1780
Financial Statements
for the year 2022
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11
12
13
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15
Note Page Note Page
1. Reporting entity ......................................... 15 23. Marketable securities ................................. 25
2. Basis of accounting .................................. 15 24. Trade and other receivables ..................... 26
3. Functional and presentation currency ....... 15 25. Cash and cash equivalents ........................ 26
4. Use of estimates and judgements ............ 15 26. Equity .......................................................... 26
5. Changes in accounting policies ................ 16 27. Earnings per share ..................................... 27
6. Operating segments ................................. 16 28. Loans and borrowings ................................ 27
7. Operating income ..................................... 17 29. Lease liabilities ........................................... 29
8. Operating expenses .................................. 17 30. Warrant liabilities ........................................ 30
9. Auditor's fee .............................................. 18 31. Non-current payables ................................. 30
10. Depreciation and amortisation .................. 18 32. Trade and other payables .......................... 30
11. Finance income and finance costs ........... 18 33. Deferred income ......................................... 31
12. Operating assets ...................................... 18 34. Financial risk management ........................ 31
13. Mortgages and commitments ................... 19 35. Financial instruments and fair value ........... 39
14. Insurance value of aircraft and 36. Capital commitments .................................. 40
flight equipment ............................. 19 37. Related parties ........................................... 40
15. Insurance value of buildings and 38. Litigations and claims ................................. 41
other operating assets ................... 19 39. Group entities ............................................. 41
16. Right of use assets ................................... 20 40. Events after reporting date ......................... 41
17. Intangible assets and goodwill .................. 20 41. Ratios ......................................................... 42
18. Impairment test ......................................... 21 42. Investment and financing without
19. Investment in associates .......................... 22 cash flow effect ............................... 42
20. Non-current receivables and deposits ...... 23 43. Significant accounting policies ................... 42
21. Income taxes ............................................ 24 44. Standards issued but not yet effective ....... 52
22. Inventories ................................................ 25
Appendices:
53
59
69
72
74Alternative performance measures ...........................................................................................................................
Consolidated Statement of Changes in Equity ..........................................................................................................
Contents
Endorsement and Statement by the Board of Directors and the CEO ......................................................................
Independent Auditors' Report ....................................................................................................................................
Consolidated Income Statement and other Comprehensive Income ........................................................................
Consolidated Statement of Financial Position ...........................................................................................................
Quarterly Statements ................................................................................................................................................
Corporate Governance Statement ............................................................................................................................
Non-Financial Reporting ............................................................................................................................................
Consolidated Statement of Cash Flows ....................................................................................................................
Notes to the Consolidated Financial Statements ......................................................................................................
Operational Risk ........................................................................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
2
Endorsement and Statement by the Board
of Directors and the CEO
Icelandair Group’s full-time equivalents (FTE) in 2022 were 3,045, on average, 958 more than on average in 2021.
IcelandairGrouphf.isanIcelandicaviationcompanywithdecades'longhistoryofoperatingintheinternationalairline
sector.TheIcelandairRouteNetworkistheheartofthebusinessmodelwhichtakesadvantageoftheunique
geographicallocationofIcelandservingasaconnectinghubbetweenEuropeandNorthAmerica.IcelandairGroupis
theparentcompanyofseveralsubsidiaries,thatinadditiontoIcelandairincludemostnotablyIcelandairCargoandthe
aircraftleasingbrandLoftleidirIcelandic.TheCompany'sstrategicinitiativessupportitsvisionof“Bringingthespiritof
Icelandtotheworld”anditsmissionofofferingsmoothandenjoyablejourneysto,from,viaandwithinIceland–the
Company's hub and home.
TheConsolidatedFinancialStatementsofIcelandairGrouphf.fortheyear2022havebeenpreparedinaccordancewith
InternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnionandadditionalIcelandic
disclosurerequirements.TheFinancialStatementscomprisetheConsolidatedFinancialStatementsofIcelandairGroup
hf. (the "Company") and its subsidiaries (together the “Group”) and have been audited by KPMG.
Operations in the year 2022
AccordingtotheConsolidatedIncomeStatement,lossfortheyear2022amountedtoUSD5.8million.Equityatyear
endamountedtoUSD273.4million,includingsharecapitalintheamountofUSD311million,accordingtothe
ConsolidatedStatementofFinancialPosition.ReferenceismadetotheConsolidatedStatementofChangesinEquity
regarding information on changes in equity.
2022wasaturnaroundyearforIcelandair.TheCompanyuseditsflexibilitytorapidlyincreasecapacitytomeetthe
demandrecoveryinallmarkets.Therevenueperformancewasstrongwithrecordpassengerrevenueinthesecondhalf
of the year and significant EBIT improvement year-on-year.
Totaloperatingincomemorethandoubledyear-on-yearwithEBITamountingtoUSD19million,animprovementof
USD 155 million between years. Net loss amounted to USD 5.8 million compared to USD 105 million in 2021.
Thepassengerflightschedule,asmeasuredinavailableseatkilometers,morethandoubledcomparedto2021and
equaled79%of2019levels.TheCompanycarried3.6millionpassengers,2.2millionmorethanin2021.Flightswere
offeredto51destinations,comparedto40in2021,andthreenewdestinationswereaddedtothenetwork:Raleigh
Durham (USA), Rome (Italy) and Nice (France).
The“to”marketwithIcelandasadestinationwasIcelandair’slargestmarketin2022andaccountedfor41%oftotal
passengers.Thesuccessfulramp-upofIcelandairoperationshasbeenessentialfortherecoveryoftheIcelandic
tourismindustryandtheIcelandiceconomyduringtheyear.The“from”market,withtraveloriginatinginIceland,
accountedfor15%ofIcelandair’stotalpassengers.The“via”marketbetweenEuropeandN-Americaaccountedfor
37%oftotalpassengerscomparedto23%in2021.Thedomesticoperation“within”Icelandaccountedfor7%oftotal
passengers.
Icelandair,likeotherairlines,experiencedchallengingconditionsatairportsandissueswithsupplychainswhichcaused
flightdisruptionsoverthesummerpeak.Withitsextensiveflightschedule,highfrequencyofflights,anditsemployees'
resourcefulness, Icelandair was in a good position to respond to these challenges.
Fuelpricesincreasedby77%year-on-year.Fuelcostsaccountedfor33%ofoperatingexpensescomparedto20%in
2021.AlargerproportionofthesubstantiallymorefuelefficientB737MAXaircraftwithinthefleet,inadditionto
improved load factor, resulted in a 17% reduction of CO2 emissions per OTK compared to 2021.
Fleetrenewalofpassengeraircraftcontinuedin2022.IcelandairtookdeliveryofsevenB737MAXaircraftbringingthe
totalnumberofB737MAXaircraftinservicetosixteen.Workingtowardsasustainablefutureinaviationisanimportant
emphasisforIcelandair.Thesteepfleetrenewalshowcasesitscommitmenttowardstheambitiousgoalofreducing
carbonemissions.TheCompanyplanstotakedeliveryoffourB737MAXaircraftbeforeyear-end2023,bringingthe
total number of B737 MAX aircraft in service to twenty.
Thecargooperation was profitablein2022.Freightcarrieddecreasedyear-on-yearby7%.Themainreasonisless
demandforimportsandexportfollowingtheinvasionofUkrainewhichledtoaneconomiccontractioninEurope.The
CompanyisaddingtwoB767-300wide-bodyaircrafttoitsfleetandbuildingaairfreighthubinIceland.Thenew
B767-300fleet,whichhasmorerangeandcarriesmorefreightthantheB757freightersithasoperatedinrecent
years,willoperatetoLiegeinBelgium,LosAngeles,NewYork,andChicago.ThefirstB767enteredservicelast
December,andthe second aircraft will be added in Q1 2023.
Theleasingoperationimprovedsignificantlyin2022,withanincreasedscopeofoperationsforitsmainlong-term
customerswiththeadditionofaswellasnewbusiness.Soldblockhoursincreasedby9%andtheprofitabilityimproved
between years.
Consolidated Financial Statements of Icelandair Group hf. 2022
3
The prospects for Icelandair’s operation are favorable for 2023. The passenger flight schedule will be the largest in the
Company’s history, with 54 destinations, 785 connections within the network, and four new destinations. The near-term
booking flow is strong, and booking patterns are gradually returning to normal. 40 aircraft will be utilized in the route
network in summer 2023, five more than in summer 2022. The development of Keflavik as an airfraight hub will continue
and the leasing projects are expected to continue to deliver strong results.
The Annual General Meeting further authorized an incremental share capital increase of up to ISK 900,000,000 nominal
value that may only be utilized to fulfil terms under stock option agreements granted pursuant to the Company’s Share-
Based Incentive Program. Existing shareholders will not have pre-emptive subscription rights to shares issued pursuant
to this provision. Share price and subscriptions shall be in accordance with the Share Based Incentive Program and
stock option agreements entered pursuant to that. The authorization is valid until 31 December 2027.
The Company's Articles of Association may only be amended at a legitimate shareholders’ meeting, provided that
amendments and their main aspects are clearly stated in the invitation to the meeting. A resolution will only be passed if
it is approved by at least 2/3 of votes cast as well as by shareholders controlling at least 2/3 of the share capital
represented at the respective shareholders' meeting.
According to the Icelandic Company's Act, companies can acquire and hold up to 10% of the nominal value of issued
shares. On 3 March 2022 the Annual General Meeting authorized the set-up of a formal buy-back program in
accordance with the provisions of Article 5 of MAR (Regulation (EU) No 596/2014 of the European Parliament and of the
Council), which has been transposed into Icelandic legislation with Act No 60/2021, as well as the provisions of the
Commission Delegated Regulation (EU) 2016/1052 which contains regulatory technical standards for the conditions
applicable to buy-back programs. Under the program the Company was authorized to purchase up to 10% of its own
shares in accordance with Article 55 of the Icelandic Companies Act No 2/1995 during a period of 18 months following
the Annual General Meeting. No buy-back of shares was undertaken in 2022 and the Company held no treasury shares
at year-end.
The Company's Board of Directors comprises five members, two women and three men. The gender ratio is thus in
accordance with Icelandic laws requiring companies with over 50 employees to ensure that the Board has representation
from both genders and that each gender comprises at least 40% of the Board Members when Board Members surpass
three. The Board Members are elected at the Annual General Meeting each for a term of one year. Those persons
willing to stand for election must give formal notice thereof to the Board of Directors and Icelandair Group's Nomination
Committee at least seven days before the Annual General Meeting.
of Directors and the CEO, contd.:
Endorsement and Statement by the Board
Share capital and Articles of Association
The nominal value of Icelandair Group’s issued share capital at year-end was ISK 41.1 billion up from ISK 35.96 billion
at the end of 2021. The share capital is divided into an equal number of shares with a nominal value of one ISK each.
The shares are listed on the Main Market of the Nasdaq Iceland stock exchange under the ticker symbol ICEAIR in a
single class bearing equal rights. The Company has entered various agreements that include "Change of control"
clauses which might be triggered if any person or group of persons acting in convert gains direct or indirect control of the
Company and/or if the Company’s shares cease to be listed on a stock exchange.
Operations in the year 2022, contd.:
The Company had an accumulated deficit at year-end, accordingly the Board of Directors proposes no dividend payment
to shareholders for the year 2022.
Icelandair’s balance sheet is healthy at year-end 2022, with an equity ratio of 19.4% and a strong liquidity position with
cash, cash equivalents, and marketable securities amounting to USD 266 million. Additionally, the Company had
undrawn committed credit lines in the amount of USD 52 million bringing total liquidity to USD 318 million.
Consolidated Financial Statements of Icelandair Group hf. 2022
4
Shares in ISK
Name
thousand
Shares in %
7,073,868
1,529,782
1,388,691
1,311,222
1,266,767
1,181,777
933,984
663,704
577,800
552,331
16,479,926
24,640,321
41,120,247
Endorsement and Statement by the Board
of Directors and the CEO, contd.:
Share capital and Articles of Association, contd.:
The Board of Directors has prepared a Corporate Governance Statement in compliance with the Icelandic Corporate
Governance guidelines which are described in full in the Corporate Governance Statement in the Consolidated Financial
Statements. It is the opinion of the Board of Directors that Icelandair Group hf. complies with the Icelandic guidelines for
Corporate Governance.
The framework for Corporate Governance practices within the Group is informed by the provisions of law, the parent
Company's Articles of Association, general securities regulations, and the Icelandic Corporate Governance guidelines
issued by the Iceland Chamber of Commerce, Nasdaq Iceland, and the Confederations of Icelandic Employers.
Corporate Governance practices ensure open and transparent relationships between the Company's management, its
Board of Directors, its shareholders, and other stakeholders.
Sólvöllur ehf. .................................................................................................. 1.61
1.41
The Group's management believes that practicing good Corporate Governance is vital for the existence of the Group
and in the best interests of shareholders, Group companies, employees and other stakeholders and will in the long run
produce satisfactory returns on shareholders' investment. Corporate Governance exercised within Icelandair Group hf.
ensures sound and effective control of the Company's affairs and highly ethical business practices.
Corporate Governance
3.38
Gildi - lífeyrissjóður ........................................................................................ 3.08
Íslandsbanki hf. .............................................................................................
Information on matters related to financial risk management is disclosed in note 34. Information regarding operational
risk management is disclosed in the Operational Risk appendix.
Other shareholders .......................................................................................
The Miri Strategic Emerging Market Fund ....................................................
Non-Financial Reporting
According to the Icelandic Financial Statements Act, the Company has compiled a thorough overview of non-financial
information. The Company’s sustainability data is presented in accordance with Nasdaq's ESG Reporting Guide 2.0
(Environment, Society and Governance). The Company has identified material issues relating to the ESG framework
that are monitored during the year.
40.08
1.34
Lífeyrissjóður starfsmanna ríkisins A-deild ...................................................
59.92
Further information on matters related to share capital is disclosed in note 26. Additional information on shareholders is
provided on the Company's website www.icelandairgroup.com.
2.87
Almenni lífeyrissjóðurinn ............................................................................... 2.27
Icelandair Group’s sustainability strategy is based on the United Nations’ Sustainable Development Goals (SDGs) and
four goals have been chosen as key focus areas. These are climate action, gender equality, responsible consumption
and production and decent work and economic growth.
The Company's policies, material issues, goals and key focus areas are further discussed in the Non-financial Reporting
that form an appendix to the Consolidated Financial Statements.
Blue Issuer Designated Activity Company ....................................................
Landsbréf - Úrvalsbréf hs. .............................................................................
100.00
The number of shareholders at year-end 2022 was 15,896 an increase of 609 during the year. At 31 December 2022 the
10 largest shareholders were:
3.72
Brú Lífeyrissjóður starfsmanna sveitarfélaga ................................................ 3.19
Arion banki hf. ...............................................................................................
17.20
Consolidated Financial Statements of Icelandair Group hf. 2022
5
Guðmundur Hafsteinsson, Chairman of the Board
Nina Jonsson
John F. Thomas
Matthew Evans
Svafa Grönfeldt
Bogi Nils Bogason
Endorsement and Statement by the Board
of Directors and the CEO, contd.:
CEO:
Reykjavík, 2 February 2023.
Board of Directors:
The Consolidated Financial Statements for the year ended 31 December 2022 have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the EU and additional Icelandic disclosure
requirements for financial statements of listed companies.
According to our best knowledge it is our opinion that the annual Consolidated Financial Statements give a true and fair
view of the consolidated financial performance of the Group for the year 2022, its assets, liabilities and consolidated
financial position as at 31 December 2022 and its consolidated cash flows for the year 2022.
Further, in our opinion, the consolidated financial statements and the endorsement of the Board of Directors and the
CEO give a fair view of the development and performance of the Group's operations and its position and describes the
principal risks and uncertainties faced by the Group.
In our opinion, the Consolidated Financial Statements of Icelandair Group hf. for the year 2022 identified as
“549300UMI5MBLZSXGL15-2022-12-31-en.zip” are in all material respects prepared in compliance with the ESEF
Regulation.
The Board of Directors and the CEO have today discussed the consolidated financial statements of Icelandair Group hf.
for the year 2022 and confirm them by means of their signatures. The Board of Directors and the CEO recommend that
the consolidated financial statements will be approved at the Annual General Meeting of Icelandair Group hf.
Statement by the Board of Directors and the CEO
Consolidated Financial Statements of Icelandair Group hf. 2022
6
To the board of directors and shareholders of Icelandair Group hf.
Report on the Audit of the Consolidated Financial Statements
Opinion
Basis for Opinion
Independent Auditors' Report
We have audited the consolidated financial statements of Icelandair Group hf. ("the Group"), which comprise the
consolidated statement of financial position as at 31 December, 2022, the consolidated statements of profit or loss and
other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising
significant accounting policies and other explanatory information.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our
report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit
of financial statements in Iceland and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated
financial position of the Group as at 31 December, 2022, and of its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and additional disclosure requirements for listed companies in Iceland.
Our opinion is consistent with the additional report submitted to the Audit Committee and the Board of Directors.
We declare, to the best of our knowledge and belief, that we have not provided any prohibited non-audit services, as
referred to in Article 5(1) of the Regulation (EU) 537/2014 and that we remained independent in conducting the audit.
We were appointed auditors of Icelandair Group hf. when it was founded in 2005. We have been re-appointed by
resolutions passed by the annual general meeting uninterrupted since then.
Consolidated Financial Statements of Icelandair Group hf. 2022
7
These aspects require significant judgements by
Management when evaluating estimated aircraft engine
utilisation hours, expected maintenance intervals and
future maintenance costs which has led us to consider this
area as one of the most relevant aspects of the audit.
Passenger ticket sale is presented as deferred income in
the consolidated statement of financial position until
transportation has been provided and at that time the sale
is recognised as revenue. Large volumes of transactions
flow through various IT systems from the date of sale until
revenue is recognized in the consolidated statement of
profit or loss.
The recording process is complex and highly automated
which gives rise to a risk of error, in determining the
amount and timing of the revenue recognition. Timing and
accuracy in the recording of passenger income is therefore
one of the key audit matters of our audit of the
consolidated financial statements.
• We used data analytics to correlate the transactions in
passenger revenue accounts to confirm appropriate
counter postings to prepaid revenues, accounts
receivables, cash and other accounts as applicable.
Provision for scheduled aircraft engine maintenance of
leased engines and amortization of owned engines.
We read all new purchase and lease agreements for
engines in the year 2022 and evaluated if accounting for
new engines was appropriate and that initial recognition is
inn line with agreements.
How the matter was addressed in the audit
Assessed whether past estimates have been historically
accurate by comparing budgeted and actual cost of the
most recent maintenance of engines.
Key Audit Matters How the matter was addressed in the audit
Independent Auditor's Report, contd.:
• Tested reconciliation between the revenue accounting
system and the financial system.
• We assessed the appropriateness of passenger revenue
recognition by selecting a sample of coupons to ensure that
the coupons were recognized as revenue on the date of
flight and at the correct amount. We also tested the
inclusion of passenger revenue transactions in the
appropriate period by testing selected flights before and
after the the reporting date.
Key Audit Matters
Timing and accuracy of revenue recognition of
passenger income
Reference is made to note 7 "Operating income” and 33
“Deferred income”.
We recalculated the estimated provision for leased engines
and amortization for owned engines as well as confirming
usage of each engine during the year.
We assessed the appropriateness of management's key
assumptions which included assessing the estimated cost
of overhaul, estimated future utilisation and expected
maintenance intervals.
Our audit procedures were designed to challenge the
timing and accuracy of passenger revenue recognition.
These procedures include:
• Testing relevant IT controls for the revenue accounting
system.
• Testing a sample of key controls in the revenue
accounting process.
• Testing all manual journal entires posted in passenger
revenue accounts.
• Testing inputs in the Prepaid income obligation and re-
performing calculations of the obligation.
• Checking that the methodology applied to prepaid income
and expired tickets was consistent to prior years and, if the
methodology has changed, assessed the appropriateness
of changes to the methodology.
Reference is made to note 12 “Operating assets” and note
31 “Non-current payables”.
We selected a sample of additions during the year and
inspected relevant invoices.
The Group operates aircraft engines which are owned or
held under lease arrangements.
For own engines the maintenance cost is capitalized and
expensed over the estimated useful life of the engine until
it needs to undergo maintenence.
Maintenance provision for leased engines is estimated by
performing calculations which are based on estimated cost
of maintenance and an estimated timetable of required
checks.
Consolidated Financial Statements of Icelandair Group hf. 2022
8
Responsibilities of the Board of Directors and CEO for the Consolidated Financial Statements
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
•
•
•
•
•
The Board of Directors and CEO are responsible for the other information. The other information comprises the
information included in the annual report, but does not include the consolidated financial statements and our auditor’s
report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
Independent Auditor's Report, contd.:
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these consolidated financial statements.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. The annual report is not available at our reporting date but is expected to be made available to us after
that date.
The Board of Directors and CEO are responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRSs as adopted by the European Union and additional disclosure requirements for
listed companies in Iceland, and for such internal control as they determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors and CEO are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless they either intend to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
The Board of Directors and CEO are responsible for overseeing the Group’s financial reporting process.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
Consolidated Financial Statements of Icelandair Group hf. 2022
9
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements, cont.:
•
Report on Other Legal and Regulatory Requirements
Report on European single electronic format (ESEF Regulation)
Report on the report of the Board of Directors and CEO
KPMG ehf.
Hjördís Ýr Ólafsdóttir
Matthías Þ. Óskarsson
Independent Auditor's Report, contd.:
Reykjavík, 2 February 2023.
As part of our audit of the consolidated financial statements of Icelandair Group hf. we performed procedures to be able
to issue an opinion on whether the consolidated financial statements of Icelandair Group hf. for the year 2022 with the
file name "549300UMI5MBLZSXGL15-2022-12-31-en.zip" is prepared, in all material respects, in compliance with the
Act on disclosure obligation of issuers of securities and the obligation to flag no. 20/2021 relating to requirements
regarding European single electronic format Regulation EU 2019/815 which include requirements related to the
preparation of the consolidated financial statements in XHTML format and iXBRL markup.
Board of Directors and CEO are responsible for preparing the consolidated financial statements in compliance with the
Act on disclosure obligation of issuers of securities and the obligation to flag no. 20/2021. This includes preparing the
consolidated financial statements in an XHTML format in accordance with EU Regulation 2019/815 on the European
single electronic format (ESEF Regulation).
Our responsibility is to obtain reasonable assurance, based on evidence that we have obtained, on whether the
consolidated financial statements is prepared in all material respects, in compliance with the ESEF Regulation, and to
issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor's
judgement, including the assessment of the risks of material departures from the requirement set out in the ESEF
Regulation, whether due to fraud or error.
In our opinion, the consolidated financial statements of Icelandair Group hf. for the year 2022 with the file name
"549300UMI5MBLZSXGL15-2022-12-31-en.zip" is prepared, in all material respects, in compliance with the ESEF
Regulation.
Pursuant to the legal requirement under Article 104, Paragraph 2 of the Icelandic Financial Statements Act No. 3/2006,
we confirm that, to the best of our knowledge, the report of the Board of Directors and CEO accompanying the
consolidated financial statements includes the information required by the Financial Statements Act if not disclosed
elsewhere in the consolidated financial statements.
The engagement partner on the audit resulting in this independent auditor’s report is Hjördís Ýr Ólafsdóttir.
From the matters communicated with The Board of Directors and the Audit Committee, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
We communicate with the Board of Directors and the Audit Committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
Consolidated Financial Statements of Icelandair Group hf. 2022
10
Notes 2022 2021
Operating income
7 1,130,252 453,868
58,510 42,676
7 76,356 88,369
1,265,118 584,913
Operating expenses
308,591 215,485
570,630 235,452
248,171 156,779
8 1,127,392 607,716
Operating profit (loss) before depreciation and amortisation (EBITDA)
..................................................................................................
