Consolidated
Icelandair Group hf. • Reykjavíkurflugvöllur • 102 Reykjavík, Iceland • Reg. No. 631205-1780
Financial Statements
for the year 2023
Consolidated Financial Statements of Icelandair Group hf. 2023
2
Contents
Endorsement and Statement by the Board of Directors and the CEO ...................................................................................... 3
Independent Auditors' Report .................................................................................................................................................... 7
Consolidated Income Statement and other Comprehensive Income ...................................................................................... 11
Consolidated Statement of Financial Position ......................................................................................................................... 12
Consolidated Statement of Changes in Equity ........................................................................................................................ 13
Consolidated Statement of Cash Flows .................................................................................................................................. 14
Notes ...................................................................................................................................................................................... 15
Note Page
1. Reporting entit
y ................................................ 15
2. Basis of accounting .......................................... 15
3. Functional and presentation currency .............. 15
4. Use of estimates and judgements .................... 15
5. Changes in accounting policies ....................... 16
6. Operating segments ......................................... 16
7. Operating income ............................................. 17
8. Operating expenses ......................................... 17
9. Auditor's fee ..................................................... 18
10. Depreciation and amortization ......................... 18
11. Finance income and (finance cost) .................. 18
12. Gain on sale of subsidiary ................................ 18
13. Operating assets .............................................. 18
14. Mortgages and commitments ........................... 19
15. Insurance value of aircraft and
flight equipment .................................... 19
16. Insurance value of buildings and
other operating assets ........................... 19
17. Right of use assets .......................................... 20
18. Intangible assets and goodwill ......................... 20
19. Impairment test ................................................ 21
20. Investment in associates .................................. 22
21. Non-current receivables and deposits .............. 23
22. Income taxes ................................................... 23
Note Page
23. Inventories ........................................................
25
24. Marketable securities........................................ 25
25. Trade and other receivables ............................. 25
26. Cash and cash equivalents .............................. 25
27. Equity ............................................................... 25
28. Earnings per share ........................................... 26
29. Loans and borrowings ...................................... 26
30. Lease liabilities ................................................. 28
31. Non-current payables ....................................... 28
32. Trade and other payables ................................. 29
33. Deferred income ............................................... 29
34. Financial risk management ............................... 30
35. Financial instruments and fair value ................. 37
36. Capital commitments ........................................ 38
37. Related parties ................................................. 38
38. Litigations and claims ....................................... 39
39. Group entities ................................................... 39
40. Ratios ............................................................... 39
41. Investment and financing without
cash flow effect ...................................... 40
42. Significant accounting policies .......................... 40
43. Standards issued but not yet effective .............. 48
Corporate Governance Statement
.......................................................................................................................................... 49
Non-Financial Reporting ......................................................................................................................................................... 55
Tax footprint ......................................................................................................................................................................... 60
Operational Risk ..................................................................................................................................................................... 66
Quarterly Statement ................................................................................................................................................................ 69
Alternative performance measures (APMs) ............................................................................................................................ 71
Consolidated Financial Statements of Icelandair Group hf. 2023
3
Endorsement and Statement by the Board of Directors and the CEO
Icelandair Group hf. is an Icelandic aviation company with decades' long history of operating in the international airline sector.
The Icelandair Route Network is the heart of the business model which takes advantage of the unique geographical location
of Iceland serving as a connecting hub between Europe and North America. Icelandair Group is the parent company of several
subsidiaries, that in addition to Icelandair include most notably Icelandair Cargo and the aircraft leasing brand Loftleidir
Icelandic. The Company's strategic initiatives support its vision of “Bringing the spirit of Iceland to the world” and its mission of
offering smooth and enjoyable journeys to, from, via and within Iceland – the Company's hub and home.
The Consolidated Financial Statements of Icelandair Group hf. for the year 2023 have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union and additional Icelandic disclosure
requirements. The Financial Statements comprise the Consolidated Financial Statements of Icelandair Group hf. (the
"Company") and its subsidiaries (together the “Group”) and have been audited by KPMG.
Operations in the year 2023
According to the Consolidated Income Statement, profit for the year 2023 amounted to USD 11.2 million. Equity at year end
amounted to USD 288.3 million, including share capital in the amount of USD 311 million, according to the Consolidated
Statement of Financial Position. Reference is made to the Consolidated Statement of Changes in Equity regarding information
on changes in equity.
Icelandair reached an important milestone in 2023 by turning a profit after taxes for the first time since 2017. Profit amounted
to USD 11 million, a turnaround from a loss of USD 6 million last year. Revenue generation was strong during the year, with
strong demand in all markets especially North America to Iceland, resulting in record unit revenues (RASK). Total revenue was
USD 1.5 billion up by 20% from 2022. EBIT amounted to USD 21 million, up by USD 2 million, with an EBIT ratio of 1.4%. The
results are considered acceptable given market conditions, external challenges, and cost increases. Following a very strong
third quarter, the fourth quarter started off well. However, the seismic activity in Southwest Iceland in November, with the
consequent global media coverage, weakened demand and, thereby, revenue generation. In addition, the impact of labor
actions by air traffic controllers in Iceland and a volcanic eruption in December was significant. Furthermore, the capacity
increase in the Company’s key markets inevitably puts pressure on unit revenue. The results in the fourth quarter were,
therefore, below expectations and impacted the results for the full year.
Icelandair transported 4.3 million passengers in 2023, 17% more than the year before. The number of passengers in the via
market to Iceland increased the most, by 22%, and accounted for 41% of total passengers.
Cargo markets were challenging in 2023, and various actions have been taken to improve the cargo operation, which resulted
in improved results in the last quarter of the year. Operating profit is expected in 2024, compared to a considerable operating
loss in 2023. The leasing business continued to perform well with good results in 2023 and the outlook for 2024 is good. One
aircraft will be added on lease to the Company's largest customer in the spring which, after the addition, will lease five aircraft
from the Company. The Company's world tours are going well, and the number of such projects will increase in 2024.
Icelandair signed an agreement with Airbus in 2023 for the purchase of 13 Airbus A321XLR aircraft with purchase rights for an
additional 12 aircraft. Delivery will commence in 2029. Icelandair further concluded long-term leases for seven new A321LR
aircraft, with the scheduled delivery of the first four in winter 2024/2025 and the remaining three in winter 2025/2026.
Preparations for the implementation of the aircraft have begun. The addition of the Airbus aircraft into the fleet will increase
the flexibility of the route network and create opportunities for future growth, as well as further support the Company's
sustainable development goals.
Icelandair employed an average of 3,638 full-time employees in 2023, 19% more than in 2022.
Equity amounted to USD 288 million, with an equity ratio of 19% at the end of the year. The liquidity position remained strong,
with cash and marketable securities amounting to USD 271 million. Additionally, the Company had undrawn committed credit
lines of USD 52 million, bringing total liquidity to USD 323 million.
The prospects for Icelandair’s operations for 2024 are favorable although the first part of the year, especially the first quarter,
will remain challenging due to the above-mentioned factors. The flight schedule in the passenger network will be Icelandair’s
largest ever, with 57 destinations, thereof three new. A total of 42 aircraft will be used in the passenger network in the summer
of 2024. The Company expects to deliver better results in 2024, both in terms of EBIT and after-tax profit.
The Company had an accumulated deficit at year-end, accordingly the Board of Directors proposes no dividend payment to
shareholders for the year 2023.
Endorsem
ent and Statement by the Board of Directors and the CEO, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
4
Share capi
tal and Articles of Association
The nominal value of Icelandair Group’s issued share capital at year-end was ISK 41.1 billion. 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.
According to the Icelandic Company's Act, companies can acquire and hold up to 10% of the nominal value of issued shares.
On 9 March 2023 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 2023 and the Company held no treasury shares at year-end.
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. In April 2023, a total of 393,300,000
stock options were granted based on the program. See note 27.
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.
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.
The number of shareholders at year-end 2023 was 14,404 a decrease of 1,492 during the year. At 31 December 2023 the 10
largest shareholders were:
Further information on matters related to share capital is disclosed in note 27. Additional information on shareholders is
provided on the Company's website www.icelandairgroup.com.
