Consolidated Financial Statements for the year 2021
3
7
11
12
13
14
15
Note Page Note Page
1. Reporting entity ......................................... 15 24. Inventories .................................................. 28
2. Basis of accounting ................................... 15 25. Marketable securities ................................. 28
3. Functional and presentation currency ....... 15 26. Trade and other receivables ...................... 28
4. Use of estimates and judgements ............ 15 27. Cash and cash equivalents ........................ 29
5. Changes in accounting policies ................ 16 28. Equity .......................................................... 29
6. Operating segments ................................. 17 29. Earnings per share ..................................... 30
7. Assets held for sale .................................. 20 30. Loans and borrowings ................................ 30
8. Operating income ...................................... 20 31. Lease liabilities ........................................... 32
9. Operating expenses .................................. 20 32. Warrant liabilities ........................................ 32
10. Auditor's fee .............................................. 21 33. Non-current payables ................................. 33
11. Depreciation and amortisation .................. 21 34. Trade and other payables .......................... 34
12. Finance income and finance costs ........... 21 35. Deferred income ......................................... 34
13. Operating assets ....................................... 21 36. Financial risk management ........................ 34
14. Mortgages and commitments ................... 22 37. Financial instruments and fair value ........... 41
15. Insurance value of aircraft and 38. Capital commitments .................................. 42
flight equipment .............................. 22 39. Related parties ........................................... 43
16. Insurance value of buildings and 40. Litigations and claims ................................. 44
other operating assets ................... 22 41. Group entities ............................................. 44
17. Right of use assets ................................... 23 42. General government measures .................. 44
18. Intangible assets and goodwill .................. 23 43. Ratios ......................................................... 45
19. Impairment test ......................................... 24 44. Investment and financing without
20. Investment in associates .......................... 25 cash flow effect ............................... 45
21. Deferred cost ............................................ 26 45. Significant accounting policies ................... 45
22. Non-current receivables and deposits ...... 26 46. Standards issued but not yet effective ....... 55
23. Income taxes ............................................. 27
Appendices:
56
63
71
74
75
Alternative performance measures ...........................................................................................................................
Consolidated Statement of Changes in Equity ..........................................................................................................
Contents
Endorsement and Statement by the Board of Directors and the CEO ......................................................................
Independent Auditors' Report ....................................................................................................................................
Consolidated Income Statement and other Comprehensive Income ........................................................................
Consolidated Statement of Financial Position ...........................................................................................................
Quarterly Statements .................................................................................................................................................
Corporate Governance Statement ............................................................................................................................
Non-Financial Reporting ............................................................................................................................................
Consolidated Statement of Cash Flows ....................................................................................................................
Notes to the Consolidated Financial Statements ......................................................................................................
Operational Risk ........................................................................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
2
According to the Consolidated Income Statement, loss for the year 2021 amounted to USD 104.8 million. Equity at year-
end amounted to USD 222.4 million, including share capital in the amount of USD 272.2 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.
After having focused on preserving its infrastructure, knowledge and maintaining financial strength throughout the
pandemic, Icelandair Group was in a strong position for an efficient ramp-up as soon as passenger demand started to
increase again in 2021. While ramping up its services, using its flexibility to adapt to rapid changes in its markets, the
Group took strategic actions to streamline and simplify its operations and build up its team again during the year. Clear
goals and a focused strategy resulted in a year of recovery for Icelandair and a strong financial position at the end of the
year.
The number of departures within Icelandair’s international route network went from only 10 per week to four destinations
early in the year to around 200 per week to almost 40 destinations during the summer peak. The total number of
passengers on international and domestic flights was around 1.5 million and increased by 64% between years. The total
passenger load factor was 65.3% in 2021 despite the surge of the Delta variant during the peak season in August and
September and the negative effect of the Omicron variant on travelling in December.
The Group’s cargo operations returned strong results in 2021 with volumes and revenues exceeding pre-COVID levels.
Demand for both export and import was high, and transit freight continued to increase. A shift back to utilizing the cargo
hold in the passenger aircraft started alongside the ramp-up of the passenger network Due to the strong outlook in
international freight markets, lease agreements were entered into in March for two B767-300ER aircraft that will be
converted to freighters with the aim to increase capacity and strengthen Iceland as a cargo hub.