137,726 22,803 )(
10
118,875 )
(
113,136 )
(
Operating profit (loss) (EBIT)
...........................................................................................................................................
18,851 135,939 )(
8,846 13,242
32,595 )( 20,779 )(
580 )( 8,182
11 24,329 )( 645
19 3,807 9,083
19 1,850 3,848 )(
179 130,059 )(
21 5,998 )( 25,263
5,819 )( 104,796 )(
Other comprehensive income (loss)
Items that are or may be reclassified to profit or loss
10,154 )( 2,203 )(
34 3,898 )( 1,238 )(
34 20,025 )( 12,412
19,751 4,400
14,326 )( 13,371
20,145 )( 91,425 )(
8,461 )( 104,298 )(
2,642 498 )(
5,819 )( 104,796 )(
Total Comprehensive loss attributable to:
23,260 )( 90,928 )(
3,115 497 )(
20,145 )( 91,425 )(
Earnings per share:
27 0.02)( 0.33)(
The notes on pages 15 to 52 are an integral part of these consolidated financial statements.
Fair value changes .............................................................................................
Profit (loss) before tax (EBT) ......................................................................................................................................................................
Loss for the year
...........................................................................................................................
Income tax ..........................................................................................................
Gain on sale of associate/subsidiary .................................................................
Consolidated Income Statement and
other Comprehensive Income for the year 2022
Finance income ..................................................................................................
Finance cost .......................................................................................................
Share of gain (loss) of associates ......................................................................
Net finance (cost) income
....................................................................................................................................................................................
Transport revenue ..............................................................................................
Aircraft and aircrew lease ...................................................................................
Other operating revenue ....................................................................................
Salaries and salary related expenses ................................................................
Aviation expenses ..............................................................................................
Depreciation and amortisation ...........................................................................
Other operating expenses ..................................................................................
Owners of the Company .....................................................................................
Non-controlling interests .....................................................................................
Total comprehensive loss for the year
...........................................................................
Earnings per share in US cent per share ...........................................................
Non-controlling interests .....................................................................................
Loss for the year
...........................................................................................................................
Currency translation differences ........................................................................
Total comprehensive loss for the year
...........................................................................
Other comprehensive (loss) income for the year
...........................................................................
Net loss on hedge of investment, net of tax .......................................................
Owners of the Company .....................................................................................
Cash flow hedges - effective portion of changes in fair value, net of tax ..........
Cash flow hedges - reclassified to profit or loss ................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
11
Amounts are in USD thousand
Notes 2022 2021
Assets:
Operating assets ............................................................................................ 12-15 505,588 391,293
Right-of-use assets ........................................................................................
16
318,971
224,794
Intangible assets and goodwill .......................................................................
17-18
55,202
55,614
Investments in associates ..............................................................................
19
11,903
11,592
Receivables and deposits ..............................................................................
20
17,668
18,987
Deferred tax asset ..........................................................................................
21
55,593
60,647
Non-current assets 964,925 762,927
Inventories ...................................................................................................... 22 22,491 24,398
Derivatives used for hedging ......................................................................... 34 2,029 2,853
Trade and other receivables .......................................................................... 24 155,317 118,417
Marketable securities ..................................................................................... 23 42,159 58,197
Cash and cash equivalents ............................................................................ 25 224,252 204,767
Current assets 446,248 408,632
Total assets 1,411,173 1,171,559
Equity:
Share capital ..................................................................................................
310,973
272,204
Share premium ...............................................................................................
0
34,178
Reserves ........................................................................................................
19,450
24,116
Accumulated deficit ........................................................................................
57,914 )
(
105,876 )
(
Equity attributable to equity holders of the Company 26 272,509 224,622
Non-controlling interests ................................................................................
877
2,238 )(
Total equity 273,386 222,384
Liabilities:
Loans and borrowings .................................................................................... 28 207,264 222,139
Lease liabilities ............................................................................................... 29 296,692 212,042
Payables ......................................................................................................... 31 33,947 23,384
Non-current liabilities 537,903 457,565
Loans and borrowings .................................................................................... 28 48,453
35,646
Lease liabilities ............................................................................................... 29 45,463
33,617
Warrants ........................................................................................................
30
0
18,395
Derivatives used for hedging ......................................................................... 34 820
1,136
Trade and other payables ..............................................................................
32
201,789
143,736
Deferred income ............................................................................................
33
303,359
259,080
Current liabilities 599,884 491,610
Total liabilities
1,137,787
949,175
Total equity and liabilities 1,411,173 1,171,559
Consolidated Statement of Financial Position
as at 31 December 2022
The notes on pages 15 to 52 are an integral part of these consolidated financial statements.
Consolidated Financial Statements of Icelandair Group hf. 2022
12
Amounts are in USD thousand
Non-
Share
Share
Hedging
Translation
Other
Accumulated
controlling
Total
capital
premium
reserve
reserves
deficit
Total
interest
equity
2021
212,969 13,208 16,720 )( 8,411 16,682 0 234,550 1,741 )( 232,809
59,235 20,970 80,205 80,205
3,300 )( 3,300 )( 3,300 )(
4,095 4,095 4,095
104,299 )( 104,299 )( 497 )( 104,796 )(
2,203 )( 2,203 )( 2,203 )(
1,238 )( 1,238 )( 1,238 )(
12,412 12,412 12,412
4,400 4,400 4,400
2,372 2,372 )( 0 0
272,204 34,178 92 4,970 19,054 105,876 )( 224,622 2,238 )( 222,384
2022
272,204 34,178 92 4,970 19,054 (105,876) 224,622 2,238 )( 222,384
38,769 13,617 52,386 52,386
18,761 18,761 18,761
8,461)( 8,461)( 2,642 5,819)(
10,627)( 10,627)( 473 10,154)(
3,898)( 3,898)( 3,898)(
20,025)( 20,025)( 20,025)(
19,751 19,751 19,751
10,133 10,133)( 0 0
47,795 )( 47,795 0 0
310,973 0 182 )( 9,555 )( 29,187 57,914 )( 272,509 877 273,386
The notes on pages 15 to 52 are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity
for the year 2022
Attributable to equity holders of the Company
Reserves
of cash flow hedges, net of tax ............................
Equity 1 January 2021 ............................................
Shares issued .........................................................
Warrants issued ......................................................
Warrants exercised .................................................
Loss for the year .....................................................
Currency translation differences .............................
Net loss on hedge of investment, net of tax ...........
Effective portion of changes in fair value
Transfer of share premium .....................................
Equity 31 December 2022 ......................................
Warrants exercised .................................................
Loss for the year .....................................................
Currency translation differences .............................
Net loss on hedge of investment, net of tax ...........
Cash flow hedges, reclassified to profit or loss ......
Cash flow hedges, reclassified to profit or loss ......
Effective portion of changes in fair value
of cash flow hedges, net of tax ............................
Effects of profit or loss of subsidiaries
and associates ....................................................
Effects of profit or loss of subsidiaries
and associates ....................................................
Equity 31 December 2021 ......................................
Equity 1 January 2022 ............................................
Shares issued .........................................................
Consolidated Financial Statements of Icelandair Group hf. 2022 13 Amounts are in USD thousands
Notes
2022
2021
Cash flows from operating activities:
5,819 )( 104,796 )(
Adjustments for:
Depreciation and amortisation .................................................................... 10 118,875 113,136
19,210
15,946
11
23,749
7,537
580 8,182 )(
2,223 )( 8,243 )(
7, 20 3,807 )( 9,083 )(
19
1,850 )
(
3,848
21
5,998
25,263 )
(
154,713 15,100 )(
Changes in:
22 3,020 1,290 )(
24 37,968 )( 21,897 )(
32 47,060 29,127
44,203 77,298
Cash generated from (used in) operating activities 56,315 83,238
4,428 688
24,837 )( 18,214 )(
Net cash from (used in) operating activities 190,619 50,612
Cash flows from (to) investing activities:
Acquisition of operating assets ....................................................................... 12 311,556 )( 170,101 )(
Proceeds from sale of operating assets ......................................................... 112,218 197,036
Acquisition of intangible assets ......................................................................
17
422 )
(
293 )
(
Deferred cost, change ....................................................................................
2,530 )
(
13,683 )
(
Proceeds from sale of a subsidiary ................................................................ 0 6,418
Investment in associates ................................................................................ 717 )( 2,290 )(
Non-current receivables, change ................................................................... 7,928 4,346
Marketable securities, change ........................................................................ 16,038
16,803 )(
Net cash from (used in) investing activities 179,041 )( 4,630
Cash flows from financing activities:
Shares issued ................................................................................................. 26 52,386 80,205
Proceeds from loans and borrowings .............................................................
28
42,002 3,229
Repayment of loans and borrowings ..............................................................
28
47,799 )( 20,365 )(
Repayment of lease liabilities .........................................................................
29
37,518 )( 30,255 )(
Net cash from (used in) financing activities 9,071 32,814
Change in cash and cash equivalents ...............................................................................................
20,649 88,056
Effect of exchange rate fluctuations on cash held ......................................................................
1,164 )( 946 )(
Cash and cash equivalents at beginning of the year ...................................................................................
204,767 117,657
Cash and cash equivalents at 31 December .............................................................................................
25 224,252 204,767
The notes on pages 15 to 52 are an integral part of these consolidated financial statements.
Inventories ..................................................................................................
Share in loss of associates .........................................................................
Income tax ..................................................................................................
Consolidated Statement of Cash Flows
for the year 2022
Loss for the year ............................................................................................
Expensed deferred cost .............................................................................
Gain on sale of operating assets ................................................................
Gain on sale of a subsidiary/associate .......................................................
Net finance cost ..........................................................................................
Changes in fair value ..................................................................................
Trade and other receivables .......................................................................
Trade and other payables ...........................................................................
Deferred income .........................................................................................
Interest paid ................................................................................................
Interest received .........................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
14
Amounts are in USD thousand
1.
Reporting entity
2.
Basis of accounting
a.
Statement of compliance
b.
Basis of measurement
3.
Functional and presentation currency
4.
Use of estimates and judgements
Assumptions and estimation uncertainties
Measurement of fair values
A number of the Group's accounting policies and disclosures require the measurement of fair value, for both
financial and non-financial assets and liabilities.
In preparing these Consolidated Financial Statements, management has made judgements, estimates and
assumptions that affect the application of the Group's accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized
prospectively.
Information on assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment in the year ending 31 December 2022 is included in the following notes:
Note 18 - Impairment test
Note 33 - Deferred income
Notes
Icelandair Group hf. (the "Company") is a public limited liability company incorporated and domiciled in Iceland. The
address of the Company's registered office is at Reykjavíkurflugvöllur in Reykjavík, Iceland. The Consolidated
Financial Statements for the Company as at and for the year ended 31 December 2022 comprise the Company and
its subsidiaries, together referred to as the “Group” and individually as "Group entities" and the Group's interests in
associates. The Group primarily operates in the airline industry. The Company is listed on the Nasdaq Main Market
Iceland, www.nasdaqomxnordic.com. The Group´s website address is www.icelandairgroup.com.
The Group's Consolidated Financial Statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU and additional Icelandic disclosure requirements for
consolidated financial statements of listed companies. They were authorised for issue by the Company's Board of
Directors on 2 February 2023.
The Consolidated Financial Statements are prepared on the historical cost basis except that derivative financial
instruments, part of deferred income and certain short-term investments are stated at their fair values. Details of the
Group's accounting policies are included in note 43.
The Company's functional currency is U.S. dollars (USD). These Consolidated Financial Statements are presented
in U.S dollars (USD). All financial information presented in USD has been rounded to the nearest thousand, unless
otherwise indicated.
Note 35 - Financial instruments and fair value
The Group has established a control framework with respect to the measurement of fair values. The Director of
Treasury and Risk Management has overall responsibility for overseeing all significant fair value measurements,
including Level 3 fair values.
Consolidated Financial Statements of Icelandair Group hf. 2022
15
Amounts are in USD thousand
4.
Use of estimates and judgements, contd.:
Measurement of fair values, contd.:
5.
Changes in accounting policies
6.
Operating segments
Geographic segments for the year 2022
North
America Europe Iceland Other Total
595,910 251,544 262,480 20,317 1,130,252
14,830 5,339 3,937 34,405 58,510
19,342 10,013 46,399 602 76,356
630,082 266,896 312,816 55,324 1,265,118
50% 21% 25% 4% 100%
Geographic segments for year 2021
North
America Europe Iceland Other Total
178,828 134,243 135,584 5,213 453,868
2,694 0 8,422 31,560 42,676
13,520 18,130 56,475 243 88,369
195,042 152,373 200,481 37,016 584,913
33% 26% 34% 6% 100%
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
Notes, contd.:
The Risk Committee regularly reviews significant unobservable inputs and valuation adjustments. If third party
information, such as broker quotes or pricing services, is used to measure fair values, then management assesses
the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of
IFRS, including the level in the fair value hierarchy in which such valuations should be classified.
The Group's operations are identified and reported as one operating segment as off beginning of year 2022.
Geographic disaggregation of revenue is based on point of sale.
A number of new standards are effective for annual periods beginning after 1 January 2023 and earlier application is
permitted; however, the Group has not early adopted the new or amended standards in preparing these
Consolidated Financial Statements and they are not considered to have significant impact on the Consolidated
Financial Statements.
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair
value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during
which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
Note 35 - Financial instruments and fair value
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Total revenue % .......................
Transport revenue ....................
Aircraft and aircrew lease .........
Other operating revenue ..........
Total revenue ...........................
Total revenue % .......................
Transport revenue ....................
Aircraft and aircrew lease .........
Other operating revenue ..........
Total revenue ...........................
Consolidated Financial Statements of Icelandair Group hf. 2022
16
Amounts are in USD thousand
7.
Operating income
Transport revenue is specified as follows: 2022 2021
975,332 333,785
72,225 32,697
82,695 87,386
1,130,252 453,868
Other operating revenue is specified as follows:
7,713 4,763
31,064 41,966
14,861 20,405
2,668 2,887
2,228 8,243
17,822 10,105
76,356 88,369
8.
Operating expenses
Salaries and other personnel expenses are specified as follows: 2022 2021
238,591 168,888
38,106 27,097
31,894 19,500
308,591 215,485
3,045 2,087
3,023 2,393
54/46 55/45
Aviation expenses are specified as follows:
374,490 119,886
1,757 705
115,392 65,079
78,991 49,783
570,630 235,452
Other operating expenses are specified as follows:
8,606 5,785
26,599 21,423
24,458 13,284
50,796 19,785
6,021 2,958
45,457 13,908
48,919 23,590
17,877 26,043
9,790 )( 2,339
29,228 27,664
248,171 156,779
Total other operating expenses ......................................................................................
Notes, contd.:
Passenger revenue .........................................................................................................
Other salary-related expenses ........................................................................................
Contributions to pension funds .......................................................................................
Total other operating revenue .........................................................................................
Sale at airports and hotels ..............................................................................................
Maintenance revenue .....................................................................................................
Other operating revenue .................................................................................................
Salaries ...........................................................................................................................
Cargo and mail ...............................................................................................................
Total transport revenue ...................................................................................................
Aircraft and cargo handling services ..............................................................................
Revenue from tourism ....................................................................................................
Total salaries and salary related expenses ....................................................................
Ancillary revenue ............................................................................................................
Average number of full time equivalents ........................................................................
Gain on sale of operating assets ....................................................................................
Total aviation expenses ..................................................................................................
Advertising ......................................................................................................................
Customer services ..........................................................................................................
Aircraft handling, landing and navigation ........................................................................
Aircraft maintenance expenses ......................................................................................
Communication ...............................................................................................................
Cost of goods sold ..........................................................................................................
Booking fees and commission expenses .......................................................................
Aircraft lease ...................................................................................................................
Tourism expenses ..........................................................................................................
Allowance for bad debt ...................................................................................................
Other operating expenses ..............................................................................................
Operating cost of real estate and fixtures .......................................................................
Gender ratio for employees (male / female) ...................................................................
Travel and other employee expenses .............................................................................
Aircraft fuel ......................................................................................................................
Full time equivalents at period end .................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
17
Amounts are in USD thousand
9.
Auditor's fee
Auditor's fee are specified as follows:
2022
2021
2022
2021
427 412 41 39
59 54 0 0
486 466 41
39
10. Depreciation and amortisation
The depreciation and amortisation charge in profit or loss is specified as follows:
2022
2021
80,145 88,305
37,930 22,477
800 2,354
118,875 113,136
11.
Finance income and finance cost
Finance income and finance cost are specified as follows:
2022
2021
6,090 321
260 276
2,496 3,723
0 8,922
8,846 13,242
11,495 8,750
13,619 7,299
1,987 4,730
5,494 0
32,595 20,779
580 )( 8,182
24,329 )( 645
12.
Operating assets
Operating assets are specified as follows:
Aircraft
Other
and flight
property and
Cost
equipment
Buildings
equipment
Total
774,243
91,285
88,340
953,868
168,993
77
1,031
170,101
239,051 )( 85 )( 1,810 )( 240,946 )(
133 )( 2,256 )( 152 )( 2,541 )(
704,052 89,021 87,409 880,482
294,228
10,489
6,839
311,556
115,626 )( 0 194 )( 115,820 )(
0 7,850 )( 245 )( 8,095 )(
882,654 91,660 93,809 1,068,123
Depreciation of right-of-use assets, see note 16 ............................................................
Amortisation of intangible assets, see note 17 ...............................................................
Other services ..................................................................
Audit .................................................................................
Group auditors
Balance at 31 December 2022 ........................................
Depreciation of operating assets, see note 12 ...............................................................
Effects of movements in exchange rates .........................
Net currency exchange loss ...........................................................................................
Other interest expenses ..................................................................................................
Net finance (cost) income ...............................................................................................
Balance at 31 December 2021 ........................................
Additions ..........................................................................
Sales and disposals .........................................................
Balance at 1 January 2021 ..............................................
Additions ..........................................................................
Net currency exchange gain ...........................................................................................
Depreciation and amortisation recognized in profit or loss .............................................
Finance cost total ............................................................................................................
Sales and disposals .........................................................
Finance income total .......................................................................................................
Interest expense on loans and borrowings .....................................................................
Interest expenses on lease liabilities ..............................................................................
Effects of movements in exchange rates .........................
Interest income on lease receivables .............................................................................
Notes, contd.:
Other interest income .....................................................................................................
Other auditors
Interest income on cash and cash equivalents ...............................................................
Changes in fair value of warrants, see note 30 ..............................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
18
Amounts are in USD thousand
12.
Operating assets, contd.:
Aircraft
Other
and flight
property and
Depreciation and impairment
equipment
Buildings
equipment
Total
395,265
21,752
38,413
455,430
75,951
3,660
8,694
88,305
52,240 )( 43 )( 1,410 )( 53,693 )(
0 0 9 )( 9 )(
69 )( 647 )( 128 )( 844 )(
418,907 24,722 45,560 489,189
69,946
3,209
6,990
80,145
4,392 )( 0 121 )( 4,513 )(
0 2,179 )( 107 )( 2,286 )(
484,461 25,752 52,322 562,535
Carrying amounts
378,978 69,533 49,927 498,438
285,145 64,299 41,849 391,293
398,193 65,908 41,487 505,588
4-20% 2-6% 5-33%
13.
Mortgages and commitments
14.
Insurance value of aircraft and flight equipment
2022 2021 2022 2021
650,797 572,000 339,505 231,666
54,330 54,300 33,003 32,319
82,956 79,719 25,685 21,160
788,083 706,019 398,193 285,145
15. Insurance value of buildings and other operating assets
The principal buildings owned by the Group are the following:
Maintenance
Staff
Office
Other
Under
2022
hangars
apartments
buildings
buildings
construction
Total
Official assessment value .....
37,896 6,417 13,440 14,112 0 71,865
Insurance value ....................
80,450
16,441
44,544
41,788
3,509
186,732
Carrying amounts .................
21,848
3,876
13,071
17,820
9,293
65,908
Square meters ......................
31,814 6,813 13,262 17,916 0 69,805
Depreciation ratios ...........................................................
Sales and disposals .........................................................
At 31 December 2021 ......................................................
Balance at 31 December 2021 ........................................
Balance at 31 December 2022 ........................................
Boeing - 26 / 26 aircraft ....................................................
The insurance value and carrying amount of the Group's aircraft and related equipment at year-end is specified as
follows:
Insurance value
Carrying amounts
Effects of movements in exchange rates .........................
Notes, contd.:
At 1 January 2021 ............................................................
Depreciation .....................................................................
Acquisition of operating assets in 2022 amounted to USD 311.6 million (2021: USD 170.1 million) therof overhaul of
own engines and aircraft spare parts in the amount of USD 102.2 million (2021: USD 40.9 million). See further in
note 36.
At 31 December 2022 ......................................................
Assets classified as held for sale .....................................
Sales and disposals .........................................................
Effects of movements in exchange rates .........................
Other - 6 / 6 aircraft ..........................................................
The Group's operating assets, aircraft and spare parts are mortgaged to secure debt. The remaining balance of the
debt amounted to USD 236.5 million at year-end 2022 (2021: USD 238.6 million). The Group owns 32 aircraft
including 17 Boeing 757, 4 Boeing 767 and 5 Boeing 737 MAX. At year-end, 6 aircraft were unencumbered.
Balance at 1 January 2021 ..............................................
Depreciation .....................................................................
Flight equipment ...............................................................
Total aircraft and flight equipment ....................................
Consolidated Financial Statements of Icelandair Group hf. 2022
19
Amounts are in USD thousand
15.
Insurance value of buildings and other operating assets, contd.:
Maintenance
Staff
Office
Other
Under
2021
hangers
apartments
buildings
buildings
construction
Total
Official assessment value .....
38,256 6,705 14,461 12,570 0 71,992
Insurance value ....................
75,524 15,272 39,885 39,112 0 169,793
Carrying amounts .................
25,230 4,452 14,824 19,704 89 64,299
Square meters ......................
31,814 6,813 13,262 17,916 0 69,805
16.
Right of use assets
Land &
Real Estate
Aircraft
Other
Total
10,785 108,604 401
119,790
993 )( 481 181 )(
693 )(
565 5,282 )( 14 4,703 )(
805
131,598
243
132,646
2,321 )
(
19,833 )
(
323 )
(
22,477 )
(
150 0 126 276
44 )
(
0
1 )
(
45 )
(
8,947 215,568 279 224,794
89 )( 43 )( 164 )( 296 )(
762
9,494
47
10,303
1,666
119,850
936
122,452
2,151 )
(
35,438 )
(
341 )
(
37,930 )
(
377 )
(
26
1 )
(
352 )
(
8,758 309,457 756 318,971
17.
Intangible assets and goodwill
Trademarks Other
Cost Goodwill and slots intangibles Total
57,902
34,565
12,458
104,925
0
0
293
293
0 0 1,466 )( 1,466 )(
1,870 )( 0 4,786 )( 6,656 )(
304 )( 0 6 )( 310 )(
55,728 34,565 6,493 96,786
0
0
422
422
0 0 70 )( 70 )(
0 0 7 )( 7 )(
55,728 34,565 6,838 97,131
Official valuation of the Group's leased land for buildings at 31 December 2022 amounted to USD 14.7 million
(2021: USD 14.6 million) and is not included in the Consolidated Statement of Financial Position.
Adjustments .....................................................................
Adjustments for indexed leases .......................................
New or renewed leases ...................................................
Insurance value of the Group's other operating assets and equipment amounted to USD 58.3 million at year-end
2022 (2021: USD 60.6 million). The carrying amount at the same time was USD 41.5 million (2021: USD 41.8
million).
Notes, contd.:
Adjustments .....................................................................
Intangible assets and goodwill are specified as follows:
Disposals .........................................................................
Reclassified to assets held for sale .................................