Shares in ISK
Name thousand Shares in %
7,073,868
1,945,179
1,257,604
1,213,222
1,048,802
998,984
767,342
743,558
663,704
642,849
16,355,113
24,765,134
41,120,247
Arion banki hf. ............................................................................................. 2.55
Almenni lífeyrissjóðurinn ............................................................................. 2.43
Gildi - lífeyrissjóður ...................................................................................... 4.73
Lífeyrissjóður starfsmanna ríkisins A-deild .................................................. 3.06
Brú Lífeyrissjóður starfsmanna sveitarfélaga .............................................. 2.95
Blue Issuer Designated Activity Company ..................................................
39.77
60.23
100.00
Other shareholders ......................................................................................
17.20
Birta lífeyrissjóður ........................................................................................ 1.56
1.87 Íslandsbanki hf. ...........................................................................................
Landsbréf - Úrvalsbréf hs. ...........................................................................
Sólvöllur ehf. ................................................................................................
1.81
1.61
Endorsem
ent and Statement by the Board of Directors and the CEO, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
5
Corpo
rate Governance
The Group's management is of the opinion 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.
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 that form an appendix to 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.
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.
Non-Financial Reporting
According to the Icelandic Financial Statements Act, the Company has compiled a thorough overview of non-financial
information. This includes key areas of sustainability according to the ESG Reporting Guide – Environment, Society and
Governance - issued by Nasdaq.
The company has previously identified material issues relating to the ESG framework that are monitored during the year and
Icelandair supports the United Nations’ Sustainable Development Goals (SDGs).
The Company's policies, material issues, goals and progress in key focus areas are further discussed in the Non-financial
Reporting that form an appendix to the Consolidated Financial Statements.
Statement by the Board of Directors and the CEO
The Consolidated Financial Statements for the year ended 31 December 2023 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.
In our opinion, the Consolidated Financial Statements of Icelandair Group hf. for the year 2023 identified as
“549300UMI5MBLZSXGL15-2023-12-31-en.zip” are in all material respects prepared in compliance with the ESEF Regulation.
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 2023, its assets, liabilities and consolidated financial
position as at 31 December 2023 and its consolidated cash flows for the year 2023.
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.
Endorsem
ent and Statement by the Board of Directors and the CEO, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
6
Statem
ent by the Board of Directors and the CEO, contd.:
The Board of Directors and the CEO have today discussed the Consolidated Financial Statements of Icelandair Group hf. for
the year 2023 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.
Reykjavík, 1 February 2024.
Board of Directors:
Guðmundur Hafsteinsson, Chairman of the Board
Nina Jonsson
John F. Thomas
Matthew Evans
Svafa Grönfeldt
CEO:
Bogi Nils Bogason
Consolidated Financial Statements of Icelandair Group hf. 2023
7
Independent Auditors' Report
T
o the board of directors and shareholders of Icelandair Group hf.
Report on the Audit of the Consolidated Financial Statements
Opinion
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, 2023, 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.
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, 2023, 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.
Basis for Opinion
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.
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.
Key Audit Matters
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.
Independent
Auditor's Report, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
8
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:
•
Ins
pecting third-party Service Organisation
Control
re
ports to determine whether General IT controls over
certain passenger revenue systems operated effectively
during the year.
•
T
esting a sample of key controls in the rev
enue
accounting process.
• T
esting al
l manual journal entires posted in passenger
re
venue accounts.
•
T
esting inputs and challenging key as
sumptions in the
P
repaid income obligation and re
-performing calculations
of the obligation.
• Checking that the methodology applied to prepaid income
and ex
pired tickets was consistent to prior y
ears and, if the
methodology has changed, assessed the appropriateness
R
eference is made to note 13 “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.
•
T
ested year-end credit card receiv
ables and trade
re
ceivables to cash received
p
ost
y
ear-end.
Key Audit Matters How the matter was addressed in the audit
•
T
ested reconciliation between the rev
enue accounting
sy
stem and the financial system.
•
W
e assessed the appropriateness of passenger rev
enue
re
cognition by selecting a sa
mple of coupons to ensure
that the coupons w
ere recognized as rev
enue on the date
of flight and at the corr
ect amount. We
also tested the
inclusi
on of passenger revenue transactions in th
e
appr
opriate period by testing se
lected flights before and
after
the the reporting date.
Key Audit Matters 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.
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 income
statement.
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.
•
W
e used data analytics to correlate the transactions in
passenger revenue accounts to confirm appr
opriate
counter p
ostings to prepaid revenues
, accounts
re
ceivables, cash and other accounts as appl
icable.
Pr
ovision for scheduled aircraft engine maintenance
of leased engines and amortization of owned engines.
We read new purchase and lease agreements for engines
in the year 2023 and evaluated if accounting for new
engines was appropriate and initial recognition is in line
with agreements.
Independent
Auditor's Report, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
9
Other information
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.
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.
Responsibilities of the Board of Directors and CEO for the Consolidated Financial Statements
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.
Auditor
'
s Responsibilities for the Audit of the Consolidated Financial Statements
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.
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 suff
icient
and ap
propriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulti
ng from
fraud is h
igher than for one resulting from error, as fraud may involve collusion, forgery, intentional omission
s,
misrepres
entations, or the override of internal contro
l.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appr
opriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’
s
intern
al control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by managemen
t.
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 exis
ts, we are
requ
ired 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 conc
ern.
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 presentati
on.
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.
Independent
Auditor's Report, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
10
Auditor
'
s Responsibilities for the Audit of the Consolidated Financial Statements, contd.:
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.
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.
Report on Other Legal and Regulatory Requirements
Report on European single electronic format (ESEF Regulation)
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 2023 with the file name
“549300UMI5MBLZSXGL15-2023-12-31-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 2023 with the file name
“549300UMI5MBLZSXGL15-2023-12-31-en.zip” is prepared, in all material respects, in compliance with the ESEF Regulation.
Report on the report of the Board of Directors and CEO
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.
Reykjavík, 1 February 2024.
KPMG ehf.
Hjördís Ýr Ó
lafsdóttir
Matthías Þ. Óskarsson
Consolidated Income Statement and other Comprehensive Income
for the year 2023
Notes 2023 2022
Operating income
Passenger revenue ......................................................................................................
7
Cargo revenue .................................................................................................
Leasing
revenue
...............................................................................................
Other Operating revenue .............................................................................................
7
Operating expenses
Salaries and salary-related expenses ..............................................................
Aircraft
fuel
.......................................................................................................
Other aviation expenses ..................................................................................
Other Operating expenses ...............................................................................
8
Operating profit before depreciation and amortization (EBITDA)
..............
Depreciation and amortization
..................................................................................
10
Operating profit (EBIT)
...................................................................................
Finance income ................................................................................................
Finance cost .....................................................................................................
(
(
Fair value changes ...........................................................................................
Net finance cost ..........................................................................................................
11
Gain on sale of associate/subsidiary ............................................................................
12
Share of (loss) gain of associates ...............................................................................
20
Profit before tax (EBT)
....................................................................................
(
(
Income tax ........................................................................................................
22
(
Profit (loss) for the year
..................................................................................
(
Other comprehensive income (loss)
Items that are or may be reclassified to profit or loss
Currency translation differences ......................................................................
Net profit (loss) on hedge of investment, net of tax ................................................... 34
Cash flow hedges - effective portion of changes in fair value, net of tax ................. 34
Cash flow hedges - reclassified to profit or loss ...............................................
Other comprehensive income (loss) for the year
.........................................
(
(
(
(
Total comprehensive profit (loss) for the year
.............................................
Owners of the Company ...................................................................................
(
(
Non-controlling interests ..................................................................................
Profit (loss) for the year
..................................................................................
Total Comprehensive profit (loss) attributable to:
(
Owners of the Company ...................................................................................
Non-controlling interests ..................................................................................
Total comprehensive profit (loss) for the year
.............................................
Earnings per share:
(
(
Basic earnings per share in US cent ..........................................................................
28
Diluted earnings per share in US cent ........................................................................
28
(
(
* Cargo revenue has been restated from Passenger and Other Operating revenue as a new line item in the
Consolidated Income Statement. Aircraft fuel cost has been restated from Other aviation expenses as a new line item
in the Consolidated Income Statement.
The notes on pages 15 to 48 are an integral part of these Consolidated Financial Statements.