Icelandair divides its route network into four markets – to, from, via and within Iceland. The “to” market with Iceland as a
destination was Icelandair’s largest market in 2021 and accounted for 47% of total passengers. As a leading airline in
Iceland, the recovery of Icelandair’s flight operations is vital for the Icelandic tourism industry, the economy and Icelandic
society at large. The “from” market with travel originating in Iceland accounted for 14% of Icelandair’s total passengers.
The “via” market between Europe and N-America, which was almost nonexistent from March 2020 until November 2021
due to the travel restrictions between the two continents, accounted for 23% of total passengers in 2021. The opening of
the US borders to vaccinated travelers from Europe in the second week of November marked an important milestone for
the Company. The domestic operation “within” Iceland accounted for 15% of total passengers and reached pre COVID
levels in the fourth quarter of the year. The integration of Icelandair and its domestic airline, Air Iceland Connect, was
completed in the first quarter of the year with the objective of simplifying and streamlining the Group’s operations. The
first domestic flight under the Icelandair brand took place on 16 March 2021.
Operations in the year 2021
On-time-performance in the international route network was high in 2021, reaching 84%, despite the steep ramp-up and
level of complexity due to travel restrictions at borders. This success was a result of the resourcefulness and hard work
of Icelandair’s employees supported by a strong emphasis on customer communications. Extensive information on travel
restrictions all around the world is available on Icelandair’s website in addition to information on what to expect before,
during and after the flight.
Endorsement and Statement by the Board
of Directors and the CEO
The Consolidated Financial Statements of Icelandair Group hf. for the year 2021 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.
Icelandair Group hf. is an Icelandic aviation company with decades' long history of operating in the international airline
and tourism sectors. The Company concentrates its focus on its core business, aviation. The business model is built
around Icelandair's route network and the unique geographical location of Iceland which serves as a connecting hub
between Europe and North America. Icelandair Group is the parent company of several subsidiaries. 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 and within Iceland – the Company's hub and home.
Consolidated Financial Statements of Icelandair Group hf. 2021
3
In March, the Boeing 737 MAX was reintroduced to service following all necessary updates and training. The operational
performance of the aircraft has exceeded expectations both in terms of flight range and fuel efficiency, which also
supports Icelandair’s commitment of reducing the carbon emissions from its operations. Icelandair took delivery of three
brand new 737 MAX aircraft during the year and had a total of nine MAX aircraft in its operation at the end of the year.
Endorsement and Statement by the Board
Operations in the year 2021, contd.:
In the beginning of October, Icelandair entered into favorable financing agreements for the final three Boeing 737 MAX
aircraft of the amended MAX purchase order from Boeing. The aircraft is to be delivered in Q1 2022. The financing is in
the form of a sale and leaseback of two MAX8 aircraft and an asset-backed loan for one MAX9 aircraft. Furthermore, in
January 2022, an agreement was reached with Dubai Aerospace Enterprise regarding long-term operating leases of two
new Boeing 737 MAX8 aircraft which are scheduled for delivery from Boeing in spring 2022, bringing the total number of
MAX aircraft to 14.
The Group’s leasing operation was challenging in 2021 with revenue amounting to 43% of 2019 revenue as its
customers’ operations continued to be impacted by COVID during the year. A significant turnaround was in the operation
of Icelandair’s travel agencies. Revenue of VITA, Icelandair’s outbound travel agency doubled between years due to
increased demand from the domestic market. The sale of Iceland Travel was completed 1 December 2021.
Meaningful steps were taken during the year to improve liquidity and strengthen the focus on the Group’s core business -
aviation and related services. The sale of the 25% remaining share in Icelandair Hotels was finalized in early August and
the sale of Iceland Travel 1 December. On 24 June 2021 the Group announced an agreement with Bain Capital on the
purchase of new shares in Icelandair Group. Total cash proceeds to the Group amounted to approximately USD 64
million. The new shares are subject to lock-up for a period of 180 days therefrom. In addition to the new shares, Bain
received a warrant for subscription rights amounting to 25% of the number of new shares purchased. The warrant will be
exercisable following the publishing of the Group’s Q2 2022 results. The warrant allows Bain to purchase the shares at a
price equaling the price per share of the new shares plus 15% annual interest. As part of the share offering completed
on 17 September 2020 Icelandair Group issued warrants to investors that purchased shares. The first of three classes
of warrants were exercisable in August 2021. Majority of warrant holders (97.1%) opted to exercise their warrants. Total
proceeds to the Company amounted to USD 16.4 million.