Depreciation .....................................................................
Currency translation adjustment ......................................
Balance at 31 December 2021 ........................................
Effects of movements in exchange rates .........................
Balance at 31 December 2022 ........................................
Balance at 31 December 2022 ........................................
Additions ..........................................................................
Currency translation adjustment ......................................
Effects of movements in exchange rates .........................
Assets classified as held for sale .....................................
Balance at 31 December 2021 ........................................
Additions ..........................................................................
Balance at 1 January 2021 ..............................................
Disposals .........................................................................
Adjustments for indexed leases .......................................
Balance at 1 January 2021 ..............................................
New or renewed leases ...................................................
Depreciation .....................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
20
Amounts are in USD thousand
17. Intangible assets and goodwill, contd.:
Trademarks
Other
Amortisation and impairment losses Goodwill and slots intangibles Total
33,308
2,605
8,751
44,664
0
0
2,354
2,354
0 0 660 )( 660 )(
0 0 5,178 )( 5,178 )(
0 0 8 )( 8 )(
33,308 2,605 5,259 41,172
0 0 800 800
0 0 37 )( 37 )(
0 0 6 )( 6 )(
33,308 2,605 6,016 41,929
Carrying amounts
24,594
31,960
3,707
60,261
22,420 31,960 1,234
55,614
22,420 31,960 822 55,202
18.
Impairment test
2022
2021
22,420
22,420
31,960
31,960
54,380 54,380
2022 2021 2022 2021
0
0
31,960
31,960
22,420
22,420
0
0
22,420 22,420 31,960 31,960
At 1 January 2021 ............................................................
Trademarks and slots
Goodwill and other intangible assets that have indefinite life are tested for impairment annually and additionally at
each reporting date if there is an indication of impairment.
At 31 December 2022 ......................................................
The recoverable amounts of cash-generating units was based on their value in use and was determined by
discounting the future cash flows generated from the continuing use of the CGU. After some turbulent years heavily
affected by the pandemic Icelandair prepared a 5-year high level financial plan based on long-term targets that
Icelandair has set regarding profitability and growth. Cash flows were projected based on actual operating results
and a the 5-year business plan. Cash flows were extrapolated for determining the residual value using a constant
nominal growth rate which was consistent with the long-term average growth rate for the industry. Management
believes that this forecast period was justified due to the long-term nature of the business. There are still some
uncertainties that the Group's operations face such as economic uncertainty in Europe, inflationary pressures in our
main markets, salary increase in Iceland historically high fuel price and increasing emissions cost. Icelandair will
expect to reach 2019 production level in 2025 with gradual growth beyond 2025 with increased fleet plan. A
weighted USA and EU CPI forecast from IMF was used as a base for inflationary increases. The renewal of aircraft
in the fleet will have a positive effect on some cost items.
Disposals .........................................................................
Balance at 31 December 2021 ........................................
Balance at 31 December 2022 ........................................
Amortisation .....................................................................
Effects of movements in exchange rates .........................
Effects of movements in exchange rates .........................
At 31 December 2021 ......................................................
Other Group entities .........................................................
Passenger and cargo operations .....................................
For the purpose of impairment testing, goodwill is allocated to the units which represent the level within the Group at
which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill
allocated to each cash generating unit (CGU) are as follows:
Total ...............................................................................
Goodwill
Total ................................................................................................................................
These assets were recognized at fair value on acquisition dates. Goodwill and other intangible assets with indefinite
life are specified as follows:
Amortisation .....................................................................
Goodwill ..........................................................................................................................
Assets classified as held for sale .....................................
Disposals .........................................................................
Notes, contd.:
Trademarks and airport slots ..........................................................................................
Balance at 1 January 2021 ..............................................
Consolidated Financial Statements of Icelandair Group hf. 2022
21
Amounts are in USD thousand
18.
Impairment test, contd.:
Passenger and
Other Group
2022
cargo operations
entities *
2.5% 2.5%
Revenue growth:
117.4% 44.1%
10.7% 10.3%
21.2% 2.9%
10.3% 13.6%
62.6% 64.8%
6.6% 6.9%
2021
2.1% 2.1%
Revenue growth:
112.7% 73.4%
24.5% 21.0%
20.6% 4.1%
9.3% 16.6%
62.9% 64.6%
4.6% 4.8%
19.
Investment in associates
Share of
Share of
Ownership
Carrying
profit/loss in
Carrying
profit/loss in
amount
associates
amount
associates
25%
1,154 233 1,017 171 )(
29%
9,009 1,757 7,323 216
50%
1,566 1,381 )( 3,095 26
0%
0 0 0 3,903 )(
174
1,241
157
16 )
(
11,903 1,850 11,592 3,848 )(
EBK ehf. operates jet fuel tank storage facilities, serving fuel to suppliers and airlines at Keflavík airport.
ÍTF1 slhf. is a fund managed by Landsbréf. The Fund's purpose was to invest in Icelandic companies focusing on
entertainment and leisure activities for foreign tourists, with focus on projects that have a full-year operational
potential. The lifespan of the fund is until end of 2023 with a possible 1 year extension each time until 2025 and the
aim is to return proceeds from its investments to shareholders as soon as they are realized.
Weighted average 2021/2020 .....................................................................................
2021- 2026 ...................................................................................................................
Forecasted EBIT growth 2022-2026 ...............................................................................
2022
Other investments ............................................................
Pre-tax interest rate for debt ...........................................................................................
EBK ehf. ....................................................
Lindarvatn ehf. ...........................................
Total investments in associates .......................................
Berjaya Iceland Hotels ..............................
Debt leverage .................................................................................................................
Forecasted EBIT growth 2023-2027 ...............................................................................
The recoverable amounts of the cash-generating units at year-end were estimated to be higher than carrying
amounts and no impairment was required. Reasonable change in main assumptions would not lead to impairment.
Long-term growth rate ....................................................................................................
* Weighted average of underlying CGU.
ÍTF 1 slhf. ..................................................
The Group has interests in number of associates. The carrying amount and share of profit of the associates is as
follows:
Pre-tax interest rate for debt ...........................................................................................
WACC .............................................................................................................................
Long-term growth rate ....................................................................................................
Weighted average 2022/2021 .....................................................................................
WACC .............................................................................................................................
2022- 2027 ...................................................................................................................
Debt leverage .................................................................................................................
2021
The values assigned to the key assumptions represent management's assessment of future trends in the airline and
transportation industries and are based on both external sources and internal historical data. Value in use was
based on the following key assumptions:
Notes, contd.:
Lindarvatn ehf. is the owner of a property at Thorvaldsensstræti in downtown Reykjavík and other properties located
near Austurvöllur which have been rebuilt as a hotel which was opened in December 2022.
Consolidated Financial Statements of Icelandair Group hf. 2022
22
Amounts are in USD thousand
19.
Investment in associates, contd.:
20.
Non-current receivables and deposits
2022 2021
42 50
5,763 7,523
18,047 14,414
0 11,390
23,852 33,377
6,184 )( 14,390 )(
17,668
18,987
- 14,390
6,184 3,357
3,193 3,557
564 575
543 519
530 507
12,838 10,472
23,852
33,377
Non-current receivables and deposits are specified as follows:
Notes, contd.:
Non-current receivables consist of notes, deposits for aircraft and engine lease agreements and various other travel
related security fees.
Prepayments on aircraft purchases ................................................................................
Maturities in 2022 ...........................................................................................................
Maturities in 2025 ...........................................................................................................
Icelandair Group finalized the sale of its holdings in Icelandair Hotels (now rebranded as Berjaya Iceland Hotel
Collection) in 2020. In its capacity as then parent the Company had issued guarantees in relation to rental
obligations for the hotel company. At the end of year 2022 these guarantees had all but one been relinquished. The
Company has a back-to-back guarantee from the hotel company owner Berjaya Land Berhad. Due to the release of
the guarantees, Icelandair recognized USD 1 million in revenue (Gain on sale of associate/subsidiary) during the
year. The remaining reserve against the remaining guarantee is USD 1 million.
Maturities in 2027 ...........................................................................................................
Non-current receivables and deposits denominated in currencies other than the functional currency comprise USD
2.7 million (2021: USD 2.3 million).
Security deposits ............................................................................................................
Loans, effective interest rate 6% / 6% ............................................................................
In December 2021, Icelandair Group finalized the sale of Iceland Travel. Part of the sales price was subject to
certain performance metrics for 2022 that have now been realized. Revenue in the amount of aproximately USD 2.8
million was realized in 2022 related to the sale (Gain on sale of associate/subsidiary).
Lease receivable, interest rate 5% ................................................................................
Current maturities ...........................................................................................................
Maturities in 2026 ...........................................................................................................
Maturities in 2023 ...........................................................................................................
Maturities in 2024 ...........................................................................................................
Total non-current receivables and deposits, including current maturities .....................
Contractual repayments mature as follows:
Subsequent ....................................................................................................................
Non-current receivables and deposits total ....................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
23
Amounts are in USD thousand
21.
Income taxes
(i) Amounts recognized in profit or loss
2022
2021
748 )(
27,461 )(
6,746 2,198
5,998
25,263 )
(
(ii)
Amounts recognized in other comprehensive income
68 )( 3,911
975 )( 309 )(
1,043 )(
3,602
(iii) Reconciliation of effective tax rate
179 130,059 )(
20.1%
36
20.0%
26,012 )(
27.4%
49
0.1%)(
75
64.8%
116
1.3%
1,636 )
(
425.1%)(
761 )
(
1.4%
1,817 )
(
206.7%)(
370 )
(
0.6%)(
770
3,905.6%
6,991
1.3%)(
1,689
136.9%)(
245 )
(
0.4%)(
509
101.7%
182
0.9%)(
1,159
3,350.8%
5,998
19.4% 25,263 )(
(iv)
Recognized deferred tax liabilities
Deferred tax liabilities are specified as follows:
2022
2021
Deferred tax liabilities 1 January ..................................................................................... 60,647 )(
38,836 )(
5,998
25,263 )(
1,043 )(
3,602
99
291 )(
0 141
55,593 )( 60,647 )(
(v)
Deferred tax liabilities are attributable to the following:
2022
2021
2022
2021
2022
2021
Operating assets ..................
0 0 27,114 )( 29,102 )( 27,114 )( 29,102 )(
Intangible assets ...................
0 0 58 )( 87 )( 58 )( 87 )(
Derivatives ............................
46 0 0 22 )( 46 22 )(
Trade receivables .................
336 2,513 0 0 336 2,513
Right-of-use assets ...............
0 0 85,816 )( 67,465 )( 85,816 )( 67,465 )(
Lease claim ...........................
0 0 6,971 )( 2,516 )( 6,971 )( 2,516 )(
Lease liabilities .....................
94,155 71,528 0 0 94,155 71,528
Tax loss carry-forwards ........
78,556 85,738 0 0 78,556 85,738
Other items ...........................
2,459
60
0
2,459
60
Total ......................................
175,552 159,839 119,959 )( 99,192 )( 55,593 60,647
Effective portion of changes in fair value of cash flow hedge .........................................
2021
Notes, contd.:
Deferred tax expense
Exchange rate difference ................................................................................................
Total tax recognized in other comprehensive income ....................................................
Total tax expense recognized in profit or loss ................................................................
Share of loss of associates ..............................................
Non-deductible expenses ................................................
2022
Gain on sale of a subsidiary/associate ............................
Assets
Origination and reversal of temporary differences ..........................................................
Income tax according to current tax rate ..........................
Exchange rate difference - other .....................................
Exchange rate difference ................................................................................................
Deferred tax (assets) liabilities 31 December .................................................................
Effective tax rate ..............................................................
Deferred tax recognized in profit or loss .........................................................................
Exchange rate difference ................................................................................................
Deferred tax liabilities transferred to assets held for sale ...............................................
Warrants ..........................................................................
Profit (loss) before tax ......................................................
Liabilities
Income tax recognized in other comprehensive income ................................................
Other items ......................................................................
Net
Exchange rate difference - tax loss carry-forwards .........
Consolidated Financial Statements of Icelandair Group hf. 2022
24
Amounts are in USD thousand
21.
Income taxes, contd.:
(vi)
Movements in deferred tax balance during the year
Recognized
in other com-
Recognized
Exchange
prehensive
Transferred
in profit
rate
income
to asset
2022
1 January
or loss
difference
and equity
held for sale
31 December
Operating assets ..................
29,102 )
(
1,825
163
27,114 )
(
Intangible assets ...................
87 )
(
29
58 )
(
Derivatives ............................
22 )
(
68
46
Trade receivables .................
2,513
2,178 )
(
1
336
Right-of-use assets ...............
67,465 )
(
18,355 )
(
4
85,816 )
(
Lease claim ...........................
2,516 )
(
4,455 )
(
6,971 )
(
Lease liabilities .....................
71,528
22,631
4 )
(
94,155
Tax loss carry-forwards ........
85,738
6,196 )
(
986 )
(
78,556
Other items ...........................
60
701
723
975
2,459
Total ......................................
60,647 5,998 )( 99 )( 1,043 0 55,593
Recognized
in other com-
Recognized
Exchange
prehensive
Transferred
in profit
rate
income
to asset
2021
1 January
or loss
difference
and equity
held for sale
31 December
Operating assets ..................
45,954 )( 16,798 189 0 135 )( 29,102 )(
Intangible assets ...................
259 )( 172 0 0 0 87 )(
Derivatives ............................
3,889 0 0 3,911 )( 0 22 )(
Trade receivables .................
1,901 614 47 )( 0 45 2,513
Tax loss carry-forwards ........
74,193 11,447 126 0 28 )( 85,738
Operating lease ....................
1,765 219 )( 24 0 23 )( 1,547
Other items ...........................
3,301
3,549 )
(
1 )
(
309
0
60
38,836 25,263 291 3,602 )( 141 )( 60,647
2022 2021
90,552 98,689
42,435 46,248
170,994 186,359
85,031 97,393
3,770 -
392,782 428,689
22.
Inventories
2022
2021
18,826 20,642
3,665 3,756
22,491
24,398
23.
Marketable securities
Tax loss carry-forwards are specified as follows:
At year-end marketable securities amounted to USD 42.2 million (2021: USD 58.2 million). Marketable securities
consist of government, bank and corporate bonds, term deposits and bills and unit shares in local mutual funds that
are valued at their year-end market price. No restrictions apply to the securities’ redemption.
Spare parts .....................................................................................................................
Tax loss from 2018 expire 2028 .....................................................................................
Tax loss from 2019 expire 2029 .....................................................................................
Tax loss from 2020 expire 2030 .....................................................................................
Tax loss from 2021 expire 2031 .....................................................................................
Tax loss from 2022 expire 2032 .....................................................................................
Notes, contd.:
Tax loss carry-forwards total ..........................................................................................
Inventories total ..............................................................................................................
Based on a five-year forecast and taking into a account the reversal of existing temporary differences, the Group
expects to utilize its carry forward tax loss.
Inventories are specified as follows:
Other inventories ............................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
25
Amounts are in USD thousand
24.
Trade and other receivables
2022
2021
51,322 47,632
21,486 17,126
30,796 20,187
3,537 2,623
18,345 16,174
29,831
14,675
155,317
118,417
25.
Cash and cash equivalents
2022
2021
34,875 30,021
188,994 174,481
383 265
224,252
204,767
26.
Equity
Share capital
Share premium
Reserves
Cash on hand .................................................................................................................
The Company's share capital amounts to ISK 41,120,247 thousand according to its Articles of Association. Each
share carries one vote at shareholders' meetings. The shares are freely transferable unless otherwise stipulated by
law. All shareholders hold equal rights to dividend payments as declared from time to time. The Company issued
new shares in the nominal amount of ISK 5,161,815 thousand in 2022. A total of 1,414,773,617 shares were sold to
the Blue Issuer Designated Activity Company, a subsidiary of Bain Capital, and 3,747,041,800 shares were issued
in relation to the exercise of warrant classes ICEAIRW180222 and ICEAIRW120822 (see note 30). All the new
shares were issued within the same share class as all existing shares in Icelandair Group.
Bank deposits .................................................................................................................
According to the Icelandic Financial Statements Act, companies must retain, in a separate equity account,
recognized share in profit of subsidiaries and associates in excess of dividend received or declared.
Restricted cash ...............................................................................................................
Other receivables ............................................................................................................
At year-end trade receivables are presented net of an allowance for doubtful accounts of USD 6.3 million (2021:
USD 17.6 million).
Trade and other receivables total ...................................................................................
The Group's exposure to credit and currency risks and impairment losses related to trade and other receivables is
disclosed in note 34.
Prepayments ...................................................................................................................
Trade receivables ...........................................................................................................
Lease receivables ...........................................................................................................
Cash and cash equivalents total .....................................................................................
Trade and other receivables are specified as follows:
The translation reserve comprises all currency differences arising from the translation of the financial statements of
subsidiaries having functional currencies other than the Group as well as from the translation of liabilities that hedge
net investment.
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedged transactions that have not yet occurred.
Notes, contd.:
Receivables due from related parties .............................................................................
Fixed term bank deposits ................................................................................................
Restricted cash is held in bank accounts pledged against credit cards acquirers, derivatives, airport operators and
tourism guarantees.
Cash and cash equivalents are specified as follows:
Prepayment and prepaid expenses which relate to subsequent periods amounted to USD 21.5 million (2021: USD
17.1 million) at year-end. The prepayments consist mainly of prepaid contractual obligations, insurance premiums,
software licenses and leases.
Share premium represents excess of payment above the nominal value (ISK 1 per share) that shareholders have
paid for shares sold by the Company. According to the Icelandic Companies Act, 25% of the nominal value of share
capital must be held in reserve. The balance of the share premium account can be used to offset losses not
covered by other reserves or to offset stock splits.
The Company held no treasury shares at year-end 2022.
Consolidated Financial Statements of Icelandair Group hf. 2022
26
Amounts are in USD thousand
26.
Equity, contd.:
Dividend
27.
Earnings per share
Basic earnings per share:
2022
2021
8,461 )(
104,298)(
38,807,390
31,605,606
0.02 )( 0.33)(
0.02 )( 0.33)(
28.
Loans and borrowings
Non-current
interest
bearing debt
Total
263,588 263,588
3,098
3,098
160
160
29 )(
29 )(
20,365 )( 20,365 )(
17,136 )( 17,136 )(
16,726
16,726
0
0
536 536
16,673 16,673
5,702 )( 5,702 )(
362
362
5,340 )( 5,340 )(
257,785 257,785
42,422
42,422
420 )(
420 )(
47,799 )( 47,799 )(
5,797 )( 5,797 )(
8,923
8,923
791 791
9,714 9,714
6,517 )( 6,517 )(
532
532
5,985 )( 5,985 )(
255,717 255,717
For the longer term the dividend policy is as follows: “The Company's goal is to declare 20-40% of annual net profit
as dividend. The final decision on dividend payments will be based on the financial position of the Company,
operating capital requirements and market conditions.”
Basic earnings per share in US cent per share ..............................................................
Weighted average number of shares for the year ..........................................................
Loss for the year attributable to equity holders of the parent company ..........................
Diluted earnings per share in US cent per share ............................................................
Notes, contd.:
Repayment of borrowings ...............................................................................................
Cash flows related to financing activities ........................................................................
Total interest-bearing debt 1 January 2021 ....................................................................
Proceeds from loans and borrowings .............................................................................
Proceeds from loans and borrowings on assets held for sale ........................................
This note provides information on contractual terms of the Group's interest-bearing loans and borrowings, which are
measured at amortized cost, and changes during the year. For more information on the Group's exposure to interest
rate, foreign currency and liquidity risk, see note 34.
The Board of Directors proposes no dividend payment to shareholders in 2023 for the year 2022 as it is not
permitted by law due to accumulated deficit at year-end
No dividend was paid to shareholders in 2022 and 2021.
Transaction cost of long-term loans and borrowings ......................................................
Earnings per share is calculated by dividing net loss attributable to equity holders of the Parent by the weighted
average number of outstanding shares during the year. The calculation of diluted earnings per share is the same as
basic earnings per share as no convertible notes or stock options, apart from warrants already exercised, have
been issued.
Repayment of borrowings ...............................................................................................
Proceeds from other payables ........................................................................................
Accrued interest added to the loans ..............................................................................
Proceeds from other payables ........................................................................................
Prepayment of borrowing assets held for sale ...............................................................
Accrued interest added to the loans ..............................................................................
Financing activities without cash flows ...........................................................................
Currency exchange difference ........................................................................................
Expensed borrowing cost recognized in finance cost .....................................................
Other liability related changes ........................................................................................
Transaction cost of long-term loans and borrowings ......................................................
Total interest-bearing debt 1 January 2022 ....................................................................
Proceeds from loans and borrowings .............................................................................
Cash flows related to financing activities ........................................................................
Financing activities without cash flows ...........................................................................
Currency exchange difference ........................................................................................
Expensed borrowing cost recognized in effective interests ............................................
Other liability related changes ........................................................................................
Total interest-bearing debt 31 December 2022 ..............................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
27
Amounts are in USD thousand
28.
Loans and borrowings, contd.:
Loans and borrowings are specified as follows:
Non-current loans and borrowings:
2022
2021
236,516 238,612
19,201 19,173
255,717 257,785
48,453 )
(
35,646)
(
207,264 222,139
Current loans and borrowings:
48,453 35,646
48,453
35,646
255,717 257,785
Terms and debt repayment schedule:
Nominal
interest
rates year
Year of
Currency
end 2022
maturity
2022
2021
USD 5.9% 2023-2028 190,677 180,115
EUR 2.7% 2023-2028 45,839 58,497
ISK 4.7% 2023-2030 19,201 19,173
255,717
257,785
Repayments of loans and borrowings are specified as follows: 2022 2021
- 35,646
48,453 46,847
58,501 58,541
36,985 34,605
27,852 25,328
15,096 12,043
68,830 44,775
255,717
257,785
Repayments in 2025 .......................................................................................................
Repayments in 2023 .......................................................................................................
Additionally, the Company had access to a government guaranteed credit facility in the amount of USD 120 million.
The facility, which was originally available for draw-down until mid-September 2022, was terminated by the
Company on 7 February 2022 having never been drawn on.
Repayments in 2024 .......................................................................................................
Repayments in 2027 .......................................................................................................
Subsequent repayments .................................................................................................
Total loans and borrowings .............................................................................................
Repayments in 2022 .......................................................................................................
Included in Unsecured loans are deferred payroll tax payments that formed a part of general government measures
in 2020 and 2021 to mitigate the negative effects of COVID-19. The loans carry zero interest and are measured at
net present value. The deferred payments granted in 2020 are payable in monthly installments over a 48-month
period from July 2022 – June 2026. Payments deferred in 2021 due in January 2022 were extended to six
installments from September 2022 to February 2023.
Total interest bearing liabilities .......................................................................................
The Company has two committed credit lines in place with local banks in the total amount of USD 52 million. The
lines were undrawn at year-end 2022.
Unsecured loans .......................................
Total remaining balance
Secured bank loans ...................................
Total current loans and borrowings ................................................................................
Secured bank loans ...................................
Unsecured loans .............................................................................................................
Repayments in 2026 .......................................................................................................
Notes, contd.:
Total non-current loans and borrowings .........................................................................
Current maturities of non-current liabilities .....................................................................
Current maturities ...........................................................................................................
Total loans and borrowings .............................................................................................
Secured bank loans ........................................................................................................
Total loans and borrowings .............................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
28
Amounts are in USD thousand
28. Loans and borrowings, contd.:
29.