Consolidated Financial Statements of Icelandair Group hf. 2023 11 Amounts are in thousands
( 135,477 )
(
(
(
(
Consolidated Statement of Financial Position
as at 31 December 2023
Notes 2023 2022
Assets:
Operating assets ................................................................................................... 13,16
Right-of-use assets .................................................................................................. 17
Intangible assets and goodwill
.............................................................................
18,19
Investments in associates ............................................................................
20
Receivables and deposits ........................................................................................ 21
Deferred tax assets .................................................................................................. 22
Non-current assets
Inventories ................................................................................................................. 23
Derivatives used for hedging ................................................................................... 34
Trade and other receivables ..................................................................................... 25
Marketable securities ................................................................................................
24
Cash and cash equivalents ......................................................................................
26
Current assets
Total assets
Equity:
Share capital ................................................................................................
Reserves ......................................................................................................
Accumulated
deficit
......................................................................................
Equity attributable to equity holders of the Company
27
Non-controlling interests ...............................................................................
Total equity
(
Liabilities:
Loans and borrowings .............................................................................................. 29
Lease liabilities .......................................................................................................... 30
Payables.................................................................................................................... 31
Non-current liabilities
Loans and borrowings .............................................................................................. 29
Lease liabilities .......................................................................................................... 30
Derivatives used for hedging ................................................................................... 34
Trade and other payables ........................................................................................ 32
Deferred income ....................................................................................................... 33
Current liabilities
Total liabilities
Total equity and liabilities
The notes on pages 15 to 48 are an integral part of these Consolidated Financial Statements.
Consolidated Financial Statements of Icelandair Group hf. 2023 12 Amounts are in thousands
(
Consolidated Financial Statements of Icelandair Group hf. 2023
13
Amounts are in thousands
Consolidated Statement of Changes in Equity
for the year 2023
Non-
Share Share Hedging Translation Other Accumulated controlling Total
capital premium reserve reserves deficit Total interest equity
2022
2023
The notes on pages 15 to 48 are an integral part of these Consolidated Financial Statements.
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 2022 .....................................
Equity 1 January 2023 ...........................................
Transfer of share premium ....................................
Equity 31 December 2023 .....................................
Profit for the year ...................................................
Currency translation differences ............................
Net profit on hedge of investment, net of tax .........
Cash flow hedges, reclassified to profit or loss .....
Divestment of Non-controlling interest ...................
Stock options .........................................................
of cash flow hedges, net of tax ...........................
Equity 1 January 2022 ...........................................
Shares 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
Attributable to equity holders of the Company
Reserves
Consolidated Financial Statements of Icelandair Group hf. 2023
14
Amounts are in thousands
Consolidated Statement of Cash Flows
for the year 2023
Notes 2023 2022
Cash flows from operating activities:
Adjustments for:
Depreciation and amortization .................................................................. 10 135,477 118,875
11 13,654 23,749
12 1,381 )( 3,807 )(
20 925 1,850 )(
22 3,380 )( 5,998
Chan
g
es in:
23 131 )( 3,020
25 12,326 37,968 )(
32 26,451 47,060
Cash generated from (used in) operating activities 52,965 56,315
Net cash from (used in) operating activities 215,121 190,619
Cash flows from (to) investing activities:
Acquisition of operating assets ..................................................................... 13 133,849 )( 311,556 )(
Proceeds from sale of operating assets ....................................................... 967 112,218
Acquisition of intangible assets .................................................................... 18 634 )( 422 )(
Deferred cost, change .................................................................................. 10,264 )( 2,530 )(
Proceeds from sale of a subsidiary ............................................................... 12 4,182 0
Proceeds from sale of (investment in) associates ........................................ 3,075 717 )(
Non-current receivables, chan
g
e .................................................................. 18,331 )( 7,928
Marketable securities, chan
g
e ...................................................................... 28,849 )( 16,038
Net cash from (used in) investing activities 183,703 )( 179,041 )(
Cash flows from financing activities:
Shares issued ............................................................................................... 27 0 52,386
Proceeds from loans and borrowings ........................................................... 29 63,461 42,002
Repayment of loans and borrowings ............................................................ 29 70,293 )( 47,799 )(
Repayment of lease liabilities ....................................................................... 30 49,788 )( 37,518 )(
Net cash from (used in) financing activities 56,620 )( 9,071
Change in cash and cash equivalents
..........................................................
.
Effect of exchange rate fluctuations on cash held
......................................
.
C
as
h
an
d
cas
h
equ
i
va
l
en
t
s a
t
b
eg
i
nn
i
ng o
f
th
e year
...................................
C
as
h
an
d
cas
h
equ
i
va
l
en
t
s a
t
31
D
ecem
b
er
................................................
.
26 199,514 224,252
Marketable securities .................................................................................... 71,008 42,159
Cash, cash equivalents and marketable securities at 31 December
..........
The notes on pages 15 to 48 are an integral part of these Consolidated Financial Statements.
Trade and other receivables .....................................................................
Trade and other payables .........................................................................
Deferred income .......................................................................................
Interest paid ..............................................................................................
Interest received .......................................................................................
Inventories ................................................................................................
Share in loss (profit) of associates ...........................................................
Income tax ................................................................................................
Profit (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 ................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2023
15
Amounts are in thousands
Notes
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
16
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
17
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
18
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
19
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
20
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
21
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
22
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
23
Amounts are in thousands
1,043
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
24
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
25
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
26
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
27
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
28
Amounts are in thousands
2,701
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
29
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
30
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
31
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
32
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
33
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
34
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
35
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
36
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
37
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
38
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
39
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
40
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
41
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
42
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
43
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
44
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
45
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
46
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
47
Amounts are in thousands
Notes
Consolidated Financial Statements of Icelandair Group hf. 2023
48
Amounts are in thousands
Consolidated Financial Statements of Icelandair Group hf. 2023
49
Corporate Governance Statement
T
he framework
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, the Rules
for Issuers of securities listed on the Nasdaq Iceland and policies and procedures approved by the Board, make up the
framework for Icelandair Group's, hereafter Icelandair, 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.
Icelandair was in 2023 recognized for Excellence in Corporate Governance, an acknowledgement granted by the Icelandic
Chamber of Commerce, Nasdaq Iceland, and the Confederation of Icelandic Employers. The acknowledgement certifies
that the working practices of the Company's Board of Directors are well organized, and that the implementation of the
Board's duties is exemplary. The recognition is based on an assessment of Icelandair's governance practices that are
evaluated based on the Guidelines on Corporate Governance. Stjórnvísi (e. Excellence Iceland), the country’s national
body for quality management and performance improvement, is the coordinator of the recognition process.
In all main respects there are detailed rules of procedure in place, including for the Nomination Committee however a
specific diversity policy has not been implemented in relation to the combination of the members of the Board of Directors.
In its work, the Nomination Committee gives consideration to the combination of the Board in terms of education,
professional background, gender, knowledge, experience, and skills. The Company has set itself a goal that the gender
ratio of either men or women in management positions is never below 40%. The proportion of women in management
positions in 2023 is 42%.
Composition and activities of the Board of Directors and sub-committees
Internal controls
Internal controls are applied at various levels 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 has a Risk governance framework in place which includes a centralized enterprise risk platform that is
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.
Health &
Board o
f
Audit Remuneration Nomination Safet
y
Directors Committee Committee Committee Committee
15 5 2 6 4
x (Chairm.) x (Chairm.)
xxx
xx
x x x (Chairm.)
xx
x
x (Chairm.)
x (Chairm.)
x
Helga Arnadottir .....................................
Nr. of meetings in 2022 .........................
Guðmundur Hafsteinsson ......................
Nina Jonsson .........................................
Svafa Grönfeldt ......................................
John F. Thomas .....................................
Matthew Evans ......................................
Ulfar Steindorsson .................................
Alexander Edvardsson ...........................
Hjorleifur Palsson ..................................
Corporate Governance Statement, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
50
Internal controls, contd.:
The oversight of compliance with the Company's risk management policies and procedures resides with the Board's Audit
Committee. Enterprise risk is monitored through bi-annual risk assessments that are reported to the Board of Directors.
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 five meetings in 2023.