Icelandair’s key goal coming out of the pandemic is to return to a level of sustainable operating results. As part of
preparing the Group for future success, Icelandair’s organizational structure was changed in November to better reflect
its ambitious strategy of sustainable growth, digital transformation and central focus on customer experience. The
commercial responsibilities were split into two divisions – Customer and Revenue. A focused Digital & Data division will
drive Icelandair’s digital and data journey. Increased emphasis will be placed on sustainability, which is central to
Icelandair’s long-term strategy and is positioned within the CEO office along with Strategy. The cargo and leasing
operations continue to be vital in complementing the core network services, increasing revenue and reducing seasonal
fluctuations within the Group’s operations. Alongside the ramp-up of its operations, Icelandair built up its team again,
hiring around one thousand people during the year, and will continue to strengthen its workforce into 2022.
The Board of Directors proposes no dividend payment to shareholders in 2022 for the year 2021.
Icelandair Group’s full-time equivalents (FTE) in 2021 were on average 2,087.
of Directors and the CEO, contd.:
Share capital and Articles of Association
The nominal value of the Company's issued share capital amounted to ISK 35.96 billion at year-end. The share capital
consist of shares of ISK 1 in nominal value, that are in a single class bearing equal rights. The shares are listed on the
Icelandic Stock Exchange (Nasdaq Iceland) under the ticker symbol ICEAIR. According to the Icelandic Company's Act,
companies can acquire and hold up to 10% of the nominal value of issued shares. At year-end the Company did not hold
any treasury shares. The Company has entered into various agreements which 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 ceases to be listed on the Icelandic stock exchange.
The liquidity position of Icelandair was strong at year-end 2021 with cash, cash equivalents and marketable securities
amounting to USD 263 million and increasing by USD 104 million from the beginning of the year. The Company had in
addition undrawn committed credit lines in the amount of USD 52 million and access to a USD 120 million back-stop
credit facility from two domestic banks which is 90% guaranteed by the Icelandic Government, bringing total liquidity up
to USD 435 million. Icelandair Group.
Consolidated Financial Statements of Icelandair Group hf. 2021
4
Shares in ISK
Name thousand Shares in %
5,659,094
1,461,210
1,188,833
1,146,232
1,051,580
1,016,032
1,006,159
975,803
731,168
645,168
14,881,280
21,077,152
35,958,432
Endorsement and Statement by the Board
of Directors and the CEO, contd.:
Share capital and Articles of Association, contd.:
On 12 March 2021 the Annual General Meeting authorized the Board of Directors to purchase in the next 18 months up
to 10% of its own shares in accordance with Article 55 of the Icelandic Companies Act No 2/1995 in order to establish a
market making agreement for issued shares in the Company or to set up a formal buyback program. It is not allowed to
purchase such shares at a higher rate than the last spot market rate or the highest bid in the trading system of a
regulated market where the shares are traded. Such purchases are however authorized if they are executed by a
market maker in accordance with Article 116 of the Act on Securities Trading or in accordance with Item 1, Paragraph 3,
Article 115, and Paragraph 2, Article 119 of the Act on Securities Transactions and regulations implemented on the
basis of Articles 118 and 131 of the same Act.
3.19
Íslandsbanki hf. .............................................................................................
3.31
15.74
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 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 number of shareholders at year-end 2021 was 15,287 an increase of 1,779 during the year. At year-end 2021 the 10
largest shareholders were:
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.
Bóksal ehf. ....................................................................................................
1.79
100.00
Corporate Governance
Bain Capital ...................................................................................................
Íslandssjóðir ..................................................................................................
2.92
2.03
The framework for Corporate Governance practices within the Group is informed by the provisions of law, the parent
Company's Articles of Association, general securities regulations and the Icelandic Corporate Governance guidelines
issued by the Iceland Chamber of Commerce, Nasdaq Iceland and the Confederations of Icelandic Employers.
Corporate Governance practices ensure open and transparent relationships between the Company's management, its
Board of Directors, its shareholders and other stakeholders.
Other shareholders .......................................................................................
58.62
Further information on matters related to share capital is disclosed in note 28. Additional information on shareholders is
provided on the Company's website www.icelandairgroup.com.