Lease liabilities
Lease liabilities is specified as follows:
2022
2021
245,659 146,597
2,701 )(
513
10,458
4,696 )
(
127,108
133,858
50,533 )
(
37,554 )
(
13,015
7,299
0 226
851 )( 584 )(
342,155 245,659
45,463 )
(
33,617 )
(
296,692 212,042
Land &
Rate
Real Estate
Aircraft
Other
Total
4.40% 89 331,525 70 331,684
4.17% 8,590 0 655 9,245
2.21% 642 0 3 645
4.43%
579
0
2
581
9,900 331,525 730 342,155
Maturity analysis
2022
2021
- 33,617
45,463 31,219
42,890 28,614
41,541 28,003
41,024 26,908
37,550 25,243
133,687 72,055
342,155 245,659
H1 2023
H2 2023
Total
2 2 4
1 0 1
3 2 5
Repayments in 2023 .......................................................................................................
Repayments in 2024 .......................................................................................................
Lease liabilities in GBP ..............................
Repayments in 2022 .......................................................................................................
Further lease commitments have been signed for three aircraft. One 767-300 freighter, scheduled for delivery in H1
2023 and two 737 MAX8 aircraft which are scheduled to be delivered in H2 2023. Letter of intent has been signed
for two additional aircraft to be delivered in H1 2023. The lease liability for these five aircraft will be approximately
USD 125 million.
New or renewed leases ..................................................................................................
Reclassified to liabilities held for sale .............................................................................
Interest of lease liabilities ................................................................................................
Currency translation adjustment .....................................................................................
As part of its financial restructuring in 2020 the Group signed deferral agreements with all major lenders. The
deferral agreements included renegotiated financial covenants of long-term loan agreements. According to the
restructured terms, that took effect at the end of Q3 2020, the equity ratio was the Group's primary financial
covenant in the following quarters and was to be a minimum of 8-10% in terms of loan agreements with lenders and
a minimum of 2% in terms of the government guaranteed credit facility. Following the termination of the government
guaranteed facility the amendment to the minimum equity ratio covenants with two out of three major lenders was
extended and was in the range of 10-12,5% at the end of each quarter in 2022. The minimum range will be 10-15%
at the end of each quarter in 2023. Additionally, one of the aforementioned lenders introduced a temporary minimum
liquidity covenant in effect until end of year 2023.
This note provides information of the Group's lease liabilities, which are measured at amortized cost, and changes
during the year. For more information on the Group's exposure to interest rate, foreign currency and liquidity risk,
see note 34.
Balance at 1 January ......................................................................................................
Adjustments ....................................................................................................................
Adjustments for indexed leases ......................................................................................
Subsequent repayments .................................................................................................
Total lease liabilities ........................................................................................................
Repayments in 2026 .......................................................................................................
Boeing 767-300 Freighter ........................................................................
Total .........................................................................................................
The expected deliveries of leased aircraft to the Company are shown below:
Boeing 737 MAX8 ....................................................................................
Lease liabilities in USD ..............................
Repayments in 2025 .......................................................................................................
Total lease liabilities ..................................
Lease liabilities in other currency ..............
Payment of lease liabilities .............................................................................................
Current maturities ...........................................................................................................
Balance at 31 December ................................................................................................
Total non-current lease liabilities ....................................................................................
Lease liabilities in ISK, indexed .................
Repayments in 2027 .......................................................................................................
Notes, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2022
29
Amounts are in USD thousand
30.
Warrant liabilities
Warrant liabilities
ICEAIRW
ICEAIRW
ICEAIRW
Bain Capital
130821
180222
120822
120822
Total
9,129 9,001 9,634 0 27,764
3,300 3,300
Gain on change
5,043 )
(
997 )
(
2,077 )
(
65 )
(
8,182 )
(
9 139 )( 154 )( 108 )( 392 )(
4,095 )( 0 0 0 4,095 )(
0 7,865 7,403 3,127 18,395
Gain on change
0 1,795 )( 2,741 366 )( 580
0 369 423 )( 160 )( 214 )(
0 6,439 )( 9,721 )( 2,601 )( 18,761 )(
0 0 0 0 0
31.
Non-current payables
2022
2021
44,568 29,457
10,621 )( 6,073 )(
33,947
23,384
Non-current payables are scheduled to be repaid as follows:
- 6,073
10,621 7,145
3,932 3,159
8,142 4,024
316 360
1,762 4,705
19,795 3,991
44,568 29,457
32.
Trade and other payables
Trade and other payables are specified as follows:
2022
2021
54,388 25,658
10,621 6,073
136,780 112,005
201,789 143,736
Current portion of engine overhauls and security deposits from lease contracts ...........
Fair value at issuance date .......................
Other payables ...............................................................................................................
Subsequent ....................................................................................................................
Repayments in 2024 .......................................................................................................
Exercised warrants ....................................
The Bain Capital warrant was exercised in full in July 2022 at a price of ISK 1.64 pr. share. Warrant class
ICEAIRW120822 was exerciseable in August with 98% of warrant holders opting to exercise their rights at a price
of ISK 1.30 pr. share. The total proceeds to the Company amounted to USD 34,4 million.
Issued warrants .........................................
Total trade and other payables .......................................................................................
Repayments in 2023 .......................................................................................................
Total non-current payables, including current maturities ...............................................
Total non-current payables .............................................................................................
Repayments in 2027 .......................................................................................................
Trade payables ...............................................................................................................
Notes, contd.:
Foreign exchange difference .....................
Repayments in 2026 .......................................................................................................
Total warrant liabilities 31.12.2021 ............
Warrant class ICEAIRW180222 was exercisable in Q1 with 97.6% of warrant holders opting to exercise their rights
to purchase new shares in the Company at a price of ISK 1.22 pr. share. The total proceeds to the Company
amounted to USD 17.9 million.
in fair value of warrant liability ...............
Repayments in 2022 .......................................................................................................
Non-current payables correspond to accrued engine overhaul cost of leased aircraft and security deposits from
lease contracts to be realized after 2023. Non-current obligations are specified as follows:
Non-current payables .....................................................................................................
Current portion, classified in trade and other payables ..................................................
Repayments in 2025 .......................................................................................................
Exercised warrants ....................................
Foreign exchange difference .....................
Total warrant liabilities 31.12.2022 ............
in fair value of warrant liability ...............
The warrants are specified as follows:
Consolidated Financial Statements of Icelandair Group hf. 2022
30
Amounts are in USD thousand
33.
Deferred income
Deferred income is specified as follows:
2022
2021
253,425 223,975
18,977 19,798
30,957 15,307
303,359 259,080
34.
Financial risk management
Overview
- Credit risk
- Liquidity risk
- Market risk
Risk management framework
Total deferred income .....................................................................................................
The Group Audit Committee oversees how management monitors compliance with the Group's risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced
by the Group. In addition to the formal oversight performed by the Audit Committee, the Company has in place
internal audit processes which act to monitor management controls and procedures, the results of which are
reported to the Audit Committee.
The Group's risk management policies are established to identify and analyze the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group,
through its training and management standards and procedures, aims to maintain a disciplined and constructive
control environment in which all employees understand their roles and obligations.
This note presents information about the Group's exposure to each of the risks above, the Group's objectives,
policies, and processes for measuring and managing risk, and the Group's management of capital. Further
quantitative disclosures are included throughout these Consolidated Financial Statements.
Sold unused tickets and vouchers ..................................................................................
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk
management framework. The Group's Risk Management Committee is responsible for developing and monitoring
the Group's risk management policies. The Committee reports regularly to the Board of Directors on its activities.
The amount allocated to frequent flyer points is estimated by reference to the fair value of the discounted services
for which they could be redeemed, since the fair value of the points themselves is not directly observable. The fair
value of the discounted services for which the points, granted through a customer loyalty program, can be
redeemed takes into account the expected redemption rate and the timing of such expected redemptions. That
amount is recognized as deferred income.
Other prepayments concist mainly of prepayments for packages and charter flights.
The Group has exposure to the following financial risks:
Frequent flyer points .......................................................................................................
Sold unused tickets, fair value of unutilized frequent flyer points and other prepayments are presented as deferred
income in the Consolidated Statement of Financial Position.
Notes, contd.:
The amount allocated to sold unused tickets and vouchers is the book value of fares and fuel surcharges that the
Group has collected and is liable for to passengers. Thereof sold tickets with future travel dates amounted to USD
212.3 million (2021: USD 140.3 million) and vouchers amounted to USD 41.1 million (2021: USD 83.7 million).
When issued the vouchers were generally valid for 3 years. The validity of covid-related vouchers has been
extended by an additional two years from the date of original issuance.
Other prepayments .........................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
31
Amounts are in USD thousand
34.
Financial risk management, contd.:
a.
Credit risk
Exposure to credit risk
Note 2022 2021
20 17,668 18,987
Trade and other receivables ....................................................................
24 133,831 101,291
23 42,159 58,197
25 224,252 204,767
417,910 383,242
Trade and other receivables and market securities
2022
2021
40,718 11,151
10,604 36,481
51,322 47,632
42,159 58,197
103,995 70,785
197,476 176,614
Impairment losses
Allowance for Allowance for
Gross impairment Gross impairment
2022 2022 2021 2021
44,950 404)( 31,314 1,456)(
4,002 474)( 2,561 523)(
1,008 520)( 15,705 7,170)(
3,345 853)( 11,556 4,989)(
4,336 4,068)( 4,138 3,504)(
57,641 6,319)( 65,274 17,642)(
Total .................................................................................
At year-end 2022, the maximum exposure to credit risk for trade and other receivables and marketable securities by
type of financial instrument was as follows:
Trade and other receivables, see note 24 ......................................................................
Past due 121-365 days ....................................................
Not past due .....................................................................
Cash and cash equivalents .....................................................................
Credit cards ....................................................................................................................
Marketable securities ...............................................................................
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from the Group's cash and cash equivalents, which are kept
with local and international banks with acceptable credit ratings, marketable securities which consist of bonds and
bills issued by the Icelandic state, high rated banks and financially strong Icelandic corporates, as well as
receivables from customers.
The carrying amounts of financial assets represent the maximum credit exposure. The maximum exposure to credit
risk at the reporting date was as follows:
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of customers and
counterparties.
The aging of trade receivables and credit cards at the reporting date was as follows:
Other receivables ............................................................................................................
Trade receivables ...........................................................................................................
Credit risk is linked to trade receivables, agreements with financial institutions related to hedging and counterparties
in marketable securities. The relative spread of trade receivables across counterparties is crucial for credit risk
exposure. The Group is aware of potential losses related to credit risk exposure and chooses its counterparties
subject to business experience and securities issuers subject to credit ratings and financial strength. The Group
does not expect further losses than already accounted for.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of
trade and other receivables. The main components of this allowance are a specific loss component that relates to
individually significant exposures, and a collective loss component established for groups of similar assets in
respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based
on historical data of payment statistics for similar financial assets.
More than one year ..........................................................
Carrying amount
Notes, contd.:
Non-current receivables and deposits .....................................................
Marketable securities ......................................................................................................
Past due 1-30 days ..........................................................
Past due 31-120 days ......................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
32
Amounts are in USD thousand
34. Financial risk management, contd.:
a. Credit risk, contd.:
2022 2021
17,642 14,305
11,171)( 2,832
1,381 493)(
1,533)( 998
6,319 17,642
Guarantees
b.
Liquidity risk
Exposure to liquidity risk
Carrying
Contractual
Within 12
More than
31 December 2022
amount
cash flows
months
1-2 years
2-5 years
5 years
Non-derivative financial liabilities
Unsecured bank loans ..........
19,201
21,409
8,368
4,709
8,333
0
Secured loans .......................
236,516
277,802
57,174
63,162
82,105
75,361
Guarantees ...........................
961
961
961
Lease liability ........................
342,155
487,626
73,687
66,704
167,429
179,806
Payables and prepayments ..
235,736 235,736 201,789 3,932 10,220 19,795
834,569
1,023,534
341,978
138,507
268,087
274,962
Derivative financial liabilities
Commodity derivatives .........
1,315)
(
1,882
1,882
0
0
0
Margin accounts ...................
1,510
1,510
1,510
0
0
0
Forward exchange contracts
820)
(
359)
(
359)
(
0
0
0
- Outflow ..............................
53,938)
(
54,770)
(
54,770)
(
0
0
0
- Inflow .................................
53,117
54,410
54,410
0
0
0
Interest rate swaps ...............
1,834
1,989
793
601
576
19
1,209
5,022
3,826
601
576
19
Exchange rate difference ................................................................................................
Balance at 1 January ......................................................................................................
Notes, contd.:
Impairment loss allowance, (decrease) increase ...........................................................
Amounts written off .........................................................................................................
Following are the contractual maturities of financial liabilities at the reporting date, including estimated interest
payments:
A significant part of the balance relates to customers that have a good track record with the Group. But based on
historical default rates and expected credit loss in the future, management believes that minimal impairment
allowance is necessary in respect of trade receivables not past due or past due by 30 days.
The Group's policy is to provide financial guarantees only to wholly owned subsidiaries. However, as part of the
sales process of Icelandair Hotels the Group remained a joint guarantor for agreements already in place at the date
of sale. Most of these were relinquished before the end of the year. The remaining guarantee is expected to be
relinquished in Q1 2023. See note 19.
The Group's management monitors its cash flow requirements by using a rolling forecast. Liquidity is managed
based on projected cash flows in different currencies.
The allowance account in respect of trade receivables is used to record impairment losses. If the Group believes
that no recovery is possible the financial asset is written off directly.
The Group aims to maintain the level of its cash and cash equivalents and marketable securities equal to the
estimated amount of three months' average fixed operating cost where 30% can be in the form of undrawn lines of
credit. At year-end the Group's cash and cash equivalents amounted to USD 224 million, and USD 42 million of
marketable securities with trusted counterparties, total USD 266 million.
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities, settled by delivering cash or another financial asset at their due date. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's
reputation.
Balance at 31 December ................................................................................................
Changes in the allowance for impairment in respect of trade receivables during the year were as follows:
Consolidated Financial Statements of Icelandair Group hf. 2022
33
Amounts are in USD thousand
34.
Financial risk management, contd.:
b.
Liquidity risk, contd.:
Carrying
Contractual
Within 12
More than
31 December 2021
amount
cash flows
months
1-2 years
2-5 years
5 years
Non-derivative financial liabilities
Unsecured bank loans ..........
19,173
22,344
3,719
5,125
13,500
0
Secured loans .......................
238,612
262,485
42,445
47,862
112,057
60,121
Guarantees ...........................
2,000
2,000
2,000
Lease liability ........................
245,659
299,054
46,100
82,344
89,830
80,780
Payables and prepayments ..
167,120
167,120
143,736
7,145
7,543
8,696
672,564
753,003
236,000
144,476
222,930
149,597
Derivative financial liabilities
Commodity derivatives .........
944
944
944
0
0
0
Margin accounts ...................
1,653
1,653
1,653
0
0
0
Forward exchange contracts
382)
(
234
234
0
0
0
- Outflow ..............................
16,464)( 16,472)( 16,472)( 0 0 0
- Inflow .................................
16,633 16,706 16,706 0 0 0
Interest rate swaps ...............
498)
(
1,514)
(
676)
(
396)
(
374)
(
68)
(
1,717
1,317
2,155
396)
(
374)
(
68)
(
c.
Market risk
Carbon risk
Market risk emerges from changes in market prices, such as foreign exchange rates, interest rates, carbon prices
and fuel prices, as those changes will affect the Group's cash flows or the value of its holdings in financial
instruments. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimizing returns. The Company holds some of its ISK holdings in term deposits,
bonds issued by the Icelandic state and rated domestic banks as well as short-term bills issued by financially strong
local corporates. These investments fall within the agreed risk management policy.
The prices of all types of allowances have risen substantially in recent years making procurement of emission
allowances a significant and growing cost item. As carbon emission is directly related to the Company’s fuel
consumption the associated costs significantly rose year-on-year following a powerful ramp-up of production from
June 2022 onwards. Icelandair enjoys a free allowance of ETS units which covered approx. 47% of the Company’s
total emission allowance needs in 2022. In 2022 the EU announced a plan to accelerate the amortization rate of the
2010 free allowance allocated to airlines. Thus Airlines will be more dependent on carbon trading in near future
which will bring the consequential added costs and volatility of procurement to their production earlier and at a faster
pace than planned.
Icelandair is required to procure three types of emission allowances in relation to its operations: EUAs, UKAs and
CHUAs. Carbon emission is calculated in a fixed proportion of the fuel consumption of flights operated to and from
the European continent. Icelandair mitigates risk associated with carbon emission allowances through opportunistic
monthly spot purchases of allowances to mirror the net shortfall of allowances taking into consideration the
Company’s free allowances.
The Group uses spot and forward trading, swaps and options in order to manage market risks. All such transactions
are carried out within the guidelines set by the Board of Directors. The Group seeks to apply hedge accounting in
order to manage volatility in profit or loss.
Notes, contd.:
Undrawn secured credit lines at year-end 2022 amounted to USD 52.0 million (2021: USD 52.0 million). Thereof
USD 22.0 million are available until September 2025 and USD 30.0 million until April 2024. An undrawn Government
Guaranteed credit line amounting to USD 120.0 million (2021: USD 120.0 million) which was available until mid-
September 2022 was terminated by the Company on 7 February 2022 having never been drawn on.
Consolidated Financial Statements of Icelandair Group hf. 2022
34
Amounts are in USD thousand
34.
Financial risk management, contd.:
c.
Market risk, contd.:
Fuel risk
Sensitivity analysis
2022
2021
3,199 1,760
3,199 )
(
1,760 )
(
Currency risk
Effect on equity
Notes, contd.:
The hedging policy allows for both swaps and options traded with approved counterparties and within approved
limits. All existing hedge contracts include a stop-loss put to limit the associated risk.
The Group is exposed to fuel price risk. The Group's fuel price risk management strategy aims to provide the airline
with protection against sudden and significant increases in oil prices while ensuring that the airline is not
competitively disadvantaged in the event of a substantial price fall. The Group strategy is to hedge between 20%
and 50% of estimated fuel consumption 6 months forward, 0-40% 7-12 months forward and 0-20% 13-18 months
forward.
At year-end 2022 all open hedge positions were effective, changes in their market value are therefore confined to
equity until settlement.
The Group is exposed to risk associated with cash flow and balance sheet items that are denominated in currencies
other than the functional currencies of Group entities.
The Group seeks to reduce the risk arising from such a currency mismatch in the cash flow by netting receivables
and payments in each individual currency and by internal trading within the Group. The shortfall of ISK is financed
by a surplus of European currencies, most importantly EUR and Scandinavian currencies but also GBP and CAD.
The disruption caused by the COVID-19 pandemic and the subsequent financial restructuring culminating in an ISK
denominated share offering, temporarily changed both the cash flow and the balance sheet exposure. The usual
ISK cash flow shortfall shifted to a long position with ISK denominated financial assets being more dominant than
before. Based on the unusual macro-economic conditions of 2022 i.e., high inflation coupled with low interest rates
in both EUR and USD markets during the first half of 2022 the Group decided to maintain a higher than usual ratio
of ISK financial assets in a bid to optimize yields. The appreciation of USD in 2022 against most currencies,
including the ISK did however spill some adverse exchange rate effects due to the increased weight of ISK assets
on the Balance Sheet.
Decrease in fuel prices by 10% ......................................................................................
Increase in fuel prices by 10% ........................................................................................
The following table demonstrates the sensitivity of the financial instruments in place at year-end to a reasonably
possible change in fuel prices, with all other variables held constant, on profit before tax and equity:
Consolidated Financial Statements of Icelandair Group hf. 2022
35
Amounts are in USD thousand
34.
Financial risk management, contd.:
c.
Market risk, contd.:
Exposure to currency risk
ISK EUR GBP DKK NOK/SEK CAD
Receivables / payables, net ..
35,499 2,278 3,264 )( 640 )( 1,748 )( 1,010 )(
Marketable securities ............
42,159 0 0 0 0 0
Cash and cash equivalents ..
78,615 23,163 7,460 11,324 12,381 10,717
Secured bank loans ..............
0 45,806 )( 0 0 0 0
Unsecured loans ...................
19,201 )( 0 0 0 0 0
Lease receivables .................
3,253 0 335 0 0 0
Lease liabilities .....................
108,627 )( 355 )( 645 )( 226 )( 0 0
Tax carrying forward .............
78,556 0 0 0 0 0
Forward exchange contracts
54,411 10,666 )( 12,029 )( 6,454 )( 11,833 )( 11,788 )(
Net statement of
financial position exposure .
164,665 31,386 )( 8,143 )( 4,004 1,200 )( 2,081 )(
Next 12 months
forecast sales .....................
229,357 182,341 70,275 36,692 54,603 54,727
Next 12 months
forecast purchases .............
447,962 )( 137,294 )( 16,852 )( 8,013 )( 3,632 )( 9,937 )(
Capex thereof .....................
28,989 )( 902 )( 0 0 0 0
Currency exposure ...............
53,940 )( 13,661 45,280 32,683 49,771 42,709
ISK EUR GBP DKK SEK CAD
Receivables / payables, net ..
90,765 )( 102,256 )( 15,364 )( 13,705 )( 7,820 )( 10,728 )(
Marketable securities ............
58,197 0 0 0 0 0
Cash and cash equivalents ..
30,556 9,380 5,833 4,079 4,678 2,160
Secured bank loans ..............
0 59,091 )( 0 0 0 0
Unsecured loans ...................
19,173 )( 0 0 0 0 0
Warrants ...............................
18,395 )( 0 0 0 0 0
Lease receivables .................
3,274 0 512 0 0 0
Lease liabilities .....................
116,266 )( 447 )( 972 )( 92 )( 0 0
Forward exchange contracts
16,706 2,265 )( 4,051 )( 1,523 )( 1,658 )( 1,572 )(
Net statement of
financial position exposure .
135,866 )( 154,679 )( 14,042 )( 11,241 )( 4,800 )( 10,140 )(
Next 12 months
forecast sales .....................
298,958 242,710 53,489 21,816 55,203 41,402
Next 12 months
forecast purchases .............
514,683 )( 174,277 )( 20,925 )( 11,232 )( 6,634 )( 5,307 )(
Capex thereof .....................
28,989 )( 902 )( 0 0 0 0
Currency exposure ...............
351,591 )( 86,246 )( 18,522 657 )( 43,769 25,955
2022
2021
2022
2021
0.0074 0.0079 0.0070 0.0076
1.05 1.18 1.07 1.13
1.23 1.38 1.20 1.35
0.77 0.80 0.74 0.79
0.14 0.16 0.14 0.15
0.10 0.12 0.10 0.11
Notes, contd.:
DKK ..................................................................................
2022
GBP .................................................................................
2021
SEK ..................................................................................
Year-end spot rate
The following significant exchange rates of USD applied during the year:
EUR ................................................................................
Average rate
The Group's exposure to currency risk in it's major currencies is as follows:
ISK ...................................................................................
CAD .................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
36
Amounts are in USD thousand
34.
Financial risk management, contd.:
c.
Market risk, contd.:
Sensitivity analysis
Total
Directly in Profit or effect on
equity loss equity
4,353 )( 8,820 )( 13,173 )(
853 1,658 2,511
962 311 )( 651
516 837 )( 320 )(
947 851 )( 96
943 777 )( 166
6,190 )( 17,060 10,869
181 12,193 12,374
324 799 1,123
122 777 899
133 251 384
126 685 811
Interest rate risk
2022 2021
2,569 )( 1,227
38,730 )( 58,629 )(
41,299 )( 57,402 )(
266,028 262,699
255,717 )( 268,221 )(
10,311 5,522 )(
Fair value sensitivity analysis for fixed rate instruments
Amount
Fixed rate instruments
At the reporting date the interest rate profile of the Group´s interest bearing financial instruments was as follows:
SEK .........................................................................................................
CAD .........................................................................................................
EUR .........................................................................................................
A 10% strengthening of the USD against the following currencies at 31 December would have increased
(decreased) post-tax equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant and omits the impact of deferred tax assets at the reporting
date.
ISK ...........................................................................................................