Audit Committee members:
Alexander Edvardsson, Chairman
John F. Thomas
Svafa Grönfeldt
Values, Code of Ethics and Corporate Responsibility
The Company's values are:
Passion
Simplicity
Responsibility
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.
Remuneration Committee
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 objective of the Remuneration Policy is to make employment with Icelandair 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 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 considering the factors above..
Corporate Governance Statement, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
51
Remuneration Committee, contd.:
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. In 2023, 393,300,000 stock options were granted based on the
program, thereof 123,700,000 to the Executive Committee.
General Salary Development
The international airline and aviation industry is 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 labor market industry pay developments in relation to the ground- and office staff is
characterized by a complicated set up based on operational requirements of 24/7 operating functionality all year around.
CEO Remuneration
According to Icelandair’sRemuneration 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 to the Board of Directors for appropriate changes
to reflect a strategic or tactical directional change for the Group from time to time.
Board of Directors Remuneration
According to Icelandair’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.
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 2023 it was
agreed that the remuneration to the Board Members would increase by 15% and the remuneration to the Sub-Committee
Members would remain umchanged. The Remuneration Committee held 2 meetings in 2023.
Remuneration Committee members:
Gudmundur Hafsteinsson, Chairman
Nina Jonsson
Matthew Evans
Nomination Committee
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.
Corporate Governance Statement, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
52
Nomination Committee, contd.:
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.
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 2023 and furthermore had meetings with
members of Icelandair's Executive Committee and the largest shareholders.
Nomination Committee members:
Hjorleifur Palsson, Chairman
Helga Arnadottir
Ulfar Steindorsson (nominated by the Board of Directors)
Health & Safety Committee
The purpose of the Health & Safety Committee is to maintain oversight of the development and implementation of
Icelandair's s Health & Safety Policies and initiatives. In addition, the Committee serves as a forum for in-depth discussions
on Icelandair’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 serve on the Health & Safety Committee.
The Health & Safety Committee was formed to foster closer involvement from the Board of Directors with Icelandair's
Health & Safety policies. 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. All quarterly Board of Directors meetings include a ten-minute safety review. The committee held four meetings in
2023.
Health & Safety Committee members:
John F. Thomas, Chairman
Nina Jonsson
The Board of Directors
At the Annual General Meeting of Icelandair Group, held on 9 March 2023, the following were elected members of the
Board of Directors; Guðmundur Hafsteinsson, John F. Thomas, Matthew Evans, Nina Jonsson and Svafa Grönfeldt.
Guðmundur Hafsteinsson was elected as the 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. Guðmundur is independent of the Company, its management and significant shareholders and holds 8,555,555
shares. 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 holds 3,394,500 shares. 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 serves on the Board as the representative of the
Company’s largest shareholder and as such he is not independent from the Company’s major shareholders. He neither
holds shares nor share options in the Company. 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 holds no shares. Further information.
Svafa Grönfeldt
Svafa joined the Board of Icelandair Group on 8 March 2019. She is born in 1965 and is an Icelandic and U.S. citizen. Svafa
is independent of the Company, its management and significant shareholders and holds 12,500,000 shares. Further
information.
Corporate Governance Statement, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
53
The Board of Directors, contd.:
The Company's Board of Directors exercises supreme authority in the Company's affairs between shareholders' meetings,
and it is entrusted with the task of ensuring that the organization 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.
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 policies 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.
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 made 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 shareholders and he shall inform the Board on their views.
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 improv
ed.
T
he 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 N
omination and Audit Committees have 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 2023 with the exception of
Matthew Evans who represents the largest shareholder.
Corporate Governance Statement, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
54
Executive committee
Bogi Nils Bogason, President & CEO
Bogi holds 23,625,000 shares and 22,100,00 share options and has no interests linked with the Company’s main clients,
competitors, or major shareholders. The seven members of the Executive Committee hold 81,700,000 share options.
Árni Hermannsson, Managing Director Loftleidir Icelandic
Elísabet Helgadóttir, Chief Human Resources Officer
Einar Már Guðmundsson, Managing Director Icelandair Cargo
Ívar S. Kristinsson, Chief Financial Officer
Rakel Óttarsdottir, Chief Digital Officer
Sylvía Kristín Ólafsdóttir, Chief Operating Officer
Tomas Ingason, Chief Commercial Officer
The Executive Committee held 84 meetings in 2023. In August it was resolved to combine the Customer and Revenue
divisions into a single Commercial division. Tómas Ingason is responsible for the Commercial division as Chief Commercial
Officer. Sylvía Kristín Ólafsdóttir moved from the role of Chief Customer Officer to the role of Chief Operating Officer. Jens
Bjarnason stepped down as Icelandair’s Chief Operating Officer and moved to a different role within the Company. In
September, Einar Már Guðmundsson took on the role of Interim Managing Director of Icelandair Cargo and took a seat on
the Executive Committee. He was permanently appointed to the position in November. Further information about the
Executive Committee members can be found on the Icelandair Group website.
Consolidated Financial Statements of Icelandair Group hf. 2023
55
Non-Financial Reporting
Bu
siness Model
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, hereafter Icelandair, reached an important milestone in 2023 by turning a profit after taxes for the first
time since 2017. Revenue generation was very strong during the year with strong demand in all markets, especially from
North America to Iceland. Icelandair transported 4.3 million passengers in 2023, 17% more than the year before and offered
flights to 55 destinations and added 6 new destinations to the network.
Corporate Strategy
Icelandair'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. 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 Company culture, and the
guiding principles that represent the keys to successful decision making and resource allocation in the day-to-day operation
are:
The way to fly to, from, via and within Iceland – which is a reminder to continually strive to bolster the Company's
valu
e proposition and improve customer experience
Agile and financially sustainable business – which highlights the value of operating in a nimble manner while
bei
ng financially responsible
Embracing our people and the planet – which underlines that all decisions should be made with full consideration
give
n to the Company's responsibilities towards its people, the wider community, and the environment
Each year Icelandair defines formal corporate objectives that set out priorities for the year to provide the employees with
further guidance on the Company’s strategic direction. In 2023, Icelandair worked towards three corporate objectives and
made good progress towards each one:
Be the leading hub carrier in Keflavik
Reinforce our culture of passion and care
Raise On-Time Performance (OTP)
Sustainability
Changes in the regulatory environment
The European Union has introduced the European Green Deal, which consists of a series of major proposals, important
commitments, and a detailed roadmap with the goal for Europe to become the world's first climate-neutral continent by
2050. The European Green Deal is supported by the Sustainable Finance Strategy, which aims to finance the sustainable
transition and re-orient investments towards more sustainable technologies and businesses. One aspect of the European
Green Deal is the new Corporate Sustainability Reporting Directive (CSRD), its accompanying European Sustainability
Reporting Standards (ESRS) and directions on alignment with the EU Taxonomy Regulation.
The EU Taxonomy Regulation entered into effect in Iceland in June 2023 and the adaptation of the CSRD into Icelandic
law is expected to be submitted in the Parliament in 2024.
CSRD expands the scope of non-financial reporting with new disclosure requirements. One of the key requirements of
CSRD is that companies perform a double materiality assessment (DMA) to identify which sustainability matters are
material for the company. Double materiality, as defined by the CSRD, comprises impact materiality and financial
materiality. Impact materiality refers to the company’s impacts on the environment and society. Financial materiality refers
to the risks and opportunities that a company faces in relation to the environment and society. A sustainability matter is
considered material for a company if it fulfils the requirements for impact materiality, financial materiality, or both.
To ensure compliance with the new CSRD regulation, Icelandair is working with external consultants on the preparation for
its reporting in 2025 for the financial year 2024. A double materiality assessment is the first step in the implementation of
CSRD and was performed in the latter part of 2023. As a result of that work, eight of the ten ESG topics have been assessed
as material for Icelandair.