Almenni lífeyrissjóðurinn ...............................................................................
Brú - Lífeyrissjóður starfsmanna sveitarfélaga .............................................
Lífeyrissjóður starfsmanna ríkisins A deild og B deild ...................................
41.38
Arion Banki hf. ...............................................................................................
2.80
Landsbréf ......................................................................................................
2.71
2.83
4.06
Gildi - lífeyrissjóður ........................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
5
Guðmundur Hafsteinsson, Chairman of the Board
Nina Jonsson
John F. Thomas
Matthew Evans
Svafa Grönfeldt
Bogi Nils Bogason
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 2021 and confirm them by means of their signatures. The Board of Directors and the CEO recommend that
the consolidated financial statements will be approved at the annual general meeting of Icelandair Group hf.
Statement by the Board of Directors and the CEO
Information on matters related to financial risk management is disclosed in note 36. Information regarding operational
risk management is disclosed in Operational Risk Appendix.
Endorsement and Statement by the Board
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 identified material issues relating to the ESG framework that are monitored during the year.
CEO:
Reykjavík, 3 February 2022.
Board of Directors:
Icelandair Group’s sustainability strategy is based on the United Nations’ Sustainable Development Goals (SDGs) and
four goals have been chosen as key focus areas. These are climate action, gender equality, responsible consumption
and production and decent work and economic growth.
The consolidated financial statements for the year ended 31 December 2021 have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the EU and additional Icelandic disclosure
requirements for financial statements of listed companies.
According to our best knowledge it is our opinion that the annual consolidated financial statements give a true and fair
view of the consolidated financial performance of the Group for the year 2021, its assets, liabilities and consolidated
financial position as at 31 December 2021 and its consolidated cash flows for the year 2021.
Further, in our opinion, the consolidated financial statements and the endorsement of the Board of Directors and the
CEO give a fair view of the development and performance of the Group's operations and its position and describes the
principal risks and uncertainties faced by the Group.
In our opinion, the Consolidated Financial Statements of Icelandair Group hf. for the year 2021 identified as
“549300UMI5MBLZSXGL15-2021-12-31-en.zip” are prepared in all material respects, in compliance with the ESEF
Regulation.
The Company's policies, material issues, goals and key focus areas are further discussed in the Non-financial Reporting
that form an appendix to the Consolidated Financial Statements.
The Board of Directors has prepared a Corporate Governance Statement in compliance with the Icelandic Corporate
Governance guidelines which are described in full in the Corporate Governance Statement in the Consolidated Financial
Statements. It is the opinion of the Board of Directors that Icelandair Group hf. complies with the Icelandic guidelines for
Corporate Governance.
Corporate Governance, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
6
To the board of directors and shareholders of Icelandair Group hf.
Report on the Audit of the Consolidated Financial Statements
Opinion
Basis for Opinion
Key Audit Matters
Independent Auditors' Report
We have audited the consolidated financial statements of Icelandair Group hf. ("the Group"), which comprise the
consolidated statement of financial position as at 31 December, 2021, the consolidated statements of profit or loss and
other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising
significant accounting policies and other explanatory information.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our
report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of
financial statements in Iceland and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial
position of the Group as at 31 December, 2021, and of its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union and additional disclosure requirements for listed companies in Iceland.
Our opinion is consistent with the additional report submitted to the Audit Committee and the Board of Directors.
We declare, to the best of our knowledge and belief, that we have not provided any prohibited non-audit services, as
referred to in Article 5(1) of the Regulation (EU) 537/2014 and that we remained independent in conducting the audit.
We were appointed auditors of Icelandair Group hf. when it was founded in 2005. We have been re-appointed by
resolutions passed by the annual general meeting uninterrupted since then.
Consolidated Financial Statements of Icelandair Group hf. 2021
7
Independent Auditor's Report, contd.:
Key Audit Matters
How the matter was addressed in the audit
The expected recoverable amount of goodwill, intangible
assets and operating assets is one of the key audit matters
due to the inherent uncertainty involved in forecasting and
discounting future cash flows which are the basis of the
assessment of the recoverability of the assets.
• Tested reconciliation between the revenue accounting
system and the finance system.
• We assessed the appropriateness of passenger revenue
recognition by selecting a sample of coupons to ensure that
the coupons were recognized as revenue on the date of
flight. We also tested the inclusion of passenger revenue
transactions in the appropriate period by testing selected
flights before and after the the reporting date.