SEK .........................................................................................................
Notes, contd.:
GBP .........................................................................................................
Variable rate instruments
2022
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and
profit or loss by the amounts stated below. This analysis assumes that all other variables, in particular foreign
exchange rates, remain constant.
A 10% weakening of the USD against the above currencies would have had the equal but opposite effect on the
above currencies to the amounts shown above, on the basis that all other variables remain constant.
The Group designates derivatives for the purpose of fuel, carbon, currency and interest rate hedging as hedging
instruments under a fair value hedge accounting model. As such, market rates affect the mark to market of the
derivatives and the market value of fixed rate financial assets. In addition, interest rate changes affect the fixed rate
instruments carrying amount through equity.
EUR .........................................................................................................
Commodity derivatives and forward exchange contracts (Carrying amount) .................
Interest rate risk is the potential that a change in market interest rates will reduce the value of a bond or other fixed
rate instruments. The fair value of a fixed rate instrument and the cash flow of a variable rate instruments will
fluctuate with changes in market interest rates. The Group follows a policy of hedging 40-80% of the net interest rate
cash flow exposure of long-term loans with up to a 5-year horizon.
GBP .........................................................................................................
ISK ...........................................................................................................
2021
DKK .........................................................................................................
Financial assets (Carrying amount) ................................................................................
Financial liabilities (Carrying amount) .............................................................................
DKK .........................................................................................................
CAD .........................................................................................................
Interest rate swaps (Notional amount) ............................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
37
Amounts are in USD thousand
34. Financial risk management, contd.:
c. Market risk, contd.:
100 bp 100 bp
increase decrease
16 17 )(
1,209 1,271 )(
1,225 1,288 )(
8 )( 8
1,830 1,924 )(
1,822 1,916 )(
Cash flow sensitivity analysis for variable rate instruments
100 bp 100 bp
increase decrease
82 82 )(
82 82 )(
44 )( 44
44 )( 44
Hedge accounting
1-6 months
7-12 months
> 13 months
Total
1,149 )( 166 )( 0 1,315 )(
593 )( 227 )( 0 820 )(
0 0 1,834 1,834
1,510 0 0 1,510
232 )( 393 )( 1,834 1,209
348 79 308 )( 119
1,394 )( 314 )( 1,526 182 )(
Climate risk
31 December 2021
Notes, contd.:
Interest rate swaps .........................................................................................................
Variable rate instruments ................................................................................................
31 December 2022
Tax ...................................................................................
31 December 2022
Commodity derivatives and forward exchange contracts ...............................................
Fair value sensitivity (net) ...............................................................................................
Variable rate instruments ................................................................................................
Fair value sensitivity (net) ...............................................................................................
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and
profit or loss by the amounts stated below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant.
31 December 2021
Interest rate swaps .........................................................................................................
Interest rate swap ............................................................
Margin accounts ...............................................................
Total derivatives, Payable ................................................
Cash flow sensitivity (net) ...............................................................................................
The Hedge Accounting Standards of IFRS 9 require hedge instruments to fulfill certain criteria so that the market
value of open hedge positions can be allocated to equity as hedge reserves until settlement day. One of these
qualifications is the requirement of effectiveness of the financial instrument against the identified exposure. The
exposure in terms of cash flows has to be considered highly likely on the basis of a robust forecast of operations. All
outstanding fuel hedge contracts are effective.
Cash flow sensitivity (net) ...............................................................................................
Derivatives used for hedging, Equity ...............................
Currency ..........................................................................
31 December 2022
Commodity derivatives and forward exchange contracts ...............................................
Fuel .................................................................................
Following table shows effective and ineffective hedges:
Climate change poses a financial risk to airlines. The potential for new regulations and taxes aimed at reducing
carbon emissions, as well as the increasing costs associated with transitioning to low-carbon fuels, can have a
material impact on the Company’s financial performance. Climate-related physical risks, such as extreme weather
events, also have the potential to disrupt operations and damage infrastructure. Additionally, the industry in general
faces reputational risks as consumers become more conscious of the environmental impact of their travel choices.
To mitigate these financial risks, Icelandair has implemented strategies to reduce carbon emissions.
Consolidated Financial Statements of Icelandair Group hf. 2022
38
Amounts are in USD thousand
35.
Financial instruments and fair value
Carrying Carrying
amount
Fair value
amount
Fair value
2022
2022
2021
2021
1,209 1,209 1,717 1,717
19,201 )( 18,008 )( 19,173 )( 19,308 )(
236,516 )( 234,488 )( 238,612 )( 248,043 )(
0 0 18,395 )( 18,395 )(
342,155 )( 342,155 )( 245,659 )( 245,659 )(
596,663 )( 593,442 )( 520,122 )( 529,688 )(
Fair value hierarchy:
31 December 2022
Financial assets
Level 1
Level 2
Level 3
Total
2,029 2,029
0 2,029 0 2,029
Financial liabilities
0
18,008 )( 18,008 )(
234,488 )( 234,488 )(
342,155 )( 342,155 )(
820 )( 820 )(
0 820 )( 594,651 )( 595,471 )(
31 December 2021
Financial assets
Level 1
Level 2
Level 3
Total
2,853 2,853
0 2,853 0 2,853
Financial liabilities
18,395 )( 18,395 )(
19,308 )( 19,308 )(
248,043 )( 248,043 )(
245,659 )( 245,659 )(
1,136 )( 1,136 )(
0
19,531 )
(
513,010 )
(
532,541 )
(
Non-derivative financial liabilities
Derivatives
Secured loans ..................................................................
The basis for determining the levels is disclosed in note 4.
Unsecured bond issue .....................................................
Derivatives used for hedging ...........................................
Lease liabilities .................................................................
Derivatives used for hedging ...........................................
Fair value reflects the credit risk of the instrument and includes adjustments to take account of the credit risk of the
Group entities and counterparties when appropriate.
The fair value of financial assets and liabilities, together with the carrying amounts shown in the Statement of
Financial Position, are as follows. The table does not include fair value information for financial assets and liabilities
measured at fair value if the carrying amount is a reasonable approximation of fair value:
Unsecured bond issue .....................................................
Lease liabilities .................................................................
Warrants ..........................................................................
Total .................................................................................
Secured loans ..................................................................
The fair value of forward exchange contracts is based on their quoted price, if available. If a quoted price is not
available, then fair value is estimated by discounting the difference between the contractual forward price and the
current forward price for the residual maturity of the contract. This methodology is also used when valuating
commodity forwards and swaps.
Derivatives used for hedging ...........................................
Secured loans ..................................................................
Derivatives used for hedging ...........................................
Derivatives used for hedging ...........................................
The fair value of interest rate swaps is based on broker quotes. If not available the fair value is based on the
discounted cash flow difference of the contractual fixed interest payment and the floating interest receivable.
Warrants ..........................................................................
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal
and interest cash flows, discounted at market rates as at the reporting date. In respect of the liability component of
convertible notes, the market rate of interest is determined by reference to similar liabilities that do not have a
conversion option.
Lease liabilities .................................................................
Unsecured bond issue .....................................................
The table below analyses the fair value of assets and liabilities and their levels in the fair value hierarchy:
Warrants ..........................................................................
Notes, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2022
39
Amounts are in USD thousand
36.
Capital commitments
37.
Related parties
Identity of related parties
Transactions with management and key personnel
Incentive
Number of
payments
shares
Salaries
Pension
for
held at
and contri- previous year-end
Board of Directors:
benefits
bution
year
thousands *
71.9 8.3 8,555
67.9 7.8
55.9 6.4 3,395
39.9 4.6
43.2 5.0 12,500
Key employees:
433.1 107.5 65 23,625
1,987.7 358.8 220 33,727
67/33
Board of Directors:
65.1 7.5 8,555
68.7 7.9
63.0 7.2 2,941
18.6 2.9
59.4 6.8 10,833
42.0 4.8 17,656
Key employees:
518.0 119.6 20,708
1,940.9 345.1 30 40,377
65/35
* Including financially related
The Group has a related party relationship with its shareholders with significant influence, subsidiaries, associates,
and with its directors and executive officers.
Notes, contd.:
Gender ratio for key employees (male / female) ..............
Gender ratio for key employees (male / female) ..............
The purchase commitment for the latter two aircraft was cancelled due to delivery delays and instead the Group has
secured long-term operating leases of two alternative 737 MAX8 aircraft which will enter service in Q2 2023, see
note 29.
Guðmundur Hafsteinsson, Chairman ..............................
Bogi Nils Bogason Group CEO ........................................
John F Thomas ................................................................
Matthew Evans ................................................................
Nina Jonsson, Vice Chairman .........................................
As announced in June 2022, the Group entered into a purchase commitment for four 737 MAX8 aircraft. Two of
these aircraft were delivered in fall of 2022 and will enter scheduled service in Q2 2023.
Salaries and benefits of management for their service to Group companies and the number of shares in the
Company held by management are specified below.
The Group took delivery of seven 737 MAX8 aircraft during the year 2022. Four of them are classified as Right-of-
use assets (of which two are financed through sale and leaseback agreements) and three classified as Operating
assets.
Furthermore, The Group took delivery of one B767-300 freighter on operating lease (classified as Right-of-use
asset) in Q3.
Nina Jonsson, Vice Chairman .........................................
John F Thomas ................................................................
Guðmundur Hafsteinsson, Chairman ..............................
Bogi Nils Bogason Group CEO ........................................
2022
2021
Eight members of Executive committee ..........................
Svafa Grönfeldt ................................................................
Matthew Evans ................................................................
Úlfar Steindórsson, former Chairman ..............................
Seven members of Executive committee ........................
Svafa Grönfeldt ................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
40
Amounts are in USD thousand
37.
Related parties, contd.:
Transaction with associates
Transaction with shareholders
38.
Litigations and claims
39.
Group entities
2022 2021
Passenger and cargo operations
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
67% 67%
Other Group entites
100% 100%
100% 100%
40.
Events after reporting date
FERIA ehf. (VITA) .......................................................................................................
Loftleiðir - Icelandic ehf. .............................................................................................
Icelandair ehf. ............................................................................................................
IceCap Insurance PCC Ltd. ........................................................................................
Ownership interest
The Company held the following significant subsidiaries at year-end 2022 which are all included in the Consolidated
Financial Statements:
The bankruptcy estate of Wow Air has initiated litigation against Icelandair and claimed compensation due to
alleged predatory pricing in 2012-2016. It is claimed that Icelandair had a dominant position in the market for flights
to and from Iceland during the period and abused its position by predatory pricing. Icelandair rejects the claim since
the Company's management is of the opinion that Icelandair's pricing in 2012-2016 was fully compliant with the
Icelandic Competition Act. Icelandair has already filed its counter-arguments in the case. The Icelandic Competition
Authority has ceased its investigation of Icelandair's alleged predatory pricing in 2012-2016.
The Group purchased and sold services to associates for immaterial amounts in 2022 and 2021. At year-end, the
Company had a long term receivable on its associate Lindarvatn amounting to USD 18.3 million.
The District Court of Reykjavik has ruled that Icelandair Group is jointly liable with Berjaya Iceland Hotels for lease
payments of up to USD 1 million as a guarantor. The ruling has been appealed to the Court of Appeal. The said
amount may be claimed from Icelandair Group if the ruling of the District Court will be upheld and Berjaya Iceland
Hotels will also be unable to pay the amount. Icelandair has a provision on its balance sheet for a potential loss
related to the claim, however the company deems it unlikely that such loss will be realized, see note 19.
There are no shareholders with significant influence at year-end 2022. Companies which members of the Board and
key employees control have been identified as being thirteen. These companies have been identified as related.
Transactions with them where immaterial in 2022.
No stock option contracts were open at year-end 2022. All investors that participated in the 2020 share offering
were allotted warrants which were listed on the Icelandic Stock Exchange. Investors could exercise these warrants
to buy additional shares. Members of management and those directors that participated in the offering exercised the
warrants during the year.
Icelandair ehf. has received compensation claims from cabin crew members for bodily injury due to alleged lack of
air quality inside Icelandair's aircraft. Icelandair has rejected the claims since there is no evidence of lack of air
quality in the Company's aircraft or any evidence linking such alleged lack of air quality to the bodily injury of
claimants.
The subsidiaries further own seven minor operating companies that are also included in the Consolidated Financial
Statements. Two of those have non-controlling shareholders.
Iceeignir ehf. ...............................................................................................................
Icelandair Cargo ehf. .............................................................................................
Flugfélag Íslands ehf. .............................................................................................
CAE Icelandair Flight Training ehf. .......................................................................
Notes, contd.:
On 31 January the Company completed a financing transaction in respect of two Boeing 737 MAX 8 aircraft. The
net proceeds to the Company amounted to USD 64 million.
Consolidated Financial Statements of Icelandair Group hf. 2022
41
Amounts are in USD thousand
41.
Ratios
The Group's primary ratios at year end are specified as follows:
2022
2021
0.74 0.83
0.19 0.19
0.88 0.82
42. Investment and financing without cash flow effect
Investment and financing without cash flow effect:
2022
2021
16 122,452 )( 132,646 )(
29 127,108 133,858
1,153 )( 2,460 )(
3,503 )( 1,248
8,923 16,726
8,923 )( 16,726 )(
30 18,761 )( 795 )(
18,761 795
43.
Significant accounting policies
a.
Basis of consolidation
(i)
Subsidiaries
(ii)
Investments in associates
(iii)
Transactions eliminated on consolidation
Warrants issued .........................................................................................
Retained earnings .......................................................................................
Many investing and financing activities do not have a direct impact on current cash flows although they do affect
the capital and asset structure of the Group and should be excluded from the statements of cash flows. The
exclusion of non-cash transactions from the statement of cash flows as these items do not involve cash flows in
the current period.
Acquisition of right-of-use assets ................................................................
New or renewed leases ..............................................................................
Gain on sale due to sales and leaseback ...................................................
Non-current receivables ..............................................................................
Loans and borrowings .................................................................................
Trade and other payables ...........................................................................
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Interests in associates are accounted for using the equity method. They are initially recognized
at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements
include the Group's share of the profit or loss and other comprehensive income of associates, until the date on
which significant influence ceases.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised gains arising from transactions with associates are eliminated against the
investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no evidence of impairment.
Notes, contd.:
The accounting policies set out in this note have been applied consistently to all periods presented in these
consolidated financial statements and have been applied consistently by Group entities.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has right
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated statements from the date
on which control commences until the date on which control ceases. When the Group looses control over
subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other compnonents
of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is
measured at fair value when control is lost.
Intrinsic value of share capital ................................................................................
Current ratio ...........................................................................................................
Equity ratio .............................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
42
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
b.
Currency exchange
(i)
Currency transactions
(ii)
Subsidiaries with other functional currencies
c. Operating income
(i)
Transport revenue
(ii)
Customer loyalty programmes
(iii) Aircraft and aircrew lease
(iv)
Other operating revenue
Notes, contd.:
Assets and liabilities of foreign operations and subsidiaries with functional currencies other than USD, including
goodwill and fair value adjustments arising on acquisitions, are translated to USD at exchange rates at the
reporting date. Income and expenses are translated to USD at exchange rates at the dates of the transactions.
Currency differences arising on translation are recognized in other comprehensive income. When an operation is
disposed of, in part or in full, the relevant amount in the currency translation reserve within equity is transferred to
profit or loss as part of the profit or loss on disposal.
Revenue from aircraft and aircrew lease is recognized in profit or loss when the service has been provided and
IFRS 16 Lease standard does not apply.
Revenue includes revenue from tourism, sales at airports and hotels, maintenance service sold and other revenue.
Revenue is recognized in profit or loss when the service has been provided or sale completed by delivery of
products.
Gain on sale of operating assets is recognized in profit or loss when the risks and rewards of ownership are
transferred to the buyer.
Passenger ticket sales are recognized as revenue when transportation has been provided. Sold refundable
documents not used within six months after expected transport are recognized as revenue. Non-refundable
documents are recognized as revenue two months after expected transport if not used. Revenue from mail and
cargo transportation is recognized when transportation has been provided.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-
monetary items in a foreign currency that are measured based on historical cost are translated using the exchange
rate at the date of the transaction. Foreign currency differences arising on retranslation are recognized in profit or
loss, except for differences arising on a financial liability designated as a hedge of the net investment in a foreign
operation to the extent that the hedge is effective or qualifying cash flow hedges to the extent the hedge is
effective, which are recognized in other comprehensive income.
Currency differences are recognized in other comprehensive income, and presented in the translation reserve in
equity. However, if the operation is not a wholly owned subsidiary, then the relevant proportion of the translation
difference is allocated to the non-controlling interests.
Transactions in currencies other than functional currencies (foreign currencies) are translated to the respective
functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and
liabilities denominated in currencies at the reporting date are translated to the functional currency at the exchange
rate at that date. The currency gain or loss on monetary items is the difference between amortized cost in the
functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and
the amortized cost in currency translated at the exchange rate at the end of the year.
For customer loyalty programmes, the fair value of the consideration received or receivable in respect of the initial
sale is allocated between the award credits (frequent flyer points) and other components of the sale. Awards can
also be generated through transportation services supplied by the Group. Through transportation services the
amount allocated to the points is estimated by reference to the fair value of the services for which they could be
redeemed, since the fair value of the points themselves is not directly observable. The fair value of the services is
calculated taking into account the expected redemption rate and timing of the redemptions. The amounts are
deferred and revenue is recognized only when the points are redeemed and the Group has fulfilled its obligations
to provide the services. The amount of revenue recognized in those circumstances is based on the number of
points that have been redeemed in exchange for services, relative to the total number of points that is expected to
be redeemed.
Consolidated Financial Statements of Icelandair Group hf. 2022
43
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
d.
Employee benefits
(i)
Short-term employee benefits
(ii)
Defined contribution plans
e.
Leases
(i)
As a lessee
At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains
a lease if the contract conveys the right of control the use of identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group
uses the definition of lease in IFRS 16.
The Group recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred an estimate of costs to
dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less
any lease incentives receivable.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right of use asset reflects that the Group will exercise a purchase option. In that
case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on
the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by
impairment leases, if any and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group´s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as
the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing
sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
- fixed payments, including in-substance fixed payments;
Short-term employee benefits are expensed when the related service is provided. A liability is recognized for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably.
- the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate early.
Notes, contd.:
Obligations for contributions to defined contribution plans are epensed when the related service is provided.
- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
- amounts expected to be payable under a residual value guarantee; and
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there
is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group´s
estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its
assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-
substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of
the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
Consolidated Financial Statements of Icelandair Group hf. 2022
44
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
e.
Leases, contd:
(ii)
Short-term leases and leases of low-value
(iii)
As a lessor
f.
Finance income and finance cost
Generally, the accounting policies applicable to the Group as a lessor in the comparative period were not different
from IFRS 16 except for the classification of the sub-lease entered into during current reporting period that resulted
in a finance lease classification.
Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending
on whether currency movements are in a net gain or net loss position.
At inception or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of their relative stand-alone prices.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an
operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of
the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance
lease; if not then it is an operating lease. As part of this assessment, the Group considers certain indicators such
as whether the lease is for the major part of the economic life of the asset.
The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value asset and
short-term leases, including IT equipment. The Group recognizes the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.
Notes, contd.:
Finance cost comprise interest expense on borrowings, unwinding of discounts on provisions, foreign currency
losses, impairment losses recognized on financial assets, and losses on hedging instruments that are recognized
in profit or loss. Borrowing costs that are not directly attributable to the acquisition of a qualifying asset are
recognized in profit or loss using the effective interest method.
The Group recognizes lease payments received under operating leases as income on a straight-line basis over the
lease term as part of 'other revenue'.
The Group applies the derecognition and impairment requirements in IFRS 9 to the net investment in the lease.
The Group further regularly reviews estimated unguaranteed residual values used in calculating the gross
investment in the lease.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying asset. If head lease is a short-term lease to which the Group
applies the exemption described above, then it classifies the sub-lease as an operating lease.
Finance income comprises interest income on funds invested, dividend income, foreign currency gains, and gains
on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or
loss, using the effective interest method. Dividend income is recognized in profit or loss on the date that the
Group's right to receive payment is established.
If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the
consideration in the contract.
A sales and leaseback transaction is one where the Group sells and asset and immediately reacquires the use of
the asset by entering into a lease agreement. Any profit from the sale is deferred and amortized over the lease
term.
Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility.
The extension options held are exercisable by the Group only and not by the lessors. The Group assesses
whether such an option is reasonably certain to be exercised at the lease commencement date. A reassessment is
made in case of a significant event or significant changes in circumstances within the Group’s control.
Consolidated Financial Statements of Icelandair Group hf. 2022
45
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
g.
Income tax
h.
Inventories
i.
Operating assets
(i)
Recognition and measurement
(ii)
Aircraft and flight equipment
(iii)
Subsequent expenditure
(iv)
Depreciation
Useful life
3-17 years
Cycles flown
17-50 years
3-20 years
Goods for resale and supplies are measured at the lower of cost and net realisable value. The cost of inventories
is based on first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing
them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling expenses.
Items of operating assets are measured at cost less accumulated depreciation and accumulated impairment
losses.
Items of operating assets are depreciated on a straight-line basis in profit or loss over the estimated useful lives of
each component unless other systematic method is considered appropriate. Leased assets are depreciated over
the shorter of the lease term or their useful lives. The estimated useful lives for the current and comparative
periods are as follows:
Aircraft and flight equipment ..........................................................................................................
Current tax is expected tax payable on taxable income for the year using tax rates enacted at the reporting date.
Subsequent expenditure is capitalised only when it is probable that future economic benefits associated with the
expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Other property and equipment ........................................................................................................
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognized for goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that do not
affect accounting, or taxable profit or differences relating to investment in subsidiaries.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets
to a working condition for their intended use.
When parts of an item of operating assets have different useful lives, they are accounted for as separate items
(major components) of operating assets.
Any gain and loss on disposal of an item of operating assets (calculated as the difference between the net
proceeds from disposal and the carrying amount of the item) is recognized in profit or loss.
Aircraft and flight equipment, e.g. aircraft engines and aircraft spare parts, are measured at cost less accumulated
depreciation and accumulated impairment losses. When an aircraft is acquired the purchase price is divided
between the aircraft itself and engines. Aircraft is depreciated over the estimated useful life of the relevant aircraft
until a residual value is met. Engines are depreciated according to actual usage based on cycles flown. When an
engine is overhauled the cost of the overhaul is capitalised and the remainder of the cost of the previous overhaul
that has not already been depreciated, if any, is expensed in full.
Income tax comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates
to items recognized directly in equity or in other comprehensive income.
Notes, contd.:
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets
are assessed and if a component has a useful life that is different from the remainder of that asset, that
component is depreciated separately.
Engines ..........................................................................................................................................
Buildings ........................................................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022
46
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
j.
Intangible assets and goodwill
(i)
Goodwill and other intangible assets with indefinite useful lives
(ii)
Other intangible assets
Useful life
3 years
6-10 years
(iii)
Subsequent expenditure
k.
Financial instruments
(i)
Non-derivative financial assets
Trade receivables and debt securities are initially recognized when they are originated. All other financial assets
and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the
instrument.
Software .........................................................................................................................................
Other intangible assets ..................................................................................................................
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and
brands, is recognized in profit or loss as incurred.
Other intangible assets acquired by the Group and have finite useful lives are measured at cost less accumulated
amortisation and impairment losses. Amortisation is recognized in profit or loss on a straight-line basis over the
estimated useful lives since this most closely reflects the expected pattern of consumption of the future economic
benefits embodied in the asset. The estimated useful lives for the current and comparative years are as follows:
All business combinations are accounted for by applying the purchase method. Goodwill represents amounts
arising on acquisition of subsidiaries. In respect of business acquisitions goodwill represents the difference
between the cost of the acquisition and the fair value of the net identifiable assets acquired.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is
initially measured at fair value plus, for an item not at fair value through profit or loss, transaction costs that are
directly attributable to its acquisition or issue. A trade receivable without a significant financing component is
initially measured at the transaction price.