Non-Fina
ncial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
56
Sustainability, contd.:
The four standards that have been assessed as material from both an impact and financial perspective are:
Climate change (E1)
Circular economy (E5)
Own workforce (S1)
Business conduct (G1)
The four standards that have been assessed as material from an impact perspective are:
Pollution (E2)
Workers in the value chain (S2)
Affected communities (S3)
Consumers and end-users (S4)
Two standards have been assessed as non-material and they are:
Water and marine resources (E3)
Biodiversity and ecosystems (E4)
Based on the results of the DMA as well as the list of disclosures for the mandatory standards, ESRS 1 and 2, and a gap
assessment will be conducted in the first part of 2024 to identify the documentation and data needed to comply with the
disclosure requirements. It includes reviewing currently available data, assessing its quality and reliability, starting to collect
new types of data, and developing policies and implementing new processes to prepare Icelandair for disclose in
accordance with CSRD when it enters into force.
As the leading airline in Iceland and an important employer, Icelandair takes its responsibility towards all stakeholders
seriously. Defined key stakeholders are employees, customers, shareholders, suppliers and partners, the tourism industry,
various NGOs, and the Icelandic authorities. The Company has approached selected groups of stakeholders before for
their views on sustainability-related topics. In 2024 a new dialogue will be initiated with key stakeholders based on the
results from the double materiality assessment for verification of materiality.
Icelandair 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.
Environment
Icelandair Group recognizes the impact that air travel has on the environment. The Company is dedicated to minimizing
its environmental impact by addressing its responsibilities to reduce emissions, conserve natural resources, as well as
optimize the use of sustainable energy and recyclable materials as stated in Icelandair Environmental Policy on Icelandair
Group’s website. 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 34 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 program is based on recognized
environmental management principles, ISO 14001, and assessments are conducted by accredited independent
organizations. In April 2023, Icelandair was audited by the international assessor ACS and the Company has now received
certifications for passing the assessment successfully. Globally, 17 airlines have achieved IEnvA stage 2 environmental
certification from IATA. However, Icelandair is the only airline in that group to have received certification for all scopes of
the assessment which includes all flight operations, general operations, including the cargo operation, the leasing business,
catering, ground handling and maintenance.
As part of the Company’s efforts of addressing its environmental impact, both globally and locally, Icelandair participates
in the work of various environmental working groups, within organizations such as the International Air Transport
Association (IATA) and Airlines for Europe (A4E).
Non-Fina
ncial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
57
EU T
axonomy
As described by the European Commission, the EU Taxonomy is a classification system for determining sustainable
economic activities that provides companies, investors, and policymakers with appropriate definitions for which economic
activities can be considered environmentally sustainable with regards to the six environmental objectives that have been
established. The Taxonomy Climate Delegated Act has been in force since 2021 for two environmental objectives within
the EU Taxonomy – Climate change mitigation and Climate change adaptation – and were amended with additional
activities in 2023. In 2023 the EU also published an Environmental Delegated Act specifying activities for the remaining
four environmental objectives – Sustainable use and protection of water and marine resources, Circular economy, Pollution
& prevention control, and Biodiversity & ecosystems.
Icelandair’s Taxonomy-eligible activities
Icelandair has reached out for external consultancy to understand the extent of the regulation for the Company. An initial
screening and interpretation of the criteria was done in the fall of 2023 to determine whether Icelandair’s business activities
were eligible under the EU Taxonomy. According to the screening, Icelandair is eligible for four economic activities included
in the amended Climate Delegated Act, as listed here below. Subsequently, for the financial year 2023, Icelandair will report
on turnover, capital expenditures and operating expenditures related to these activities.
The Company will continue to work on alignment, minimum safeguards, and further implementation of the EU Taxonomy
to prepare for disclosure for the financial year 2024.
3.21 Manufacturing of aircraft
Description of the activity: Manufacture, repair, maintenance, overhaul, retrofitting, design, repurposing and upgrade of
aircraft and aircraft parts and equipment.
Icelandair does
have financial streams relating to manufacturing of aircraft, specifically repair and maintenance.
6.18 Leasing of aircraft
Description of the activity: Renting and leasing of aircraft and aircraft parts and equipment.
Icelandair
does have financial streams relating to leasing of aircraft. Through its leasing business, Loftleidir Icelandic,
Icelandair is involved in the leasing of aircraft for airlines and tour operators.
6.19 Passenger and freight air transport
Description of the activity: Purchase, financing, and operation of aircraft including transport of passengers and goods. The
economic activity does not include leasing of aircraft referred to in Section 6.18.
Icelan
dair does have financial streams relating to passenger and freight air transport. Icelandair operates an international
passenger airline and route network, specifically flying to and from Europe and North America. The focus of Icelandair’s
airfreight and logistics operations is on air freight services to and from Iceland, by leveraging the passenger route network
together with scheduled air freighter flights, operating designated cargo aircraft.
6.20 Air transport ground handling operations
Description of the activity: Manufacture, repair, maintenance, overhaul, retrofitting, design, repurposing and upgrade,
purchase, financing, renting, leasing and operation of equipment and service activities including ground services activities
at airports and cargo handling, such as loading and unloading of goods.
Icelandair does have financial streams relating to ground handling operation. Ground handling involves a range of services
provided on the ground to aircraft, passengers, and cargo.
Non-Fina
ncial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
58
T
axonomy non-eligibility
Icelandair's business activities that are currently not included in the EU Taxonomy, and thus not assessed as Taxonomy
eligible, comprise the Taxonomy non-eligible percentage (%)
Calculation of turnover, Capex and Opex
Climate
To address the global challenge of climate change Icelandair has set goals, aiming to achieve net zero emissions by 2050,
and monitors fuel efficiency and CO2 emissions from flight operations. In addition, the Company has set specific targets
for reducing CO2 emissions per Operational Ton Kilometer (OTK) from flight operations by 2030 compared to 2019. The
total emissions from aviation in 2023 were 1,113,4672, a reduction of 18% compared to 2019. The emissions from the
route network includes domestic and regional routes. The emissions from aviation are reported annually to the
Environmental Agency of Iceland.
Operational Ton Kilometer (OTK) is how much CO2 is emitted moving one payload ton one kilometer and takes into
consideration the weight of the aircraft, passengers, and cargo.
Decision on Icelandair’s future fleet was taken in the year 2023 with an agreement with Airbus on the purchase of up to 25
A321XLR aircraft. Deliveries will commence in 2029. Icelandair also finalized long-term agreements for four new A321LR
aircraft in 2023 and additional three in 2024. Delivery of the first four is expected during the winter 2024-2025 and the three
remaining aircraft in the winter 2025-2026. These aircraft are of a new generation of more environmentally friendly aircraft
and therefore an important part of reducing carbon emissions within the operations.
Fleet renewal is currently the most effective measure to reach ambitious goals in reducing carbon emissions. A part of the
fleet renewal process is the decommissioning of older aircraft. Two Boeing 757 aircraft were decommissioned during the
year. This process involves that all usable and sellable parts are removed for further use. This applies to technical parts,
seats, and other interior items. The rest of the aircraft is then torn down and recycled by a specialized recycling company.
In September 2023 a new law, ReFuelEU, was adopted in the European Parliament with the aim to increase the uptake of
sustainable fuels in the aviation sector. It came into effect on 1 January 2024. It obliges EU airports and fuel suppliers to
ensure that, starting from 2025, at least 2% of aviation fuels will be sustainable, with this share increasing every five years:
6% in 2030, 20% in 2035, 34% in 2040, 42% in 2045 and 70% in 2050.
Airlines have been part of the EU’s emissions trading system, the ETS system, since 2012. Since the beginning, the total
number of emissions allowances in the system has been steadily reduced. In 2023, changes were made to the system to
ensure a further reduction in emissions and they were implemented into Icelandic laws at the end of 2023. The changes
include faster deduction of the number of allowances and that the allocation of free emissions allowances to airlines will
be phased out from 2024 to 2026
Amounts are in USD thousand
% of % of % of
Economic activities turnover Capex Opex
A.
E
ligible activities
0.1% 18.5% 12.1%
4.7% 22.6% 3.5%
93.4% 55.6% 75.6%
0.9% 3.4% 8.8%
B.
N
on-eligible activities
0.9% 0.0% 0.0%
Total
100.0% 100.0% 100.0%
Manufacturing of aircraft ..........................................................................................
Leasing of aircraft ....................................................................................................
Passenger and freight air transport ..........................................................................
Air transport ground handling operations .................................................................
Non-eligible activities ...............................................................................................