We evaluated the adequacy of the financial statement
disclosures, including disclosures of key assumptions,
judgements and sensitivies.
The carrying value of intangible assets has been allocated
to the applicable cash generating units within the Group.
Management is required to perform an impairment test
annually on goodwill and other intangible assets with
indefinite useful lives, other assets are required to be
tested if there is an indication of impairment. The purpose
of an impairment test is to determine if the assets can be
recovered through future cash flows.
• We used data analytics to correlate the transactions in
passenger and cargo revenue accounts to accounts
receivables and cash.
Expected recoverable amount of goodwill, intangible
assets and operating assets
With the assistance of valuation specialists, we assessed
the valuation models and assumptions used by
management in their calculations of expected recoverable
amount of each cash generating unit.
Timing and accuracy of revenue recognition of
passenger income
Reference is made to note 8 "Operating income” and 35
“Deferred income”.
Passenger ticket sale is presented as deferred income in
the consolidated statement of financial position until
transportation has been provided and at that time the sale
is recognised as revenue. Large volumes of transactions
flow through various IT systems from the date of sale until
revenue is recognized in the consolidated statement of
profit or loss.
We verified the impairment calculations. Furthermore, we
challenged management´s sensitivity analysis to evaluate
wether a reasonable change in the key assumptions for any
of the Group´s cash generating units would cause the
carrying amounts to exceed the recoverable amounts.
We assessed the appropriateness of management's key
assumptions. We evaluated alignment of long-term growth
rates and considered whether discount rates were within
acceptable ranges for each cash generating unit.
The recoverable amounts of individual cash generating
units are determined by discounting the expected future
cash flows generated from the continuing use of the units.
Key Audit Matters
How the matter was addressed in the audit
Our audit procedures were designed to challenge the timing
and accuracy of passenger and cargo revenue recognition.
These procedures include:
• Testing relevant IT controls for the revenue account
ing
s
ystem.
• Testing a sample of key controls in the rev
enue
accounting process.
• Testing all manual journal entires posted in passenger and
cargo revenue accounts to ensure that they have
c
ommercial value.
• Testing inputs into the Prepaid income obligation by re-
performing calculations and tracing to underlying data.
• Checking that the methodology applied to prepaid incom
e
and expired tickets was consistent to the prior year and
as
sessed the appropriateness of changes to t
he
m
ethodology.
The recording process is complex which gives rise to an
inherent 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.
Reference is made to note 18 “Intangible assets and
goodwill” , note 13 “Operating assets”, and 19.
“Impairment”.
We considered the potential impact of uncertainties related
to COVID-19 and the effect on key assumptions within
management´s business plans.
Consolidated Financial Statements of Icelandair Group hf. 2021
8
Independent Auditor's Report, contd.:
Other information
Responsibilities of the Board of Directors and CEO for the Consolidated Financial Statements
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
•
•
•
•
•
The Board of Directors and CEO are responsible for the other information. The other information comprises the
information included in the annual report, but does not include the consolidated financial statements and our auditor’s
report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. The annual report is not available at our reporting date but is expected to be made available to us after that
date.
The Board of Directors and CEO are responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRSs as adopted by the European Union and additional disclosure requirements for
listed companies in Iceland, and for such internal control as they determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors and CEO are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless they either intend to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
The Board of Directors and CEO are responsible for overseeing the Group’s financial reporting process.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
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.
Consolidated Financial Statements of Icelandair Group hf. 2021
9
Independent Auditor's Report, contd.:
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements, cont.:
•
Report on Other Legal and Regulatory Requirements
Report on European single electronic format (ESEF Regulation)
Report on the report of the Board of Directors and CEO
KPMG ehf.
Hjördís Ýr Ólafsdóttir
Reykjavík, 3 February 2022.
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 2021 with the
file name "549300UMI5MBLZSXGL15-2021-12-31-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
In our opinion, the consolidated financial statements of Icelandair Group hf. for the year 2021 with the file name
"549300UMI5MBLZSXGL15-2021-12-31-en.zip" is prepared, in all material respects, in compliance with the ESEF
Regulation.