Notes, contd.:
Goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units
and is tested annually for impairment.
Goodwill, trademarks and airport slots with indefinite useful lives are stated at cost less accumulated impairment
losses.
Consolidated Financial Statements of Icelandair Group hf. 2022
47
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
k.
Financial instruments, contd.:
Financial assets at fair value through profit or loss
Financial assets measured at amortized cost
(ii)
Non-derivative financial liabilities
The Company initially recognizes debt securities issued on the date that they are originated. All other financial
liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual
provisions of the instrument.
The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new financial liability based on the modified terms is recognized
at fair value.
The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial
liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortized cost using the effective interest method.
Financial assets measured at amortized cost comprise cash and cash equivalents and trade and other
receivables.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as
at FVTPL:
– it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
– its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or
less.
Financial liabilities other than derivatives comprise loans and borrowings and trade and other payables.
The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the
risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor
retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value
through profit or loss and financial assets measured at amortized cost.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value
basis are measured at FVTPL. These assets are subsequently measured at fair value. Net gains and losses,
including any interest or dividend income, are recognized in profit or loss.
Financial assets at fair value through profit or loss comprise marketable securities actively managed by the
Group's treasury department to address short-term liquidity needs.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Notes, contd.:
These assets are subsequently measured at amortized cost using the effective interest method. The amortized
cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are
recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
Consolidated Financial Statements of Icelandair Group hf. 2022
48
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
k.
Financial instruments, contd.:
(iv)
Derivative financial instruments and hedge accounting
Cash flow hedges
Net investment hedges
The Group holds derivative financial instruments to hedge its foreign currency, fuel price and interest rate risk
exposures (see note 34). Derivatives are recognized initially at fair value; attributable transaction costs are
recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value,
and changes therein are generally recognized in profit or loss. The Group holds no trading derivatives.
On initial designation of the derivative as a hedging instrument, the Group formally documents the relationship
between the hedging instrument and hedged item, including the risk management objectives and strategy in
undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge
relationship as well as on an ongoing basis, whether the hedging instruments are expected to be highly effective in
offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the
hedge is designated, and whether the actual results of each hedge are within a range of 80-125 percent. For a
cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present
an exposure to variations in cash flows that ultimately could affect reported profit or loss.
Other non-trading derivatives
Notes, contd.:
When a derivative financial instrument is not designated in a hedge relationship that qualifies for hedge
accounting, all changes in its fair value are recognized immediately in profit or loss.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to
realize the asset and settle the liability simultaneously.
When the hedged item is a non-financial asset, the amount accumulated in equity is included in the carrying
amount of the asset when the asset is recognized. In other cases the amount accumulated in equity is reclassified
to profit or loss in the same period during which the hedged item affects profit or loss. If the hedging instrument no
longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is
revoked, then hedge accounting is discontinued prospectively. If the hedged future cash flows is no longer
expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging
reserve are immediately reclassified to profit or loss.
When a non-derivative financial liability is designated as the hedging instrument in a hedge of a net investment in
a foreign operation, the effective portion of foreign exchange gains and losses is recognized in other
comprehensive income and presented in the translation reserve within equity. Any ineffective portion of the
changes in the fair value of foreign exchange gains and losses on the non-derivative is recognized immediately in
profit or loss. The amount recognized in other comprehensive income is reclassified to profit or loss as a
reclassification adjustment on disposal of the foreign operation.
When a derivative is designated as a cash flow hedging instrument in a hedge of the variability in cash flows
attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast
transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is
recognized in other comprehensive income and accumulated in the hedging reserve in equity. Any ineffective
portion of changes in the fair value of the derivative is recognized immediately in profit or loss.
Warrants are free standing financial instruments that are legally detachable and separately exercisable from the
underlying shares. Pursuant to the requirements of IAS 32 Financial instruments: Presentation, the warrants are
classified as financial liabilities because their exercise price is denominated in ISK, the Company's functional
currency is USD and the Company did not offer the warrants pro rata to all of its existing shareholders. The
outstanding warrants are recognized as warrant liabilities in the Consolidated Statement of Financial Position and
are measured at their fair value on their issuing date and are subsequently measured at each reporting period with
changes in fair value being recorded as a component of Change in fair value in the Consolidated Income
Statement and other Comprehensive Income according to IFRS 13, Fair Value Measurement.
Consolidated Financial Statements of Icelandair Group hf. 2022
49
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
l.
Share capital
m.
Impairment
(i)
Non-derivative financial assets
(ii)
Non-financial assets
Notes, contd.:
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognized as a deduction from equity, net of any tax effects.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, for the
purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the
level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal
reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected
to benefit from the synergies of the combination.
Impairment losses are recognized in profit or loss. Impairment losses recognized in respet of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the
carrying amounts of other assets in the CGU (group of CGUs) on a pro rata basis.
The disappearance of an active market for a security because of financial difficulties; or
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine
whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of
impairment as a result of one or more events that have occurred after the initial recognition of the asset, and that
loss event had an impact on the estimated future cash flows of that asset which can be estimated reliably.
When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes
directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares
are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are
sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting
surplus or deficit on the transaction is presented in share premium.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the asset's
original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against
receivables. Interest on the impaired asset continues to be recognized. When an event occurring after the
impairment recognized causes the amount of impairment loss to decrease, the decrease in impairment loss is
reversed through profit or loss.
Objective evidence that financial assets are impaired includes:
Default or delinquency by a debtor;
Indications that a debtor or issuer will enter bankruptcy;
Adverse changes in the payment status of borrowers or issuers;
Observable data indicating that there is a measurable decrease in the expected cash flows from a group of
financial assets.
Restructuring of an amount due to the Group on terms that the Group would not consider otherwise;
The carrying amounts of the Group's non-financial assets, other than inventories and deferred tax assets, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists, then the asset's recoverable amount is estimated. Goodwill and indefinite-lived intangibles assets are
tested annually for impairment. An impairment loss is recognized if the carrying amount of an asset or cash-
generating unit (CGU) exceeds its recoverable amount.
Ordinary shares
Repurchase and reissue of share capital
Consolidated Financial Statements of Icelandair Group hf. 2022
50
Amounts are in USD thousand
43.
Significant accounting policies, contd.:
m.
Impairment, contd.:
n.
Provisions
Overhaul commitments relating to aircraft under operating leases
o. Deferred income
Icelandair's frequent flyer program
p. Deferred tax asset
q.
Earnings per share
An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds its estimated
recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect
of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and
then to reduce the carrying amount of other assets in the unit (group of units) on a pro rata basis.
A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability.
With respect to the Group´s operating lease agreements, where the Group has a commitment to maintain the
aircraft, provision is made during the lease term for the obligation based on estimated future cost of major airframe
and certain engine maintenance checks by making appropriate charges to the profit or loss calculated by
reference to the number of hours or cycles operated.
Provisions are entered into the statement of financial position among non-current and current payables, as
applicable.
Frequent flyer points earned or sold are accounted for as a liability on a fair value basis of the services that can be
purchased for the points. The points are recognized as revenue when they are utilized or when they expire.
Notes, contd.:
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, using tax rates enacted at the reporting date.
Sold unused tickets, fair value of unutilized frequent flyer points and other prepayments are presented as deferred
income in the statement of financial position.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to
the extent that the asset's carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognized.
The Group's corporate assets do not generate separate cash inflows and are utilised by more than one CGU.
Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of
the testing of the CGU to which the corporate asset is allocated.
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined
by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding, adjusted for treasury shares held, for the effects of all dilutive potential ordinary shares.
A deferred tax asset is recognized for unused tax losses and deductible temporary differences, to the extent that it
is probable that future taxable profits will be available against which they can be used. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realized.
Consolidated Financial Statements of Icelandair Group hf. 2022
51
Amounts are in USD thousand
Notes, contd.:
43.
Significant accounting policies, contd.:
r.
Segment reporting
44.
Standards issued but not yet effective
Inter-segment pricing is determined on an arm's length basis.
Segment results, reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly investments and related revenue, loans and
borrowings and related expenses, corporate assets and head office expenses, and income tax assets and
liabilities.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group's
other components. An operating segment's operating results are reviewed regularly by the CEO to make decisions
about resources to be allocated to the segment and assess its performance, and for which discrete financial
information is available. The major revenue-earning assets of the Group is the aircraft fleet, the majority of which is
registered in Iceland. Since the Group's aircraft fleet is employed flexibly across its route network, there is no
suitable basis of allocating such assets and related liabilities to geographical segments.
- IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts.
- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice statement 2)
- Definition of Accounting Estimates (Amendments to IAS 8)
- Deferred tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
A number of new standards are effective for annual periods beginning after 1 January 2023 and earlier application
is permitted; however, the Group has not early adopted the new or amended standards in preparing these
consolidated financial statements.
The following amended standards and interpretations are not expected to have a significant impact on the Group's
consolidated financial statements.
Consolidated Financial Statements of Icelandair Group hf. 2022
52
Amounts are in USD thousand
The framework
Composition and activities of the Board of Directors and sub-committees
Health &
Board of
Audit
Remuneration
Nomination
Safety
Directors
Committee
Committee
Committee
Committee
10 4 3 6 4
x (Chairm.) x (Chairm.)
x x x
x x
x x x (Chairm.)
x x
x
x (Chairm.)
x (Chairm.)
x
Internal controls
Audit Committee members:
Alexander Edvardsson, Chairman
John F. Thomas
Svafa Grönfeldt
Ulfar Steindorsson .................................
Alexander Edvardsson ...........................
Hjorleifur Palsson ...................................
Corporate Governance Statement
The Guidelines on Corporate Governance 6th edition issued on 21 July 2021 by the Iceland Chamber of Commerce,
Nasdaq Iceland and the Confederation of Icelandic Employers, along with the Company's Articles of Association, and
rules for Issuers of Securities listed on the Nasdaq Iceland, make up the framework for Icelandair Group's Corporate
Governance practices. The Company's Articles of Association are accessible on the Company's website. The
Guidelines on Corporate Governance are accessible on the website www.leidbeiningar.is and the guidelines and the
rules for Issuers are available on the website of Nasdaq Iceland.
The oversight of compliance with the Company’s risk management policies and procedures resides with the Board´s
Audit Committee. Regular and ad hoc reviews of risk management controls and procedures are a part of the
Company's working procedures, the results of which are reported to the Audit Committee. The Committee oversees
the annual financial statements of the Company and the Group's consolidated financial statements including non-
financial information as well as the Company's annual report. The Committee is responsible for the evaluation of the
independence and the eligibility of both the Company's external auditor and auditing firm. The Committee shall make
suggestions to the Board of Directors regarding the selection of the Company's auditor. The Audit Committee held
four meetings in 2022.
The Company complies in all main respects to the rules mentioned above. As there are detailed rules of procedure in
place for the Nomination Committee, a specific diversity policy has not been implemented in relation to combination
of the members of the Board of Directors. In its work, the Nomination Committee considers the combination of the
Board in terms of education, professional background, gender, knowledge, experience and skills. The Company has
set a goal that the gender ratio is never less than 40% of either men or women in management positions.
Internal controls are applied at various levels in order to minimize the risk of fraud, abuse of funds and to achieve
operational, reporting and compliance objectives. The management establishes appropriate internal control, with
Board oversight, and holds individuals accountable for their responsibilities in the pursuit of objectives. Directors are
responsible for identifying, assessing and mitigating risks associated with the operations of their respective divisions
and report on them to the Board. The Company is currently in the final review of its Risk governance framework to
include a centralized enterprise risk platform that will be coordinated by Risk Management and overseen by the Risk
Committee. Icelandair has identified risks in the financial and accounting processes and selected and developed
control activities to mitigate those risks.
Nr. of meetings in 2022 ..........................
Guðmundur Hafsteinsson ......................
Nina Jonsson .........................................
Svafa Grönfeldt ......................................
John F. Thomas .....................................
Matthew Evans ......................................
Helga Arnadottir .....................................
Consolidated Financial Statements of Icelandair Group hf. 2022
53
Values, Code of Ethics and Corporate Responsibility
The Company's values are:
Passion
Simplicity
Responsibility
Remuneration Committee
General Salary Development
The objective of the Remuneration Policy is to make employment with Icelandair Group and its subsidiaries an
attractive option for highly skilled employees and thereby secure the Company's position as a leading competitor in
its field. Pursuant to said objective the Company must be able to offer competitive salaries and other variable forms
of payment, such as short-term cash incentives and equity-related long-term incentives.
Icelandair has a short-term incentive program in place for the senior leadership team and for each year the
remuneration committee approves the program.
The purpose of the Remuneration Committee is to maintain oversight of the remuneration of the Executive
Committee and senior management as well as to ensure that the structure of the remuneration components is
aligned with the long-term interests of shareholders.
The main tasks of the Remuneration Committee are to prepare the decision-making process of the Board with
regards to the remuneration policy, including the determination of any performance related variable compensation,
and setting the terms and conditions for remuneration for the CEO and members of the Board. The Remuneration
Committee is also assigned to regularly review the remuneration policy and ensuring its adherence.
The Remuneration Committee also oversees the overall long-term development of remuneration and human
resource matters to ensure that all remuneration practices are in accordance with laws, regulations and overall best
practices. Furthermore, the Remuneration Committee seeks to formulate a point of view on any risks – operational,
financial or otherwise – and if and how they may affect the organization.
The Remuneration Committee inquiries about the results and outcomes of established human resource policies and
procedures on a regular basis.
The purpose of the program is to align the interests of the management and shareholders and mobilize the
Company’s leadership to focus on the overall performance – both financial objectives and the execution of the
Group's strategy. The program is designed to encourage the management to increase shareholder value and reward
operational performance, proper management and professional conduct. Performance outcomes are determined by
a mixture of financial-, strategic-, and operational measures which take into account the participant's role.
Performance pay-outs based on this short-term incentive program are annual and capped at 25% of annual base
salary.
Any compensation to the management under the short-term incentive program is based on the sole discretion of the
Remuneration Committee taking into account the factors above.
On 25 May 2009 the Board of Directors approved a Code of Ethics which was amended on 5 January 2011 and 18
November 2016. The Code of Ethics is accessible to all Company employees through the Company's intranet,
MyWork and on the Icelandair Group website.
Corporate Governance Statement, contd.:
The international airline and aviation industry is a very regulated and highly unionized and Icelandair's operations are
no exception therefrom. This operational set-up means that typically about half of the workforce's terms and
conditions of employment – corrected for seasonality – is governed by collective wage agreements with the other half
operating under the law of supply and demand.
In terms of the local Icelandic general labour market industry pay developments vis-à-vis the ground- and office staff
is characterized by a complicated set up based on operational requirements of 24/7 opening functionality all year
around.
At the Company’s Annual General Meeting in 2022 it was approved to implement a share-based incentive program
for the senior leadership team and other selected key employees. No stock options have been granted yet based on
the program.
Consolidated Financial Statements of Icelandair Group hf. 2022
54
Remuneration Committee, contd.:
CEO Remuneration
Board of Directors' Remuneration
Remuneration Committee members:
Gudmundur Hafsteinsson, Chairman
Nina Jonsson
Matthew Evans
Nomination Committee
The Remuneration Committee is currently reviewing the Remuneration Policy and the remuneration to the members
of the Board of Directors. If any changes will be suggested, and approved by the Board of Directors, such proposals
will be submitted to the Annual General Meeting for the approval of shareholders. At the Annual General Meeting
2022 it was agreed that the remuneration to the Board Members and Sub-Committee Members would be the same
as 2021. The Remuneration Committee held three meetings in 2022.
According to Icelandair Group's Remuneration Policy, the remuneration package for the President and CEO is
comprised of a fixed and variable salary component and needs to be competitive with other CEO's of publicly traded
companies in the Icelandic stock market as well as other airlines in the same market. In addition, the terms of
employment of the President and CEO shall take into account the financial and operating results of the Company
from time to time.
As stated above, the variable remuneration of the President and CEO is an integral part of the overall Executive
Committee remuneration policy which is linked to predetermined and quantifiable performance measures which are
reviewed and approved by the Remuneration Committee and the Board each fiscal year. The Remuneration
Committee typically reviews the President's and CEO's performance measures and makes a proposal for appropriate
changes to the Board of Directors to reflect a strategic or tactical directional change for the Group from time to time.
According to Icelandair Group's Remuneration Policy, remuneration for the members of the Board of Directors and
members of the Board's sub-committees shall be based on the time spent by directors on the job and the
responsibilities associated with the role. When determining remuneration to the directors of the Board, consideration
shall be given to the remuneration paid to board directors of comparable companies. Members of the Board of
Directors are not remunerated in shares, purchase or put options, pre-emptive rights, warrants or any other
payments related to shares in the Company or the share price development in the Company.
The Remuneration Committee re-evaluates the remuneration of members of the Board of Directors annually taking
into consideration, among other things, wage development within Icelandair, development of the general wage index
as well as the Company's overall performance. Proposals of the Remuneration Committee on the remuneration of
the members of the Board of Directors and its sub-committees, and any changes in the Remuneration Policy, are
submitted to the Board of Directors which subsequently submits a proposal for a shareholders' vote at the Annual
General Meeting.
Corporate Governance Statement, contd.:
Icelandair Group operates a Nomination Committee which has an advisory role in the selection of members of the
Board of Directors. The Committee presents its proposal to the Annual General Meeting or other Shareholders'
meetings where election to the Board of Directors is on the agenda.
The Nomination Committee shall put forward its rationalized opinion concurrently to the notification of the AGM or as
soon as possible in conjunction with other shareholder meetings. The Committee's opinion shall be made available
to shareholders in the same way as other proposals to be submitted to the meeting. The Committee operates
according to rules of procedures which are set by the Committee itself and approved by the Board of Directors. The
Nomination Committee shall review its rules of procedure as needed and have any changes approved by the Board
of Directors annually.
The Nomination Committee consists of three members. The Shareholders' meeting elects two members, one man
and one woman, which are nominated by shareholders. Subsequently, the Board of Directors nominates one
member.
Consolidated Financial Statements of Icelandair Group hf. 2022
55
Nomination Committee, contd.:
Nomination Committee members:
Hjorleifur Palsson, Chairman
Helga Arnadottir
Ulfar Steindorsson
Strategy Committee
Health & Safety Committee
Health & Safety Committee members:
John F. Thomas, Chairman
Nina Jonsson
The purpose of the Health & Safety Committee is to maintain oversight over the development and implementation of
Icelandair Group's s Health & Safety policies and initiatives. In addition, the Committee serves as a forum for in-
depth discussions on Icelandair Group’s safety matters and relevant considerations to health and risk mitigation
strategies. At the start of its term, the Board of Directors selects up to two of its members to sit on the Health &
Safety Committee.
The Health & Safety Committee was formed to foster closer involvement from the Board of Directors with Icelandair
Group's Health & Safety policies. As a whole, the Committee has extensive knowledge and experience of airline
safety matters in addition to a strong background within the industry. As a result, it can provide valuable support to
the organization on health & safety topics. In year 2022 it was decided to, from now on, initiate all quarterly Board of
Directors meetings on a ten minute safety review. The committee held four meetings in 2022.
At the start of the 2022-23 term of Icelandair‘s Board of Directors, it was decided to discontinue the Strategy
Committee, one of the Board‘s sub-committees. The purpose of the Strategy Committee had been to maintain
oversight over the development and implementation of Icelandair Group‘s strategy and the risks to it. In addition, the
Committee had served as a forum for in-depth discussions on Icelandair Group‘s strategy.
All members shall be independent of the Company and its executives. The member nominated by the Board of
Directors shall be independent of the Company's largest shareholders. The same criteria shall apply to the
assessment of the independence of Committee members as to the assessment of the independence of Board
Members according to The Guidelines on Corporate Governance issued by the Iceland Chamber of Commerce, the
Confederation of Icelandic Employers and Nasdaq Iceland. The Nomination Committee held six meetings in 2022
and furthermore had meetings with Icelandair Group's management team and the largest shareholders.
Corporate Governance Statement, contd.:
The Strategy Committee had been active between 2020 and 2022, at a time when Icelandair was revising its strategy
development and implementation processes prompting a need for frequent interactions on the topic between the
Board and management. At the start of the 2022-23 term, the Board concluded that there was no longer a need for
as frequent meetings on strategy development and implementation, and that it would be better to schedule in-depth
discussions on Icelandair Group‘s strategy at its regular meetings. Therefore, the decision was made to discontinue
the Strategy Committee.
Consolidated Financial Statements of Icelandair Group hf. 2022
56
Corporate Governance Statement, contd.:
The Board of Directors and Executive Committee
Board of Directors
At the Annual general meeting of Icelandair Group, held on 3 March 2022, the following were elected members of the
Board of Directors; Guðmundur Hafsteinsson, John F. Thomas, Matthew Evans, Nina Jonsson, Svafa Grönfeldt.
Guðmundur Hafsteinsson took on the role of Chairman of the board.
Gudmundur Hafsteinsson, Chairman
Guðmundur joined the Board of Icelandair Group on 8 March 2018. He is born in 1975 and is an Icelandic and U.S.
citizen. Gudmundur is independent of the company, its management and significant shareholders and has 8,555,555
shares. For further information.
John F. Thomas
John joined the Board of Icelandair Group on 6 March 2020. He is born in 1959 and is an Australian and U.S. citizen.
John is independent of the company and has 3,394,500 shares. For further information.
Matthew Evans
Matthew joined the Board of Icelandair Group on 23 July 2021. He is born in 1986 and is a U.S. citizen. Matthew is
independent of the company and its management. However, he is a board member as the representative of the
Company’s largest shareholder and as such he is not independent from the Company’s major shareholders and
neither holds shares nor share options in the Company. For further information.
Nina Jonsson, Vice Chairman
Nina joined the Board of Icelandair Group on 6 March 2020. She is born in 1967 and is an Icelandic and U.S. citizen.
Nina is independent of the company, its management and significant shareholders and has no shares. For further
information.
Svafa Grönfeldt
Svafa joined the Board of Icelandair Group on 8 March 2019. She is born in 1965 and is an Icelandic citizen. Svafa is
independent of the company, its management and significant shareholders and has 12,500,000 shares. For further
information.
Executive committee
Bogi Nils Bogason, President & CEO
Bogi has 23,625,000 shares but holds no share options and has no interest links with the Company’s main clients,
competitors, or major shareholders. For further information.
Arni Hermannsson, Managing Director Loftleidir Icelandic
Elisabet Helgadottir, Chief Human Resources Officer
Gunnar Mar Sigurfinnsson, Managing Director Icelandair Cargo
Ivar S. Kristinsson, Chief Financial Officer
Jens Bjarnason, Chief Operating Officer
Rakel Ottarsdottir, Chief Digital Officer
Sylvia Kristin Olafsdottir, Chief Customer Officer
Tomas Ingason, Chief Revenue Officer
The executive committee held 87 meetings in 2022. At the beginning of the year, Sylvia Kristin Olafsdottir was
appointed Chief Customer Officer and Rakel Ottarsdottir was appointed Chief Digital Officer of Icelandair Group.
They both started in the first quarter of the year and took seat on the Executive Committee. Further information about
the Executive committee members can be found on the Icelandair Group website.
The Company's Board of Directors exercises the supreme authority in the Company's affairs between shareholders'
meetings, and it is entrusted with the task of ensuring that the organisation and activities of the Company's operation
are at all times in correct and proper order.
The Board of Directors is instructed in the Company's Articles of Association to appoint a President and CEO for the
Company and decide the terms of his or her employment. The Board of Directors and President and CEO are
responsible for the management of the Company.