2023 2022
Total CO2 emissions
1,113,467 950,107
kgCO2 emissions per OTK
0.76 0.77
Non-Fina
ncial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
59
Climate, contd.:
The Icelandic government reached an agreement with the EU Commission on Iceland's adaptation to Directive (EU)
2023/958 on the ETS system in aviation. This adjustment includes that airlines flying to and from Iceland receive a 100%
reimbursement of the price difference between all sustainable aviation fuel and fossil fuel at airports in Iceland. In addition,
they will also have a permission to maintain the allocation of free emission allowances to airlines in 2025 and 2026, which
can correspond to the number of allowances that the airlines will be allocated in 2024. The condition of the allocation is
that the airlines submit a carbon neutrality plan to the Environment Agency.
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).
Waste
Icelandair's goal is to minimize 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 increases between years. Laws and regulations have always restricted waste separation on board, and Icelandair
has for years called for changes in regulations about recycling waste from international flights, which has until now all been
incinerated due to these regulations. In good cooperation with the Environment Agency of Iceland and the Icelandic Food
and Veterinary Agency, new guidelines were implemented at the beginning of the year that enable airlines to sort clean
recyclables, i.e., plastic, paper and aluminum cans coming into Iceland. Icelandair therefore started to sort recyclables at
the end of February and about 34% of the waste from the airplanes was sorted during the year. That is reflected in the
overall sorted waste percentage going up to 41% from 33% the previous year.
Icelandair also participated in a joint project with IATA where the focus is to pressure authorities in Europe and North
America to allow airlines to recycle waste in outstations. This included doing a recycling trial on one of the North American
routes in November where the sorted and general waste were weighed and registered.
Icelandair has offered passengers the option to offset the carbon footprint of their air travel since September 2019.
Passenger participation in this program during 2023 contributed to the planting of around 2500 trees over the year. The
carbon offset program was devised in co-operation with Klappir Green Solutions and Kolvidur – the Iceland Carbon Fund
to cultivate forests in Iceland and sequestering carbon from the atmosphere through tree planting. At the end of the year
the carbon calculator was taken out of use as the Company is in the process of developing a new and more accessible
solution for carbon compensation for passengers that will be implemented in 2024.
Society
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 supports Icelandic music through Iceland Airwaves and Icelandic Music Experiments. The Company 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 Special
Children Travel Fund which helps families of children with long-term illnesses and children who live in difficult
circumstances.
2023 2022
Amount of waste
1338 tons 1160 tons
Sorted waste
41% 33%
General waste 59% 67%
Non-Fina
ncial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
60
Tax footprint
Icelandair contributes directly to the Icelandic economy in the form taxes and fees paid to the government and
municipalities. The total tax footprint of Icelandair Group in 2023 amounted to USD 400.6 million (2022: USD 328.9 million).
Employees
Icelandair’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. Employees can report potential breaches of the Company’s Code of Ethics by
talking to their Superior or the Compliance Officer. Code of Ethics for Icelandair can be found on Icelandair's website.
About five hundred more employees were employed by the company at year end 2023 than the previous year and fewer
employees left the company during the year with turnover rates coming down to 4% from 8%.
That is one of the reasons the year 2023 was unprecedented when it comes to employee training. Not only was this the
most extensive training period in Icelandair’s history but also the most extensive in Icelandic aviation history. This period
understandably did put heavy strain on the Company’s infrastructure, but the quality of the training and safety were always
top priority. The number of students trained during the year were 6.836, but that number does not reflect the number of
individuals as some employees received more than one type of training
Total tax footprint of Icelandair Group in USD thousand
Other Other
Iceland
C
ountries Total Iceland
C
ountries Total
Salary-related taxes ................................
21,080 417 21,497 17,904 373 18,277
Pension fund contribution ........................
47,599 1,282 48,881 38,062 44 38,106
Emission charges .................................... 0 23,272 23,272 0 15,112 15,112
Landing fees ............................................ 14,596 32,169 46,765 13,222 23,554 36,776
Other taxes .............................................. 4,346 0 4,346 1,494 0 1,494
Companies fees
87,621 57,139 144,761 70,683 39,083 109,765
Employee income taxes .......................... 100,180 336 100,517 86,062 393 86,455
Passenger taxes ..................................... 41,818 107,006 148,824 32,183 90,075 122,258
Collected taxes
141,999 107,342 249,341 118,245 90,468 208,714
Deferred payments on payroll taxes ........ 6,535 0 6,535 10,401 0 10,401
Total tax footprint
236,155 164,481 400,636 199,329 129,551 328,880
20222023
2023 2022
Turnover rates
4% 8%
Average FTEs
3638 3045
FTEs year end
3542 3023
Non-Fina
ncial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
61
Emp
loyees, contd.:
General health and well-being of Icelandair 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 offers various health-related programs and
initiatives to further its employee's health and wellbeing. The Health & Attendance Policy outlines how risk is managed and
how zero accidents culture is obtained by a number of measures, one being that all incidents must be recorded. 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 the health
protection service, Heilsuvernd, on confidential medical services ensuring employee's' access to health care.
The Company implemented the EASA regulation 2018/1042 in 2023 which includes technical requirements and
administrative procedures related to introducing support programs, psychological assessment of flight crew, as well as
systematic and random testing of psychoactive substances to ensure medical fitness of flight and cabin crew members.
The Company is proud of how its team of people has adapted to a 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. In the past year the
Company continued emphasizing strong communication and information flow from the leadership team and necessary
support in remote working.
Icelandair 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 has been mandatory for all new employees from 2020. All cabin crew members have
been trained in relation to human trafficking awareness and preventive actions.
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 behavior or breach of legal obligations or other reprehensible
misconduct within the Company, it implemented a simple online announcement tool for employees, which is called
Tilkynna.is. The tool provides the possibility to send a comment regarding a behavior 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.
One of Icelandair 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.
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 the leadership team is especially
important.
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
Never less than 40% of either men or women in management positions
Increase the number of female pilot positions by 25% compared to 2021
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
2023 2022
Overal
g
ender ratio, men / women
54% / 46% 54% / 46%
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
62
Employees, contd.:
In 2023 the ratio of women in management positions is 42%. The share of female pilot positions has increased by 280%
since 2021 and the share of male cabin crew positions has increased by 136% since 2021. Icelandair signed an
agreement with the Technical College in Reykjavik in 2023 regarding the promotion and future development of education
and jobs in aircraft maintenance engineering.
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
dropped to 5% in 2021 but with the successful ramp-up of Icelandair’s operations following the pandemic the proportion
of female pilots was 14% in 2023. Male cabin crew members were 5% 10 years ago but are up to 15% in 2023 because
of targeted changes in the hiring process.
Icelandair implemented an equal pay policy in 2018. The purpose of the Equal Pay Policy, found on the Company’s website,
is to ensure gender pay equality in the Company through the implementation of an Equal Pay System. Icelandair commits
to ensuring 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. Two companies within
Icelandair Group, Icelandair and Icelandair Cargo had been certified by a third party and received Equal pay certification
in 2021, the certification for the companies has been combined in one and recertified for 2022-2025. Icelandair’s Equality
Plan which is an integral part of the equal pay system 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.
Governance practices
In 2022, the Company continued to work to centralize and improve procurement functions across all its operations as
responsible procurement has previously been identified as a material issue for Icelandair. 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.
In 2023, the goal was to implement a new responsible Sourcing and Procurement policy That work will continue in 2024
and the Company will monitor the implementation of the new European Corporate Sustainability Due Diligence Directive
(CSDDD) for reference. More emphasis will be put on qualifying and monitoring suppliers in a systematic way, with self-
assessments and risk evaluations.
Human Rights
The Company respects fair labor practices and contractors, sub-contractors and work agencies working for Icelandair shall
ensure that wages, wage-related obligations and safety in the workplace all comply with Icelandair'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.
Anti-corruption and bribery policy
Icelandair Group conducts all its business in an honest and ethical manner and the integrity of 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.
Assurance
The information presented in this Appendix has not been assured by a third party. However some information has been
assured independently. The Company’s Equal Pay management system is audited by BSI every year. The environmental
management system is certified by IATA every other year and the independent auditing company ACS performs the audits
on their behalf. The CO2 emissions from flights are audited by Verifavia every year in relation to the ETS and Corsia
validating process. The environmental data such as water, electricity and waste are gathered through a software by Klappir
– Green solutions. Sustainability and climate relate topics are discussed at the Board of Directors quarterly meetings from
the beginning of 2023.bls.