Pursuant to the legal requirement under Article 104, Paragraph 2 of the Icelandic Financial Statements Act No. 3/2006,
we confirm that, to the best of our knowledge, the report of the Board of Directors and CEO accompanying the
consolidated financial statements includes the information required by the Financial Statements Act if not disclosed
elsewhere in the consolidated financial statements.
The engagement partner on the audit resulting in this independent auditor’s report is Hjördís Ýr Ólafsdóttir.
Matthías Þ. Óskarsson
From the matters communicated with The Board of Directors and the Audit Committee, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
We communicate with the Board of Directors and the Audit Committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors and the Audit Committee with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and were applicable, related safeguards.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
Consolidated Financial Statements of Icelandair Group hf. 2021
10
Notes 2021 2020
Operating income
8 453,868 265,523
8 88,369 103,329
Operating expenses
9 607,716 520,085
Operating loss before depreciation and amortisation (EBITDA) .................
11
18 0 116,158 )(
Operating loss (EBIT) .......................................................................................
12 645 69,870 )(
7, 20 9,083 22,454
20 3,848 )( 27,423 )(
23 25,263 61,658
Other comprehensive income (loss)
Items that are or may be reclassified to profit or loss
36 1,238 )( 5,274 )(
36 12,412 38,442 )(
Total Comprehensive loss attributable to:
Earnings per share:
29 0.33 )( 3.04 )(
29 0.33 )( 3.04 )(
The notes on pages 15 to 55 are an integral part of these consolidated financial statements.
Non-controlling interests ....................................................................................
Loss for the year ...............................................................................................
Currency translation differences ........................................................................
Total comprehensive loss for the year ...........................................................
Other comprehensive income (loss) for the year ..........................................
Net loss on hedge of investment, net of tax .......................................................
Owners of the Company ....................................................................................
Cash flow hedges - effective portion of changes in fair value, net of tax ...........
Cash flow hedges - reclassified to profit or loss ................................................
Diluted earnings per share in US cent per share ...............................................
Owners of the Company ....................................................................................
Non-controlling interests ....................................................................................
Total comprehensive loss for the year ...........................................................
Basic earnings per share in US cent per share .................................................
Consolidated Income Statement and
other Comprehensive Income for the year 2021
Finance income ..................................................................................................
Finance costs .....................................................................................................
Share of loss of associates ................................................................................
Net finance costs ...............................................................................................
Transport revenue ..............................................................................................
Aircraft and aircrew lease ..................................................................................
Other operating revenue ....................................................................................
Salaries and salary related expenses ................................................................
Aviation expenses ..............................................................................................
Depreciation and amortisation ...........................................................................
Other operating expenses ..................................................................................
Impairment .........................................................................................................
Fair value changes .............................................................................................
Loss before tax (EBT) .......................................................................................
Loss for the year ...............................................................................................
Income tax ..........................................................................................................
Gain on sale of associate/subsidiary .................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
11
Amounts are in USD thousand
Notes 2021 2020
Assets:
Operating assets ............................................................................................ 13-16 391,293 498,438
Right-of-use assets ........................................................................................ 17 224,794 119,790
Intangible assets and goodwill ....................................................................... 18-19 55,614 60,261
Investments in associates .............................................................................. 20 11,592 9,603
Deferred cost .................................................................................................. 21 0
Receivables and deposits .............................................................................. 22 18,987
Deferred tax asset ..........................................................................................
23 60,647
Non-current assets 762,927 752,151
Inventories ...................................................................................................... 24 24,398 23,383
Derivatives used for hedging .......................................................................... 36 2,853 0
Trade and other receivables .......................................................................... 26 118,417 99,334
Marketable securities .....................................................................................
25
Cash and cash equivalents ............................................................................