Consolidated Financial Statements of Icelandair Group hf. 2022
57
Board of Directors, contd.:
The Board of Directors elects the members of the Remuneration Committee and the Audit Committee. These sub-
committees adhere to the Rules on Working Procedures. The Nomination Committee has its own Rules of
Procedures which are approved by the Board. The Board of Directors convened ten times during the year and all
Board Members attended almost all meetings. All the current members of the Board of Directors are independent
from the Company. All Board members were independent of the Company’s major shareholders in 2022 with the
exception of Matthew Evans who represent the largest shareholder.
The Company's Board of Directors must at all times ensure that there is adequate supervision of the Company's
accounts and the safeguarding of its assets and shall adopt working procedures in compliance with the Companies
Act. Only the Board of Directors may assign powers of procuration on behalf of the Company. The signatures of the
majority of the members of the Board are required to bind the Company. The President and CEO has charge of the
day-to-day operation of the Company and is required in his work to observe the policy and instructions set out by the
Company's Board of Directors. Day-to-day operation does not include measures which are unusual or extraordinary.
Such measures can only be taken by the President and CEO with the specific authorization of the Board of Directors
unless it is impossible to await the decision of the Board without seriously disadvantaging the operation of the
Company. In such instances, the President and CEO is required to consult with the Chairman of the Board, if
possible, after which the Board of Directors must immediately be notified of the measures. The President and CEO
shall ensure that the accounts and finances of the Company conform to law and accepted practices and that all
assets belonging to the Company are securely safeguarded. The President and CEO is required to provide the
members of the Board of Directors and Company auditors with any information pertaining to the operation of the
Company which they may request, as required by law.
The Company's Board of Directors consists of five members elected at the Annual General Meeting for a term of one
year. Those who intend to stand for election to the Board of Directors must inform the Board in writing of their
intention at least seven days before the AGM, or extraordinary shareholders’ meeting at which elections are
scheduled. Only those who have formally informed the Board of their candidacy are eligible.
Corporate Governance Statement, contd.:
On 12 September 2007 the Board of Directors approved Rules on Working Procedures for the Board which were
amended on 10 August 2012 and 9 February 2018. The Rules on Working Procedures are accessible to the Board
of Directors and the management through the Board's intranet, Admincontrol. In accordance with article 14 of the
Rules on Working Procedures the Board of Directors must annually evaluate its work, size, composition and
practices, and must also evaluate the performance of the CEO and others responsible for the day-to-day
management of the Company and its development. The annual performance assessment is intended to improve
working methods and increase the efficiency of the Board. The assessment entails e.g. evaluation of the strengths
and weaknesses of the Board's work and practices and takes into consideration the work components which the
Board believes may be improved.
The Board of Directors elects a Chairman and Deputy Chairman from its members, and otherwise allocates its
obligations among its members as needed. The Chairman calls Board meetings. A meeting must also be held if
requested by a member of the Board of Directors or the President and CEO. Meetings of the Board are valid if
attended by a majority of its members. However, important decisions shall not be taken unless all members of the
Board have had an opportunity to discuss the matter, if possible. The outcome of issues is decided by force of vote,
and in the event of an equality of votes, the issue is regarded as rejected. The President and CEO attends meetings
of the Board of Directors, even if he or she is not a member of the Board and has the right to participate in
discussions and submit proposals unless otherwise decided by the Board in individual cases. A book of minutes is
kept of proceedings at meetings and must be signed by participants in the meeting. A Board member who disagrees
with a decision made by the Board of Directors is entitled to have his or her dissenting opinion entered in the book of
minutes. The same applies to the President and CEO. The Chairman is responsible for the Board's relations with the
shareholders and he shall inform the Board on the views of the shareholders.
Consolidated Financial Statements of Icelandair Group hf. 2022
58
Corporate Strategy
Business Model
Icelandair Group’s approach to sustainability
Icelandair's vision, the guiding light of the organization, is to “bring the spirit of Iceland to the world” and its mission
is to “offer smooth and enjoyable journeys to, from, via and within Iceland, our hub and home”. The values of
passion, simplicity and responsibility represent the principles of the culture the Company aims to foster.
As the leading airline in Iceland and an important employer, Icelandair Group takes its responsibility towards all its
stakeholders seriously. Defined key stakeholders are employees, customers, shareholders, suppliers and partners,
the tourism industry, various NGOs and the Icelandic authorities.
• Agile and financially sustainable business – which highlights the value of operating in a nimble manner and
acting quickly, while being financially responsible
• Embracing our people and the planet – which underlines that all decisions should be made with full
consideration given to the Company's responsibilities towards its people, the wider community and the environment
Non-Financial Reporting
The heart of the Icelandair business model is its international route network built on the unique location of Iceland
which serves as a connecting hub between Europe and North America. This unique route network creates a
competitive advantage for Icelandair and drives value creation for its shareholders and other stakeholders. The
route network allows Icelandair to serve four distinct markets: to, from, via and within Iceland. In addition, the
Company runs both cargo and aircraft leasing and consulting services that complement and further strengthen its
core network operations.
Icelandair Group's corporate strategy provides a compass for the entire organization, articulating its vision for the
future, strategic priorities and the core values of the Company.
In 2022, Icelandair reviewed and developed its strategy further by establishing the guiding principles that represent
the key to successful decision-making and resource allocation. The aim was to make the strategy clearer and
easier to communicate. These changes ensure that the strategy is more direct and are based on employee
feedback to better align the strategy with daily operations. The three guiding principles are:
• The way to fly to, from, via and within Iceland – which is a reminder to continually strive to bolster the
Company's value proposition and improve customer experience
Consolidated Financial Statements of Icelandair Group hf. 2022
59
2022 2021
Turnover rates 8% 7%
Average FTEs
3045 2087
FTEs year end
3023 2393
The successful ramp-up of Icelandair’s operations following the pandemic has been crucial for the recovery of
Icelandic tourism and economy due to Icelandair’s significant role in connecting Iceland to the world and as one of
the largest employer in the country. Safeguarding the value that aviation and travel create and the fact that people
want to travel and broaden their horizon which increases the demand for flights, it is important to ensure a
sustainable future of these industries, taking into account economic, social and environmental factors.
Icelandair Group’s approach to sustainability, contd.:
The Company has approached selected groups of stakeholders (Icelandair Group Annual Report 2020) for their
views on which sustainability matters relating to Icelandair Group's decisions and activities are material for them.
The assessment gathered the views of key stakeholders and confirmed that the most material sustainability issue
for the Company is climate impact. Other material issues defined in terms of sustainability within Icelandair Group's
operations are environmental impact, passenger safety and well-being, fair employment, gender equality and
diversity, contribution to the Icelandic economy, responsible procurement, business ethics and anti-corruption, as
well as governance.
Icelandair Group’s supports the United Nations’ Sustainable Development Goals (SDGs) and has chosen four
goals that represent the Company’s key sustainability focus areas. These are climate action, gender equality,
responsible consumption and production and decent work and economic growth. The Company’s sustainability data
is presented in accordance with the Nasdaq's ESG Reporting Guide 2.0 (Environment, Society and Governance). It
is published both in this appendix as well as in the annual report with more detailed information. After issuing this
year’s financial statements, Icelandair Group will start preparing for next year, by identifying which areas need to be
addressed, to be in line with the new EU legislation - the Corporate Sustainability Reporting Directive (CSRD).
Specific targets have been set for the Company’s key sustainability focus areas and action plans have been
developed. The following sections provide further information on the responsible actions Icelandair has taken as
well as an overview of the key areas of sustainability.
At Icelandair, 2022 was a year of a turnaround of the business following the pandemic. The number of passengers
more than doubled and the Company was well positioned and prepared to rapidly increase capacity to meet the
steep increase in demand in all its markets. Flights were offered to 51 destinations, compared to 40 in 2021, and
three new destinations were added to the network.
In line with the aviation industry as a whole, Icelandair experienced challenging conditions at airports and issues in
supply chains that caused flight disruptions over the summer peak. Icelandair was, however, in a good position to
respond to these challenges. With its extensive flight schedule, high frequency of flights and the resourcefulness of
the Company’s employees, it managed to find ways to get passengers efficiently to their destinations. At the same
time there were operational challenges in the domestic network but with a joint effort those challenges were
addressed by the end of the year. In addition, severe weather conditions towards the end of the year impacted
Icelandair’s customers, operations, and financial performance.
Icelandair’s employees have shown perseverance and endurance and they have played a big part in the effective
ramp-up of the operations and getting the Company through the challenging condition of last years. In line with the
expansion of its operations, Icelandair has hired around six hundred employees at the end of the year.
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2022
60
• 50% reduction of CO2 emissions per OTK from flight operations by 2030 compared to 2019
• 40% reduction of CO2 emissions from ground vehicles by 2025 compared to 2015
2022
2021
Total CO2 emissions
950,107 484,955
kgCO2 emissions per OTK
0.77 0.93
The total emissions from aviation in 2022 were 950,107 tCO2e, a reduction of 30% compared to 2019. The
emissions from the route network includes domestic and regional routes. The emissions from aviation are reported
to the Environmental Agency of Iceland annually.
The year 2022 was an eventful year for fleet renewal in the international network. Icelandair took delivery of seven
Boeing 737 MAX aircraft, including the last three aircraft from the Boeing order made in 2013 and four additional
aircraft of the same type from other sources. They are of a new generation of more environmentally friendly aircraft
and therefore an important part of reducing carbon emissions in the operations.
The MAX has proven to be a good fit to Icelandair’s route network, and its fuel efficiency contributes positively to
the Company´s efforts of reducing its carbon emissions.
Non-Financial Reporting, contd.:
Fuel efficiency is measured in fuel burn per operational tonne kilometre (OTK) which takes into consideration the
weight of the aircraft, passengers and cargo.
Icelandair is fully committed to reach its climate goals and participate in industry groups and forums to stimulate the
technological innovation that will be needed for zero carbon emission aviation such as the Nordic Initiative for
Sustainable Aviation (NISA) and the Nordic Network for Electric Aviation (NEA). In addition, Icelandair has signed
letters of intent with Heart Aerospace and Universal Hydrogen that are developing electric-hybrid and hydrogen-
powered aircraft.
Environment
Icelandair Group is an environmentally-conscious company and recognises the impact that air travel has on the
environment. The Company is dedicated to minimising its environmental impact by addressing its responsibilities to
reduce emissions, conserve natural resources, as well as optimise the use of sustainable energy and recyclable
materials. Climate risk, both physical and transition risk, is an important risk factor for the Company but it can also
create new opportunities when managed successfully. Further information on climate risk can be found in note 36 in
the Consolidated Financial Statements.
Icelandair is certified to the highest level of the IEnvA environmental assessment program from IATA, which
requires demonstration of ongoing environmental performance improvements. The IEnvA programme is based on
recognized environmental management principles, ISO 14001, and assessments are conducted by accredited
independent organisations. Icelandair Environmental Policy can be found on Icelandair’s website.
Sustainable business growth requires the Company to address its environmental impact, both globally and locally.
As part of this effort, Icelandair Group participates in the work of various environmental working groups, at
organizations such as the International Air Transport Association (IATA) and Airlines for Europe (A4E).
Climate SDG#13
Icelandair adheres to the industry goals IATA has set to address the global challenge of climate change, aiming to
achieve net zero emissions by 2050, and monitors fuel efficiency and CO2 emissions from flight and ground
operations, accordingly. In addition, the Company has set specific targets for reducing emissions by 2030.
Fleet renewal is currently the most effective measure to reach ambitious goals in reducing carbon emissions.
Working towards a sustainable future of aviation is an important emphasis for Icelandair now and going forward.
Consolidated Financial Statements of Icelandair Group hf. 2022
61
Waste
2022
2021
Amount of waste 1160 tons 688 tons
Sorted waste 33% 40%
General waste
67% 60%
Icelandair Group's goal is to minimise waste and increase recycling in all operations where restrictions by laws and
regulations do not restrict waste separation.
The amount of waste is relative to the number of flights flown and passengers transported, therefore, the total
amount of waste almost doubles year to year. Laws and regulations restrict waste separation on-board, therefore
the percentage of sorted waste decreased between 2022 and 2021.
Icelandair has offered passengers the option to offset the carbon footprint of their air travel since September 2019.
Passenger participation in this program during 2022 contributed to the planting of around 4000 trees over the year.
The carbon offset program was devised in co-operation with Klappir Green Solutions and Kolviður – the Iceland
Carbon Fund to cultivate forests in Iceland and sequestering carbon from the atmosphere through tree planting.
Society - Decent work and economic growth SDG#8
As the airline that brings the majority of tourists to Iceland and as an important employer in the country, Icelandair's
operations are vital for Icelandic tourism, the local economy and society at large. Icelandair Group contributes
directly to the Icelandic economy in the form of salaries, salary-related expenses and pension contributions in
addition to its indirect contribution that drives economic benefits not only to the local tourism industry but the
Icelandic economy as a whole.
Icelandair continued its efforts to contribute to Icelandic society through its diverse partnerships that reflect the
Company's strategy and approach to social responsibility and are underpinned by its vision of "bringing the spirit of
Iceland to the world". Icelandair signed a partnership agreement with Arctic Circle on further collaboration where the
goal is to strengthen Iceland’s position as an international centre for dialogue on matters related to the Arctic and
the climate. Among other projects is its support of Icelandic music through Iceland Airwaves and Icelandic Music
Experiments. Icelandair has also been a proud sponsor of the main sports federations in Iceland for years. To
support the development of tourism in Iceland, the Company is a founding member of the Icelandic Tourism Fund,
which invests in innovation in tourism. The Company also partners with Iceland's main volunteer search-and-rescue
team on safe travel as well as flight safety and emergency response. Furthermore, together with contributions from
its passengers, Icelandair supports the Children Special Travel Fund which helps families of children with long-term
illnesses and children who live in difficult circumstances.
Employees
Icelandair Group's employees are one of the Company's greatest strategic assets. All employees are part of the
same team and the Company's core values – passion, simplicity and responsibility – are the principles that guide
the Company to maintain a strong and motivating company culture. Code of Ethics for Icelandair group can be
found on Icelandair's website.
Health and safety
General health and well-being of Icelandair Group's employees is a priority where the Company is committed to
providing an attractive and exciting place to work where people can thrive at their best. The Company has in place
a comprehensive Health & Attendance Policy under which – among other things – Icelandair Group offers various
health-related programs and initiatives to further its employee's health and wellbeing. Promoting good health among
employees is high on the Company's agenda and initiatives have been launched with the overall aim of improving
the well-being of all employees. Further to this the Company has a service agreement with Health Protection
Service (Heilsuvernd) on confidential medical services ensuring employee's access to health care.
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2022
62
Health and safety, contd.:
Equal Rights
2022
2021
Overal gender ratio, men / women
54% / 46% 55% / 45%
2022
2021
Female pilots
11% 5%
Male cabin crew
14% 9%
Equal pay policy
Before Covid, Icelandair was among the airlines that had the highest proportion of female pilots in the world, or
12%, however the effects of Covid-19 changed the landscape for female pilots significantly and the proportion of
female pilots had dropped to 5% in 2021 but with the successful ramp-up of Icelandair’s operations following the
pandemic the proportion for 2022 is up to 11%. Male cabin crew members were 5.3% 10 years ago but are up to
14% in 2022.
• Never less than 40% of either men or women in management positions
• Increase the number of female pilot positions by 25% compared to 2021
Non-Financial Reporting, contd.:
The Company is proud of how its team of people has adapted to new hybrid work model based on the policy
Flexible working @ Icelandair. The aim of the policy is to provide employees with the flexibility and opportunity to
work remotely when the job does not require them to be onsite. In addition to increased flexibility and good work-life
balance for employees, this policy also gives the Company an opportunity to recruit and employ the best talent for
the organization irrespective of location and reduce carbon footprint by decreasing unnecessary transportation. The
past year the Company continued emphasizing on strong communication and information flow from leadership and
necessary support in remote working.
• Increase the number of male cabin crew positions by 25% compared to 2021
• Increase the number of female aircraft maintenance technicians by promoting the job and education to girls
The Company promotes equality by providing equal job opportunities and fairness for employees and job
applicants. Rich emphasis is on building diverse teams and any discrimination is not tolerated. Diversity in our
leadership team is especially important.
One of Icelandair Group's sustainability focus areas is gender equality. The Company emphasizes equality,
diversity and non-discrimination. This focus, which ensures that all employees are provided with equal opportunities
and equal rights, is an integral part of the Company's Equal Rights Policy and Equal Rights Plan.
Achieving gender equality across the Company's operations remains one of the Company's core focus areas when
it comes to sustainability. The Company continues its efforts towards its long-term goals in this area. Icelandair
Group has set targets in line with IATA's "25by25" equality project about gender equality within management, pilot
roles, cabin crew positions and aircraft maintenance.
Objectives for 2025
Icelandair Group implemented an equal pay policy in 2018. The purpose of the Equal Pay Policy is to ensure
gender pay equality in the Company through the implementation of an Equal Pay System. Icelandair Group commits
to ensure that equal wages are paid for jobs of equal value, irrespective of gender. Enforcement of the Policy and
ensuring full observance of gender equality in decisions on wages is the responsibility of management. The
Executive Board of Icelandair Group will annually establish equal pay objectives based on measurements derived
from a pay analysis. Two companies within Icelandair Group, Icelandair and Icelandair Cargo had been certified by
a third party and received Equal pay certification in 2021. In 2022 the certification for the companies were combined
in one and it was recertified for 2022-2025.
Special preventive arrangements were made to ensure the safety of all employees during the continued pandemic
in the first months of 2022. The Company continued to make necessary changes to work schedules to ensure the
safety of employees and to ensure that the Company complied with all rules and regulations, with regards to
restrictions on gatherings of people, number limits, proximity limits and mask use.
Consolidated Financial Statements of Icelandair Group hf. 2022
63
Non-Financial Reporting, contd.:
Equal pay policy, contd.:
According to the Act on Equal Status and Rights Irrespective of Gender no. 150/2020 all companies and institutions
that have 25 or more employees must make an Equality Plan or integrate equality matters into their personnel
policies. The Company updated their Equality plan in 2022. The Equality Plan contains goals that are defined and a
project execution plan where responsibilities and key steps are stated. The equality plan consists of more than 20
actions. Icelandair Group's Equal Pay Policy can be found on Icelandair website.
Responsible Business SDG#12
In 2022 the Company continued to work to centralise and improve procurement functions across all its operations
as responsible procurement has been identified as a material issue for Icelandair Group. The intention is to work
with responsible suppliers throughout the supply chain, including sustainability criteria on transparency, legal
compliance, and responsible growth. Supplier Code of Conduct can be found on Icelandair Group website.
All suppliers are asked to apply to the Supplier code of conduct, and they are evaluated through Icelandair Group’s
risk screening model. By the end of 2022 52% of suppliers with registered contracts in the Company’s contract
system had read and signed the Supplier Code of Conduct. The current procurement processes involve the risk
screening model to be one of the decision factors when choosing a supplier before a contract with a supplier is
signed. In 2021 all significant suppliers went through the risk screening model and in 2022 all other suppliers with a
registered contract in our contract system were assessed according to risk. That includes all current and new
suppliers as well as suppliers that had their contracts renewed in 2022. Before entering contracts with the
Company, suppliers should confirm that they have policies in place for reducing negative environmental and social
impacts and adhere to good governance principles.
In 2023, the goal is to implement a new responsible Sourcing and Procurement policy. More emphasis will be put
on qualifying and monitoring suppliers in a systematic way, with self-assessments and risk evaluations.
Human Rights
Icelandair Group respects human rights, as set out in the UN Universal Declaration of Human Rights and requires
all its employees to treat others with trust, dignity, respect, fairness and equity. Icelandair has implemented an e-
learning module on the Company's Code of Conduct which is mandatory for all new employees from 2020.
All cabin crew members have been trained in relation to human trafficking awareness and preventive actions. The
Company respects fair labour practices and contractors, sub-contractors and work agencies working for Icelandair
Group shall ensure that wages, wage-related obligations and safety in the workplace all comply with Icelandair
Group's standards.
Importance is placed on ensuring that employees respect the equal rights policy and conduct themselves within its
spirit. All discrimination, such as based on gender, age, origin, religion, operating field, opinions or position in other
respects, is not permitted.
Icelandair has a clear policy against bullying, sexual and gender-related harassment, and violence in accordance
with the Act No. 1009/2015, in addition to also having rules on procedure for whistleblowing in accordance with Act
No. 40/2020.
To simplify the process of announcing undesirable behaviour or breach of legal obligations or other reprehensible
misconduct within the company, it implemented a simple tool for employees, which is called Tilkynna.is. The tool is
simple in use, and it is possible to send a comment regarding a behaviour with a name included or anonymously.
The announcer receives access to a communication channel where further information can be provided, and
updates can be received on the matter reported. All managers received appropriate training and open lectures were
held for all employees.
Consolidated Financial Statements of Icelandair Group hf. 2022
64
Environmental Metrics
E1 GhG Emissions
Units
2022
2021
Total amount, in CO2 equivalents, for Scope 1 tCO2e 951,572 486,064
Total amount, in CO2 equivalents, for Scope 2 tCO2e 222 213
Total amount, in CO2 equivalents, for Scope 3 tCO2e 114 68
E2 Emissions Intensity
Total GhG emission per output scaling factor tCO2e per FTEs 313 233
tCO2e per
passenger
0.26 0.33
Total CO2 emissions per scaling factor CO2 per OTK 0.77 0.93
E3 Energy Usage
Total amount of energy directly consumed (fossil fuels) kWh 3,932,409,653 1,973,201,386
Total amount of energy indirectly consumed (electricity
and heat)
kWh 24,144,673 22,904,111
E4 Energy Intensity
Total direct energy usage per output scaling factor kWh per FTEs 1,299,361 957,824
kWh per
passenger
1,082 1,366
E5 Energy Mix
Non renewable energy (fossil fuels aret he primary
energy source)
% 99% 99%
Renewable energy % 1% 1%
E6 Water Usage
Total amount of water consumed m3 342,546 346,556
Total amount of water reclaimed m3 - -
E7 Environmental Operations
Does your company follow a formal Environmental Policy Yes/No Yes Yes
Does your company follow specific waste, water, energy,
and/or recycling policies
Yes/No Yes Yes (fossil fuel)
Does your company use a recognized energy
management system
Yes/No Yes Yes (fossil fuel)
Non-Financial Reporting, contd.:
Anti-corruption and bribery policy
Icelandair Group conducts all its business in an honest and ethical manner and the integrity of each and every
member of staff serves to maintain the good reputation and trust of the Company. All persons, representing or
performing services for or on behalf of Icelandair Group must comply with applicable anti-bribery and anti-corruption
legislation and policies, and Icelandair Group’s Code of Conduct.
Icelandair Group's anti-corruption and bribery policy applies to the entire Icelandair Group workforce at all levels
and grades (whether permanent, fixed-term or temporary), and all operations, subsidiaries and affiliates in all
countries that the company operates in. The Anti corruption and bribery policy can be found on the Company
website.