2023 2022 2021
Female
p
ilots
14% 11% 5%
Male cabin crew
15% 14% 11%
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
63
ESG Accounting
Environmental Metrics
E1 GhG Emissions Units
2023 2022
Total amount, in CO2 equivalents, for Scope 1 tCO2e 1,114,297 951,572
Total amount, in CO2 e
q
uivalents, for Sco
p
e 2 tCO2e 243 222
Total amount, in CO2 e
q
uivalents, for Sco
p
e 3 tCO2e 114 114
E2 Emissions Intensit
y
Total GhG emission
p
er out
p
ut scalin
g
factor tCO2e
p
er FTEs 306 313
tCO2e per
passenger
0.26 0.26
Total CO2 emissions
p
er scalin
g
facto
r
CO2
p
er OTK 0.76 0.77
E3 Ener
gy
Usa
g
e
Total amount of energy directly consumed (fossil fuels) kWh 4,532,282,210 3,932,409,653
Total amount of ener
gy
indirectl
y
consumed
(
electricit
y
and heat
)
kWh 26,196,708 24,144,673
E4 Ener
gy
Intensit
y
Total direct ener
gy
usa
g
e
p
er out
p
ut scalin
g
factor kWh
p
er FTEs 1,253,018 1,299,361
kWh per
p
assen
g
er
1,064 1,082
E5 Ener
gy
Mix
Non renewable ener
gy
(
fossil fuels are the
p
rimar
y
ener
gy
source
)
%99%99%
Renewable ener
gy
%1%1%
E6 Water Usa
g
e
Total amount of water consumed m3 376,458 342,546
Total amount of water reclaimed m3 - -
E7 Environmental O
p
erations
Does your company follow a formal Environmental Policy Yes/No Yes Yes
Yes/No Yes Yes
Yes/No Yes Yes
Does your company follow specific waste, water, energy, and/or
recycling policies
Does your company use a recognized energy management
system
E8 Climate Oversi
g
ht / Board
Yes/No No No
E9 Climate Oversi
g
ht / Mana
g
ement
Yes/No Yes Yes
E10 Climate Risk Miti
g
ation
ISK - -
Does your Board of Directors oversee and/or manage climate-
related risks
Does your Senior Management Team oversee and/or manage
climate-related risks
Total amount invested, annually, in climate-related
infrastructure, resilience, and product development
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
64
Social data metrics
S1 CEO Pa
y
ratio
Units
2023 2022
ratio 5.68 5.53
Yes/No Yes Yes
S2 Gender Pa
y
Ratio
Gender pay analysis (regular earnings) % 2.8% in favor
of men
2.9% in favor
of men
CEO total compensation to median FTE total compensation
Does
y
our compan
y
report this metric in re
g
ulator
y
filin
g
s
S3 Em
p
lo
y
ee Turnove
r
Year-over-
y
ear chan
g
e for full-time em
p
lo
y
ees % 4% 8%
S4 Gender Diversit
y
Total enterprise headcount women/men% 46/54 46/54
Entr
y
- and mid- level
p
ositions held b
y
men and women women/men% - -
women/men% 38/62 33/67
S5 Tem
p
orar
y
Worker Ratio
women/men% - -
women/men% - -
Senior- and executive-level positions held by men and women
(only executive committee)
Total enterprise headcount held by part-time employees
Total enterprise headcount held by contractors and/or
consultants
S6 Non-Discrimination
Yes/No Yes Yes
S7 In
j
ur
y
Rate
--
S8 Global Health & Safet
y
Yes/No Yes Yes
Does your company follow a sexual harassment and/or non-
discrimination policy
Frequency of injury events relative to total workforce time
Does your company follow an occupational health and/or global
health & safety policy
S9 Child & Forced Labou
r
Yes/No Part of CoC Part of CoC
Yes/No Part of SCoC Part of SCoC
S10 Human Ri
g
hts
Yes/No Yes Yes
Yes/No Yes Yes
Does your company follow a child and/or forced labour policy
If yes, does your child and/or forced labor policy also cover
suppliers and vendors
Does
y
our compan
y
follow a human ri
g
hts polic
y
If yes, does your human rights policy also cover suppliers and
vendors
Non-Fina
ncial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
65
Go
vernance Metrics
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.
G1 Board Diversit
y
Units
2023 2022
%40%40%
%0%0%
G2 Board Inde
p
endence
Yes/No Yes Yes
%80%80%
G3 Incentivized Pa
y
Yes/No Yes Yes
Total board seats occupied by women (as compared to men)
Committee chairs occupied by women (as compared to men)
Does compan
y
prohibit CEO from servin
g
as board chair
Total board seats occupied b
y
independants
Are executives formally incentivized to perform on sustainability
G4 Collective Bar
g
ainin
g
%99%97%
G5 Su
pp
lier Code of Conduct
Yes/No Yes Yes
G6 Ethics & Anti-Corru
p
tion
Yes/No Yes Yes
% 100% of new
em
p
lo
y
ees
100% of new
em
p
lo
y
ees
G7 Data Privac
y
Yes/No Yes Yes
Yes/No Yes Yes
G8 ESG Re
p
ortin
g
Yes/No Yes Yes
Yes/No Yes Yes
Total enterprise headcount covered by collective bargaining
agreements
Are your vendors or suppliers required to follow a Code of
Conduct
Does your company follow an Ethics and/or Anti-Corruption
policy
If yes, what percentage of your workforce has formally certified
its com
p
liance with the
p
olic
y
Does your company follow a Data Privacy policy
Has
y
our compan
y
taken steps to compl
y
with GDPR rules
Does your company publish a sustainability report
Is sustainabilit
y
data included in
y
our re
g
ulator
y
filin
g
s
G9 Disclosure Practices
Yes/No Yes Yes
Yes/No Yes Yes
Yes/No Yes Yes
G10 External Assurance
Yes/No No No
Does your company provide sustainability data to sustainability
reporting frameworks ?
Does your company focus on specific UN Sustainable
Development Goals (SDGs)
Does your company set targets and report progress on the UN
SDGs
Are your sustainability disclosures assured or validated by a
third party
Consolidated Financial Statements of Icelandair Group hf. 2023
66
Operational Risk
Overview
The Group considers the following to be its main operational risks as at year-end 2023:
- 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
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 was the case in 2023 with continued geopolitical unrest and relatively high inflation. 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. 2023 saw a disproportionate increase in capacity to and from
Keflavík airport, Icelandair’s hub and home.
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.
Safety and security risk
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. Seismic activity was ongoing on the Reykjanes Peninsula
in late 2023 culminating in a volcanic eruption on 18 December. Although neither Keflavík airport nor the Company’s flight
schedule was affected by the events they nonetheless impacted the Company’s revenue generation in the last part of the
year.
The acute nature of such events may limit the Company's ability to mitigate the associated risks. In this respect it is
important to note that the airport itself is not situated on an active volcanic system. Disruptions would therefore likely be
limited to or associated with temporary loss of electricity or water supplies. 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, which is at the heart of the Company’s
operations.
Operational Risk, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
67
Regulatory risk
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.
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 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.
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.
Environmental and sustainability risk
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.
Operational Risk, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
68
Technical risk
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.
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 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.
Labor market risk
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.
Reputational risk
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.
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.