27
Current assets 408,632 282,087
Total assets 1,171,559 1,034,238
Equity:
Share capital .................................................................................................. 272,204 212,969
Share premium ............................................................................................... 34,178 13,208
Reserves ........................................................................................................ 24,116 8,373
Accumulated deficit ........................................................................................ 105,876 )( 0
Equity attributable to equity holders of the Company 28 224,622 234,550
Non-controlling interests ................................................................................. 2,238 )(
Total equity 222,384 232,809
Liabilities:
Loans and borrowings .................................................................................... 30 222,139 239,575
Lease liabilities ............................................................................................... 31 212,042 119,707
Payables ......................................................................................................... 33 23,384 17,087
Derivatives used for hedging .......................................................................... 36 0 5,958
Warrants ......................................................................................................... 32 0 18,635
Non-current liabilities 457,565 400,962
Loans and borrowings .................................................................................... 30 35,646
Lease liabilities ............................................................................................... 31 33,617 26,890
Warrants ......................................................................................................... 32 18,395
Derivatives used for hedging .......................................................................... 36 1,136
Trade and other payables .............................................................................. 34 143,736
Deferred income ............................................................................................ 35 259,080
Current liabilities 491,610 400,467
Total liabilities
Total equity and liabilities 1,171,559 1,034,238
Consolidated Statement of Financial Position
as at 31 December 2021
The notes on pages 15 to 55 are an integral part of these consolidated financial statements.
Consolidated Financial Statements of Icelandair Group hf. 2021
12
Amounts are in USD thousand
Non-con-
Share Share Accumulated trolling Total
capital
premium Reserves deficit Total interest equity
Interest .....................................
and associates .........................
and associates .........................
The notes on pages 15 to 55 are an integral part of these consolidated financial statements.
Warrants excised .........................
Consolidated Statement of Changes in Equity
for the year 2021
Attributable to equity holders of the Company
Balance at 1 January 2021 ..........
Balance at 31 December 2020 ....
2021
2020
Effects of profit or loss of subsid.
Shares issued ..............................
Warrants issued ...........................
Loss for the year ..........................
Other comprehensive loss ...........
Information on changes in other reserves is provided in note 28.
Balance at 31 December 2021 ....
Balance at 1 January 2020 ..........
Loss for the year ..........................
Other comprehensive Income ......
Effects of profit or loss of subsid.
Warrants issued ...........................
Divestment of Non-Controlling
Transfer of share premium ..........
Shares issued ..............................
Consolidated Financial Statements of Icelandair Group hf. 2021
13
Amounts are in USD thousand
Notes 2021 2020
Cash flows from operating activities:
Adjustments for:
Depreciation and amortisation ....................................................................
11 113,136 160,343
Impairment ..................................................................................................
18 0 116,158
12 7,537 26,844
7, 20 9,083 )( 22,454 )(
20 3,848 27,423
23 25,263 )( 61,658 )(
Changes in:
24 1,290 )( 726 )(
26 21,897 )( 32,732
34 29,127 108,060 )(
Cash generated from (used in) operating activities 83,238 94,769 )(
Net cash from (used in) operating activities 50,612 193,219 )(
Cash flows from (to) investing activities:
Acquisition of operating assets .......................................................................
13 170,101 )( 41,790 )(
Proceeds from sale of operating assets .........................................................
Acquisition of intangible assets ...................................................................... 18 293 )( 730 )(
Deferred cost, change .................................................................................... 13,683 )( 6,640 )(
Proceeds from sale of a subsidiary ................................................................ 6,418 45,312
Investment in associates ................................................................................ 2,290 )( 0
Non-current receivables, change ................................................................... 4,346 22,476
Cash attributable to assets held for sale ........................................................ 7 0 4,920 )(
Marketable securities, change ........................................................................
Net cash from (used in) investing activities 4,630 2,279 )(
Cash flows from financing activities:
Shares issued .................................................................................................
28 80,205 166,396
Proceeds from loans and borrowings .............................................................
30
Repayment of loans and borrowings ..............................................................
30
(
(
Repayment of lease liabilities .........................................................................
31
(
(
Repayment of short term borrowings .............................................................
30
(
Net cash from financing activities 32,814 79,659
Change in cash and cash equivalents ............................................................
Effect of exchange rate fluctuations on cash held ........................................
Cash and cash equivalents at beginning of the year .....................................
Cash and cash equivalents at 31 December ...................................................
27 204,767 117,657
The notes on pages 15 to 55 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 of associates .........................................................................
Income tax ..................................................................................................
Consolidated Statement of Cash Flows for the
for the year 2021
Loss for the year ............................................................................................
Expensed deferred cost ..............................................................................
Gain on sale of operating assets ................................................................
Gain on sale of a subsidiary/associate .......................................................
Net finance costs ........................................................................................
Changes in fair value ..................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
14
Amounts are in USD thousand
a. Statement of compliance
b.