ESG Accounting
Consolidated Financial Statements of Icelandair Group hf. 2022
65
Environmental Metrics, contd.:
E8 Climate Oversight / Board
Units
2022
2021
Does your Board of Directors oversee and/or manage
climate-related risks
Yes/No No No
E9 Climate Oversight / Management
Does your Senior Management Team oversee and/or
manage climate-related risks
Yes/No Yes Yes*
E10 Climate Risk Mitigation
Total amount invested, annually, in climate-related
infrastructure, resilience, and product development
ISK - -
Social data metrics
S1 CEO Pay ratio
CEO total compensation to median FTE total
compensation
ratio 5.53 6.4
Does your company report this metric in regulatory filings Yes/No Yes Yes
S2 Gender Pay Ratio
Gender pay analysis (basic earnings) % 4.4% in favor of
men
0.3% in favor of
men*
Gender pay analysis (regular earnings) % 2.9% in favor of
men
3% in favor of
men
S3 Employee Turnover
Year-over-year change for full-time employees % 8% 7%
S4 Gender Diversity
Total enterprise headcount held by men and women women/men% 46/54 45/55
Entry- and mid- level positions held by men and women women/men% - -
Senior- and executive-level positions held by men and
women (only executive committee)
women/men% 33/67 25/75
S5 Temporary Worker Ratio
Total enterprise headcount held by part-time employees women/men% - -
Total enterprise headcount held by contractors and/or
consultants
women/men% - -
S6 Non-Discrimination
Does your company follow a sexual harassment and/or
non-discrimination policy
Yes/No Yes Yes
S7 Injury Rate
Frequency of injury events relative to total workforce time - -
S8 Global Health & Safety
Does your company follow an occupational health and/or
global health & safety policy
Yes/No Yes Yes
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2022
66
Social data metrics, contd.:
S9 Child & Forced Labour
Units
2022
2021
Does your company follow a child and/or forced labour
policy
Yes/No Part of CoC Part of CoC
If yes, does your child and/or forced labor policy also
cover suppliers and vendors
Yes/No Part of SCoC Part of SCoC
S10 Human Rights
Does your company follow a human rights policy Yes/No Yes Yes
If yes, does your human rights policy also cover
suppliers and vendors
Yes/No Yes Yes
Governance Metrics
G1 Board Diversity
Total board seats occupied by women (as compared to
men)
% 40% 40%
Committee chairs occupied by women (as compared to
men)
% 0% 25%
G2 Board Independence
Does company prohibit CEO from serving as board chair Yes/No Yes Yes
Total board seats occupied by independants % 80% 80%
G3 Incentivized Pay
Are executives formally incentivized to perform on
sustainability
Yes/No No No
G4 Collective Bargaining
Total enterprise headcount covered by collective
bargaining agreements
% 97% 97%
G5 Supplier Code of Conduct
Are your vendors or suppliers required to follow a Code
of Conduct
Yes/No Yes Yes
G6 Ethics & Anti-Corruption
Does your company follow an Ethics and/or Anti-
Corruption policy
Yes/No Yes Yes
If yes, what percentage of your workforce has formally
certified its compliance with the policy
% 100% of new
employees
100% of new
employees
G7 Data Privacy
Does your company follow a Data Privacy policy Yes/No Yes Yes
Has your company taken steps to comply with GDPR
rules
Yes/No Yes Yes
G8 ESG Reporting
Does your company publish a sustainability report Yes/No Yes Yes
Is sustainability data included in your regulatory filings Yes/No Yes Yes
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2022
67
Governance Metrics, contd.:
G9 Disclosure Practices
Units
2022
2021
Does your company provide sustainability data to
sustainability reporting frameworks ?
Yes/No Yes Yes
Does your company focus on specific UN Sustainable
Development Goals (SDGs)
Yes/No Yes Yes
Does your company set targets and report progress on
the UN SDGs
Yes/No Yes Yes
G10 External Assurance
Are your sustainability disclosures assured or validated
by a third party
Yes/No No No
Non-Financial Reporting, contd.:
*) Restated from last year report
More Information
Further information about Icelandair Group's Sustainability and non-financial aspects of the business is published in
the Company's Annual Report and on the Company's website.
Consolidated Financial Statements of Icelandair Group hf. 2022
68
Overview
- macroeconomic and competition risk - safety and security risk
- regulatory risk - environmental and sustainability risk
- technical risk - labor market risk
- reputational risk
Macroeconomic and competition risk
Safety and security risk
Operational Risk
Icelandair Group operates an international passenger airline and route network as well as ground handling,
maintenance, cargo, and charter operations. The Company’s business, and demand for its services are therefore
highly susceptible to general macroeconomic conditions in all its markets. A slowing economy, whether globally or
locally, might decrease consumer spending e.g., in the event of lower employment levels, higher interest and/or
inflation rates, diminished access to credit, or exchange rates fluctuations. All this can adversely affect the
Company's operations and financial standing.
Uncertain economic and, as a result financial market conditions, can affect jet fuel prices, interest rates and
currency exchange rates as clearly demonstrated in 2022 following the Russian invasion of the Ukraine at a time
when the world was just beginning to see recovery from the unprecedented supply chain disruption caused by the
Covid-19 pandemic. The Company cannot guarantee that its liquidity and access to acceptably priced financing will
always be sufficient or unaffected by external macroeconomic trends or financial market volatility, whether global or
domestic. This in turn might have subsequent implications for loan covenants, the Company’s financing costs, fair
value of assets and overall financial condition.
Competition amongst airlines is high which heavily influences pricing decisions. In general, the airline industry is
susceptible to fare discounting due to the low marginal costs of adding passengers to otherwise empty seats. New
market entrants, especially low-cost carriers, mergers, acquisitions, consolidations, new partnerships, and
transparency of pricing in the air travel market are examples of factors influencing competition. Unless the Group
can offer a competitive product, it stands the risk of not meeting its revenue and profit targets.
The Group monitors trends and demand in its key markets closely through regular surveys and discussions with
trade partners. The Company further imposes strict cost control in all its operations to stay competitive while
safeguarding its ability to offer attractive value propositions to its customers.
The loss or grounding of an aircraft, such as due to an accident, design defects or operational malfunction would
cause significant losses for the Group and impact its reputation and customer confidence. Such incidents and
wreckages can be the result of various factors ranging from human error or misconduct to adverse or extreme
weather to deferred maintenance. Should this risk materialize, it would bring about both direct costs such as repair
or replacement costs and passenger claims as well as indirect costs such as the potentially poorer perception of the
safety of the Company’s chosen fleet.
Demand for airline travel is moreover highly vulnerable to events outside the Company's control such as natural
disasters, terrorist attacks, armed conflicts, and pandemics. Such events could individually or collectively cause
disruptions to flight schedules that in extreme cases can lead to prolonged suspension of certain routes and closure
of airports as well as the future operational environment and regulatory burden of airlines.
The acute nature of these events limits the Company's ability to mitigate the associated risks. Nonetheless, the
Company has in previous crisis demonstrated a high level of flexibility and resilience that has allowed the Company
to withstand short to medium-term demand shocks. The Company has in place, and regularly reviews, safety
measures, emergency response protocols and working procedures that prioritize the safety and security of its
passengers and staff.
The Group considers the following to be its main operational risks as at year-end 2022:
Consolidated Financial Statements of Icelandair Group hf. 2022
69
Regulatory risk
Environmental and sustainability risk
An evolving and growing issue for airlines is government regulations aimed at environmental protection such as
taxation on jet fuel, mandates on implementing SAF et.al. to reach goals of reducing carbon dioxide emissions.
Moreover, the industry is subject to various local restrictions around airports such as to reduce noise and pollution.
This can concern opening hours of airports, availability of slots and the usage of airspace. Congestion and
environmental restrictions can for example lead to delays or increase the complexity of departure and approach
maneuvers which may act to reduce productivity and increase costs.
Regulatory risk refers to the potential financial and operational impacts that changes in government regulations can
have on the airline industry. This can include changes in safety regulations, environmental and sustainability
regulations, and rules surrounding air traffic control, among others. Airlines must constantly monitor and adapt to
these regulatory changes, which can be costly and time-consuming. Additionally, non-compliance with regulations
can result in fines and penalties, further adding to the financial risks faced by the industry.
The airline and tourism industries are subject to numerous fees and charges as well as an everchanging tax
environment, which can have a direct effect on ticket pricing and demand. Examples of airline specific costs are
take-off, transit and landing fees, noise, navigation, and emission charges in addition to value added tax. Unless
mitigated through higher pricing these taxes act to increase operating costs.
Icelandair is a member of IATA and Airlines for Europe (A4E) that guard the interests of airlines and provide input on
their behalf to local, national, and supra-national governmental bodies on policy frameworks regarding the above
issues. Icelandair further endeavors to maintain good relations with airport operators and the Icelandic government
with the same objective.
The Company's shares are traded on Nasdaq Iceland’s Regulated Market. The Company is therefore subject to the
Icelandic Securities Transactions Act and subsequent regulations as well as Nasdaq Iceland's Rules for Issuers.
Violation of these provisions, whether intended or unintentional, could have adverse financial impact on the
Company. Serious breaches may result in penalties and Nasdaq Iceland halting trading in the shares. Icelandair has
a Compliance Officer and compliance processes in place to mitigate the risk of any breaches. The Company further
maintains a good relationship with its oversight authority, the Financial Supervisory Authority – Iceland.
Operational Risk, contd.:
Climate change poses significant financial risks to the aviation industry. The effects include both physical risks such
as flight delays or airport closures and related costs, as well as contractual, regulatory, and legal compliance risks.
In the shorter-term, risks are more likely to be associated with disruptive events, such as extreme weather events
like storms or extreme heat, which can lead to delays, cancellations, and infrastructure damage. In the longer-term,
gradual but persistent impacts, such as temperature change or sea level rise, may lead to business and wider macro-
economic effects such as changes in tourist demand and damage or loss of infrastructure.
Risings costs of carbon offsetting, such as through the EU, UK and Swiss Emissions Trading System, and the bid
for sustainable growth requires the Company to address its environmental impact, both globally and locally. As part
of this effort, the Company participates in the work of various environmental working groups, such as with IATA and
Airlines for Europe (A4E). A4E’s goal is to ensure the sustainable growth of aviation and contribute positively to the
socioeconomic development of European nations. Icelandair Group is committed to implementing an emission
mitigation scheme in line with CORSIA. CORSIA will be implemented in stages and once fully reached Icelandair will
be committed to neutralizing all carbon emission beyond the emission of 2019, which has been chosen as the
baseline year. Among actions taken by Icelandair are setting new medium- and long-term targets to reduce CO2
emissions from flight operations and setting up action plans to achieve those targets. Action plans relate to
Sustainable aviation fuels, operational improvements, fleet renewal, new technology and carbon compensation.
The ultimate costs borne by airlines in respect of environmental and sustainability factors will be determined by the
chosen methods imposed by governments and/or supra-national bodies to combat climate change. These are likely
to include a mix of economic, political, and social measures. The pace of the demand for transition to more
sustainable energy sources and other mitigating measures will determine the magnitude of impacts to the business.
Consolidated Financial Statements of Icelandair Group hf. 2022
70
Technical risk
Labor market risk
Reputational risk
The Company seeks to maintain good relations with its union representatives through active dialogue and regular
meetings to foster a culture of mutual respect and understanding.
The Company collects and retains personal information received from customers and is therefore subject to the
EU's General Data Protection Regulation (EU) 2016/679 (“GDPR”) aimed at protecting personal data held by
businesses and other organizations. These requirements include but are not limited to implementing certain policies
and processes, developing an effective internal data protection management system and appointing a data
protection officer. If found non-compliant to the GDPR regulators can, determined by the level of the infringement,
levy fines of up to 4% of a company’s annual worldwide turnover. The Executive Committee considers the Company
to be GDPR compliant.
Icelandair Group makes every effort to minimize the risk of disruption with the aim of securing the Company's
business continuity. Among measures that the Company has in place are documented procedures regarding access
to information and other systems, the back-up and storing of data, remote access via virtual private network clients
and the disposal of confidential or otherwise sensitive material. Virus protection for all computers and servers are
centrally managed, internet connectivity is secured by firewalls and web security gateways, and all services open for
external usage are secured by an application firewall. The Company offers regular seminars to its employees to
guard against fraud and phishing e-mail attempts.
The Group is subject to various risks that can lead to disruptions and interruptions to flight schedules. These include
computer faults, accidents, labor unrest, weather conditions, delays by service providers, congestion, and
unexpected maintenance. Additionally, increased focus on sustainability factors requires the Company to address its
environmental and social impact, both globally and locally.
The Company's operations are dependent on IT and other systems. Failure or disruption to IT, financial or
management systems, whether internal or external, could affect the Company’s ability to carry out its daily
operations and services to its customers. Many factors that can cause such systems to fail are outside the
Company's control.
Operational Risk, contd.:
Serious or repeated interruptions to services, or a perception that the Company is not conducting itself in a socially
or environmentally responsible manner, can result in a decline in demand for the Company's products and services
thus hurting revenue generation. It further brings on the risk of tarnishing the Company's reputation and/or its
individual brand names that might take a long time to repair.
The airline and tourism industries are inherently labor-intensive industries. Most of the Company's employees are
unionized; and represented by several unions, each of which has its own collective agreement on salaries and
benefits with the Group's companies. Each union's contract comes up for renegotiation every few years, bringing
with it a risk that the parties will not reach an immediate agreement, resulting in a jeopardy of production disruptions
through strikes. In 2020 the Company signed new long-term wage agreements with its cabin crew, pilots and aircraft
mechanics’ which collectively make up the vast majority of the Company’s employees. These agreements are valid
until the second half of 2025 and as such mitigate the risk for disruptions caused by strikes in the near to medium
term. The Company seeks to maintain good relations with its union representatives through active dialogue and
regular meetings to foster a culture of mutual respect and understanding.
Consolidated Financial Statements of Icelandair Group hf. 2022
71
Unaudited summary of the Group's operating results by quarters:
Q1
Q2
Q3
Q4
Total
Year 2022
Operating income
92,707 256,892 408,288 217,445 975,332
9,976 19,195 25,159 17,895 72,225
22,519 21,985 18,277 19,914 82,695
125,202 298,072 451,724 255,254 1,130,252
13,673 13,792 13,455 17,590 58,510
1,687 1,539 2,963 1,524 7,713
10,173 7,436 7,459 5,996 31,064
3,142 3,967 4,581 3,171 14,861
336 475 957 900 2,668
1,259 278 780 89 )( 2,228
3,193 3,386 4,808 6,435 17,822
19,790 17,081 21,548 17,937 76,356
158,665 328,945 486,727 290,781 1,265,118
Operating expenses
49,269 64,651 60,275 64,396 238,591
8,310 10,305 9,461 10,030 38,106
8,583 8,913 5,022 9,376 31,894
66,162 83,869 74,758 83,802 308,591
45,311 106,019 136,742 86,418 374,490
0 0 1,326 431 1,757
18,341 31,034 40,743 25,274 115,392
15,317 19,817 26,713 17,144 78,991
78,969 156,870 205,524 129,267 570,630
2,020 2,334 2,354 1,898 8,606
5,813 5,823 8,211 6,752 26,599
4,148 5,337 6,334 8,639 24,458
5,217 15,647 19,722 10,210 50,796
1,366 1,043 2,432 1,180 6,021
6,373 11,182 15,941 11,961 45,457
8,617 13,303 14,765 12,234 48,919
6,530 3,828 4,199 3,320 17,877
1,794 )( 4,354 )( 1,475 )( 2,167 )( 9,790 )(
6,973 6,456 7,513 8,286 29,228
45,263 60,599 79,996 62,313 248,171
190,394 301,338 360,278 275,382 1,127,392
31,729)
(
27,607
126,449
15,399
137,726
Quarterly statements (unaudited)
Operating profit (loss) bef. depr. (EBITDA) ...
Aircraft and aircrew lease ...................................
Passenger revenue ............................................
Ancillary revenue ................................................
Cargo and mail ...................................................
Total transport revenue ......................................
Sale at airport .....................................................
Revenue from tourism ........................................
Aircraft and cargo handling services ..................
Maintenance revenue .........................................
Gain on sale of operating assets ........................
Other operating revenue .....................................
Total other operating revenue ............................
Salaries ...............................................................
Contributions to pension funds ...........................
Other salary-related expenses ...........................
Total other operating income ..........................
Total salaries and salary related expenses ........
Aircraft fuel .........................................................
Aircraft lease .......................................................
Aircraft handling, landing and navigation ............
Aircraft maintenance expenses ..........................
Total aviation expenses ......................................
Operating cost of real estate and fixtures ...........
Communication ...................................................
Advertising ..........................................................
Booking fees and commission expenses ...........
Other operating expenses ..................................
Total other operating expenses ..........................
Cost of goods sold ..............................................
Customer services ..............................................
Travel and other employee expenses ................
Tourism expenses ..............................................
Allowance for bad debt .......................................
Total operating expenses ................................
Consolidated Financial Statements of Icelandair Group hf. 2022
72
Amounts are in USD thousand
Q1
Q2
Q3
Q4
Total
Year 2022
18,225 17,232 23,165 21,523 80,145
7,996 9,034 10,421 10,479 37,930
388 135 143 134 800
26,609 26,401 33,729 32,136 118,875
58,338)
(
1,206
92,720
16,737)
(
18,851
125 959 1,485 3,521 6,090
0 132 71 57 260
1,537 413 562 16 )( 2,496
1,662
1,504
2,118
3,562
8,846
1,869 2,204 2,942 4,480 11,495
2,639 2,997 3,677 4,306 13,619
524 1,242 223 2 )( 1,987
457 3,452 5,449 3,864 )( 5,494
5,489
9,895
12,291
4,920
32,595
345 )( 9,950 10,185 )( 0 580 )(
4,172 )(
1,559
20,358 )(
1,358 )
(
24,329 )(
0 0 0 3,807 3,807
14
632)( 1,447 1,021 1,850
62,496)
(
2,133
73,809
13,267)
(
179
12,795 1,669 15,938)( 4,524)( 5,998)(
49,701)( 3,802 57,871 17,791)( 5,819)(
9,950
7,305)( 21,211)( 4,240 14,326)(
39,751)( 3,503)( 36,660 13,551)( 20,145)(
83,883 121,713 49,110)(
34,133 190,619
58,732)( 7,209)( 39,204)(
73,896)( 179,041)(
38,268 14,968)( 12,570
26,799)( 9,071
Income tax ..........................................................
Operating profit (loss) (EBIT) ..........................
Share of loss of associates ................................
Profit (loss) before tax (EBT) ..........................
Gain on sale of associate/subsidiary ..................
Profit (loss) ........................................................
Other comprehensive profit (loss) ..................
Total comprehensive (loss) income ...............
Net cash from (used in) operating activities .......
Net cash from (used in) financing activities ........
Net cash from (used in) investing activities ........
Depreciation of operating assets ........................
Depreciation of right-of-use assets .....................
Quarterly statements (unaudited), contd.:
Interest income on cash and cash equivalents
Amortization of intangible assets ........................
Depreciation and amortization ............................
and marketable securities .................................
Interest income on lease receivables .................
Other interest income .........................................
Finance income total ..........................................
Interest expenses on loans and borrowings .......
Interest on lease liabilities ..................................
Net finance costs ..............................................
Other interest expenses .....................................
Net currency exchange loss ...............................
Finance costs total ..............................................
Changes in fair value of warrants .......................
Consolidated Financial Statements of Icelandair Group hf. 2022
73
Amounts are in USD thousand
2022
2021
Traffic
YTD
YTD
13,252,887
5,963,027
8.2
6.7
8.4
9.2
10,568,557
3,894,555
3,658,363
1,461,446
73.0%
84.0%
14,785
7,661
79.7%
65.3%
14,666
13,492
132,029
142,713
Passenger mix
1,481,964
687,113
556,196
207,841
1,350,969
341,071
269,234
225,421
2022
2021
Capital structure
31.12
31.12
266,411
262,964
318,411
434,964
10,470 )
(
5,179 )
(
335,844
238,137
0.74
0.83
0.19
0.19
0.20
0.21
0.88
0.82
2022
2021
Other
YTD
YTD
1,156
727
314,508
184,077
202,290
12,959 )
(
3,045
2,087
Alternative performance measures (APMs)
Net lease liabilites (USD ´000) .................................................................
Current ratio ..............................................................................................
Equity ratio ................................................................................................
Equity ratio without warrants ....................................................................
ASK (´000) ................................................................................................
CASK (USD cent) .....................................................................................
RASK (USD cent) .....................................................................................
RPK (´000) ................................................................................................
PAX ...........................................................................................................
OTP ..........................................................................................................
Passenger flights ......................................................................................
Liquidity (USD ´000) .................................................................................
Net interest-bearing debt (USD ´000) ......................................................
LF ..............................................................................................................
Sold Block Hours - Leasing ......................................................................
FTK (´000) ................................................................................................
To ...........................................................................................................
From ......................................................................................................
CAPEX, net ...............................................................................................
FTE ...........................................................................................................
Intrinsic value of share capital ..................................................................
Via ..........................................................................................................
Total cash and marketable securities (USD '000) ...................................
Within .....................................................................................................
Effective fuel price (USD pr. Metric tonn) ................................................
CAPEX, gross ...........................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2022 74
Traffic
ASK .........................................
RASK ......................................
CASK ......................................
CASK less fuel ........................
RPK .........................................
PAX - Passenger ....................
OTP ........................................
Passenger flights ....................
LF ............................................
Sold Block Hours - Leasing .....
FTK .........................................
Passenger mix:
To ........................................
From ....................................
VIA .......................................
Within ..................................
Capital sturcture
Total cash and
marketable securities ..........
Liquidity ...................................
Net interest-bearing debt ........
Net lease liabilities ..................
Current ratio ...........................
Equity ratio ..............................
Intrinsic value of share capital .
Other
Effective fuel price ...................
CAPEX, gross .........................
CAPEX, net .............................
FTE .........................................
Average full time employee equivalent
Cost of jet fuel and surcharges, including hedging results, but excluding de-icing and
emissions trading cost (pr. tonn)
Capital expenditure of operating assets, intangible assets and deferred cost
Capital expenditure of operating assets, intangible assets and deferred cost less
proceeds from sale of operating assets
Indicates the book value of each share and is calculated by dividing total equity with
share capital
The Icelandic domestic market where Iceland is the point of departure
The interantional market between Europe and North America
The domestic operation within Iceland
Total cash and cash equivalents (including cash from assets held for sale), marketable
securities and undrawn revolving facilities
Loans and borrowings, net of total cash and marketable securities
Lease liabilities (including assets held for sale, net of lease receivables)
Indicates how many times over current assets can cover current liabilities and is
calculated by dividing current assets with current liabilities
Indicates the ratio of how leveraged the Company is and is calculated by dividing total
equity with total equity and liabilities
Cash and cash equivalents (including cash from assets held for sale) and marketable
securities
The tourist market with Iceland as the destination
Each passenger is counted by the number of flight coupons his journey requires. A
passenger flying KEF-CPH is counted as one passenger, a passenger flying
NYC-KEF-
CPH is counted as two passengers
Arrival on time performance, a measure of flights arriving within 15 minutes of
scheduled arrival time. OTP is calculated by diving the number of arrivals that arrive
within 15 minutes of scheduled arrival time with the total number of arrivals
Flight flown by an airline for the purpose of carrying passengers, freight and mail
according to a published timetable for which it receives commercial remuneration
Passenger load factor, calculated by dividing RPK by ASK
Sold Block hours in the leasing operation. Block Hours is the time computed from the
moment the blocks are removed from the wheels of the aircraft until they are replaced
at the next point of landing
The number of tonnes of freight carried, obtained by counting each tonne of freight on
a particular flight (with one flight number)
Revenue passenger kilometers, the number of revenue passengers carried on
scheduled flights multiplied by the number of kilometers those seats were flown
Alternative performance measures (APMs), contd.:
Available seat kilometers, which is the total number of seats available on scheduled
flights multiplied by the number of kilometers these seats were flown
Total revenues on a given flight divided by the ASK on that same flight
Total operating and depreciation cost per available seat kilometer is calculated by
dividing total operating and depreciation cost on a given flight by availble seat
kilometers (ASK) on that flight
Total operating and depreciation cost per available seat kilometer less fuel is
calculated by deducting cost of fuel, fuel hedges, carbon emissions trading expenses
and de-icing from total operating and depreciation cost and divide by total availble seat
kilometers (ASK)
Consolidated Financial Statements of Icelandair Group hf. 2022
75
icelandairgroup.is
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