Consolidated Financial Statements of Icelandair Group hf. 2023
69 Amounts are in USD thousands
Quarterly Statement
Unaudited summary of the Group's operating results by quarters:
Q1 Q2 Q3 Q4 Total
Year 2023
Operating income
156,339 330,123 478,684 238,917 1,204,063
14,201 22,605 29,360 19,698 85,864
170,540 352,728 508,044 258,615 1,289,927
23,691 22,020 20,951 21,599 88,261
19,083 19,456 13,708 19,070 71,317
12,392 10,128 7,514 9,390 39,424
1,493 1,774 2,542 1,524 7,333
1,191 1,957 2,545 1,358 7,051
125 373 73 130 701
4,740 5,744 4,980 4,091 19,555
19,941 19,976 17,654 16,493 74,064
233,255 414,180 560,357 315,777 1,523,569
Operating expenses
59,756 78,996 84,725 80,203 303,680
9,684 12,570 13,109 13,518 48,881
9,222 14,364 4,380 11,037 39,003
78,662 105,930 102,214 104,758 391,564
60,544 82,840 117,033 84,855 345,272
4,060 6,474 7,944 4,794 23,272
2,004 6,266 3,614 )( 1,879 )( 2,777
66,608 95,580 121,363 87,770 371,321
114 6,188 3,608 2,470 12,380
26,347 39,000 55,740 32,683 153,770
22,349 25,836 25,783 24,429 98,397
48,810 71,024 85,131 59,582 264,547
13,636 18,799 19,323 16,356 68,114
9,113 7,283 5,850 7,286 29,532
7,168 8,534 9,553 8,584 33,839
8,311 5,829 6,829 4,274 25,243
9,609 17,169 25,176 14,203 66,157
1,123 1,320 1,900 1,429 5,772
10,470 14,842 20,555 14,436 60,303
2,366 2,390 2,584 2,352 9,692
535 854 115 242 )( 1,262
8,930 9,026 11,711 10,092 39,759
71,261 86,046 103,596 78,770 339,673
265,341 358,580 412,304 330,880 1,367,105
32,086)( 55,600 148,053 15,103)( 156,464
Operating profit (loss) bef. depr. (EBITDA) ...
Leasing revenue ................................................
Passenger airfare ..............................................
Ancillary revenue ...............................................
Total Passanger revenue ...................................
Sale at airport ....................................................
Revenue from tourism .......................................
Aircraft handling .................................................
Aircraft fuel ........................................................
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 .......
Emission changes .............................................
Fuel hedges .......................................................
Total Aircraft fuel cost ........................................
Aircraft and engine lease ...................................
Aircraft handling, landing and navigation ...........
Aircraft maintenance expenses .........................
Total Other aviation expenses ...........................
Operating cost of real estate and fixtures ..........
Other Operating expenses .................................
Travel and other employee expenses ................
Tourism expenses .............................................
Allowance for bad debt ......................................
Total operating expenses ...............................
Total Other Operating expenses ........................
IT expenses .......................................................
Advertising .........................................................
Booking fees and commission expenses ..........
Cost of goods sold .............................................
Customer services .............................................
Cargo revenue ...................................................
Quarterly Statement, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
70 Amounts are in USD thousands
Q1 Q2 Q3 Q4 Total
Year 2023
18,164 22,393 22,537 21,571 84,665
11,278 12,247 13,375 13,453 50,353
97 106 126 130 459
29,539 34,746 36,038 35,154 135,477
61,625)( 20,854 112,015 50,257)( 20,987
3,847 3,055 6,262 10,245 23,409
50 42 32 101 225
851 517 1,180 1,126 3,674
1,590 438 )( 0 1,152 )( 0
6,338
3,176
7,474
10,320
27,308
4,278 )( 4,784 )( 4,985 )( 4,895 )( 18,942 )(
4,405 )( 4,968 )( 4,727 )( 4,615 )( 18,715 )(
597 )( 679 )( 844 )( 927 )( 3,047 )(
0 0 2,359 )( 2,101 258 )(
9,280 )(
10,431 )(
12,915 )(
8,336 )(
40,962 )(
2,942 )( 7,255 )( 5,441 )( 1,984 13,654 )(
0 1,381 0 0 1,381
535
)
(
361 370)( 381)( 925)(
65,102)( 15,341 106,204 48,654)( 7,789
15,970 1,685)( 21,740)( 10,835 3,380
49,132)( 13,656 84,464 37,819)( 11,169
2,072
997 10,942 10,533)( 3,478
47,060)( 14,653 95,406 48,352)( 14,647
154,414 129,001 41,441)( 26,853 )(
215,121
67,825)( 51,452)( 41,668)( 22,758 )(
183,703)(
37,296 25,660)( 30,019)( 38,237 )(
56,620
)
(
Income tax .........................................................
Operating profit (loss) (EBIT) ..........................
Share of loss of associates ................................
Profit (loss) before tax (EBT) .........................
Gain on sale of 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 .......
Interest income on lease receivables ................
Depreciation of operating assets .......................
Depreciation of right-of-use assets ....................
Net finance cost ...............................................
Other interest expenses .....................................
Net currency exchange loss ..............................
Finance costs total .............................................
Other interest income ........................................
Net currency exchange gain ..............................
Finance income total .........................................
Interest expenses on loans and borrowings ......
Interest on lease liabilities .................................
Interest income on cash and cash equivalents
Amortization of intangible assets .......................
Depreciation and amortization ...........................
and marketable securities ................................
Consolidated Financial Statements of Icelandair Group hf. 2023
71
Alternative performance measures (APMs)
2023 2022
Traffic YTD YTD
15,666 13,253
8.4 8.2
8.4 8.4
6.2 5.7
12,767 10,569
4,285,977 3,658,363
77.1% 73.0%
16,966 14,785
81.5% 79.7%
15,388 14,666
177,448 132,029
1,113,467 951,109
0.77 0.88
Passen
g
er mix
1,766,906 1,481,964
610,489 556,196
1,644,355 1,350,969
264,227 269,234
2023 2022
Capital structure 31.12 31.12
270,522 266,411
322,522 318,411
18,192 )( 10,694 )(
370,564 336,392
352,372 325,698
0.71 0.74
0.19 0.19
0.93 0.88
2023 2022
Other YTD YTD
967 1,156
144,747 314,508
143,780 202,290
3,638 3,045
Net lease liabilites (USD ´000) ..............................................................
Freight ton kilometers (FTK´000) .............................................................
To ..........................................................................................................
From ......................................................................................................
On-Time-Performance (OTP) ..................................................................
Passenger flights ......................................................................................
Liquidity (USD ´000) .................................................................................
Net interest-bearing debt (USD ´000) ...................................................
Passenger load factor ..............................................................................
Sold Block Hours - Leasing ......................................................................
Total CO2 emissions tons ........................................................................
CO2 emissions per OTK ..........................................................................
Available seat-kilometers (ASKm.) ..........................................................
CASK (US cents) .....................................................................................
RASK (US cents) .....................................................................................
Revenue seat-kilometers (RPKm.) ..........................................................
Passengers total ......................................................................................
CASK less fuel (US cents) .......................................................................
CAPEX, net (USD ´000) ...........................................................................
FTE ..........................................................................................................
Intrinsic value of share capital ..................................................................
Via .........................................................................................................
Total cash and marketable securities (USD ´000) ...................................
Within ....................................................................................................
Effective fuel price (USD pr. Metric tonn) .................................................
CAPEX, gross (USD ´000) .......................................................................
Current ratio .............................................................................................
Equity ratio ...............................................................................................
Net financial liabilities (USD ´000) ............................................................
Alternative performance measures (APMs), contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
72
Traffic
Available seat-kilometers (ASK) .
RASK ..........................................
CASK ..........................................
CASK less fuel ............................
Revenue seat-kilometers (RPK) .
Passengers total .........................
On-Time-Performance (OTP) .....
Passenger flights ........................
Passenger load factor .................
Sold Block Hours - Leasing .........
Freight ton kilometers (FTK) .......
Total CO2 emissions tons ...........
CO2 emissions per OTK .............
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 ..... Indicates the book value of each share and is calculated by dividing total equity with
share ca
p
ital
Passengers originating in Iceland visiting destinations outside of Iceland
Passengers traveling across the Atlantic connecting in Iceland
Passengers traveling solely 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
Passenger visiting Iceland
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
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, belly freight and mail
according to a published timetable for which it receives commercial remuneration
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 tons of freight carried, obtained by counting each ton of freight on a
particular flight (with one flight number)
Carbon emission from all operations, including scope 2 and 3 emissions, measured in
tons
Carbon emission measured relative to one ton of carried passengers and cargo loads
one kilometer
The number of revenue passengers carried on scheduled flights multiplied by the
number of kilometers those seats were flown
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)
Alternative performance measures (APMs), contd.:
Consolidated Financial Statements of Icelandair Group hf. 2023
73
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. ton)
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
Consolidated Financial Statements of Icelandair Group hf. 2023 74