Basis of measurement
c. Going Concern
3. Functional and presentation currency
4. Use of estimates and judgements
Assumptions and estimation uncertainties
Measurement of fair values
Note 37 - Financial instruments and values
The Group has an established a control framework with respect to the measurement of fair values. The Director of
Treasury and Risk Management has overall responsibility for overseeing all significant fair value measurements,
including Level 3 fair values.
Notes
1. Reporting entity
address of the Company's registered office is at Reykjavíkurflugvöllur in Reykjavík , Iceland. The Consolidated
Financial Statements for the Company as at and for the year ended 31 December 2021 comprise the Company and
its subsidiaries, together referred to as the “Group” and individually as "Group entities" and the Group's interests in
associates. The Group primarily operates in the airline and tourism industry . The Company is listed on the Nasdaq
Main Market Iceland.
2. Basis of accounting
The Group's Consolidated Financial Statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU and additional Icelandic disclosure requirements for
consolidated financial statements of listed companies. They were authorised for issue by the Company's Board of
Directors on 3 February 2022.
The Consolidated Financial Statements are prepared on the historical cost basis except that derivative financial
instruments, part of deferred income and certain short-term investments are stated at their fair values. Details of the
Group's accounting policies are included in note 45.
The Company's functional currency is U.S. dollars (USD). These Consolidated Financial Statements are presented
in U.S dollars (USD). All financial information presented in USD has been rounded to the nearest thousand, unless
otherwise indicated.
These Consolidated Financial Statements are prepared on a going concern basis. Despite uncertainty due to
COVID-19, the Board of Directors believes that it is appropriate to prepare these Consolidated Financial Statements
on a going concern basis.
Note 35 - Deferred income
A number of the Group's accounting policies and disclosures require the measurement of fair value, for both
financial and non-financial assets and liabilities.
In preparing these Consolidated Financial Statements, management has made judgements, estimates and
assumptions that affect the application of the Group's accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized
prospectively. Due to COVID-19, the aviation and travel industries are facing tremendous uncertainty around when
demand for travel will return to normal levels, i.e. as they were prior to COVID-19. In preparation of the
Consolidated Financial Statements, management adjusted its estimations and assumptions towards the current
unprecedented circumstances.
Information on assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment in the year ending 31 December 2021 is included in the following notes:
Note 19 - Measurement of the recoverable amounts of cash-generating units
Consolidated Financial Statements of Icelandair Group hf. 2021
15
Amounts are in USD thousand
4. Use of estimates and judgements, contd.:
5. Changes in accounting policies
Note 32 - Warrant liabilities
A number of new standards are effective for annual periods beginning after 1 January 2021 and earlier application
is permitted; however, the Group has not early adopted the new or amended standards in preparing these
Consolidated Financial Statements and they are not considered to have significant impact on the Consolidated
Financial Statements.
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair
value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during
which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
Note 37 - Derivatives
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
Notes, contd.:
The Risk Committee regularly reviews significant unobservable inputs and valuation adjustments. If third party
information, such as broker quotes or pricing services, is used to measure fair values, then management assesses
the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of
IFRS, including the level in the fair value hierarchy in which such valuations should be classified.
Consolidated Financial Statements of Icelandair Group hf. 2021
16
Amounts are in USD thousand
6. Operating segments
Passenger and cargo operations
Other group entities
Notes, contd.:
Segment information is presented in the Financial Statements in respect of the Group's business segments, which
are the primary basis of segment reporting.
The parent, Icelandair Group hf., is listed on the Nasdaq Iceland stock exchange and is the holding company.
Iceeignir, a real estate company that holds the real estate of Icelandair Group and IceCap, a captive insurance
company are platform functions of the business that primarily support the Group entities in this segment and are
therefore classified within this segment.
Loftleidir Icelandic, which offers aircraft leasing and consulting services to international passenger airlines and tour
operators and Feria, which operates under the name VITA as an outgoing tour operator are also operating segments
but do not exceed the quantitative thresholds to be reportable and management has concluded that there are
currently no other reasons why they should be separately disclosed.
Iceland Travel was classified as an asset held for sale from January to November 2021. The sale of the company
was finalized by delivering shares against payment on 1 December 2021.
The business segment reporting format reflects the Group's management and internal reporting structure. Segment
results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Inter-segment pricing is determined on an arm's length basis.
Each entity operates as a single business unit and the management of Icelandair Group assesses performance
based on measures including operating profit, and makes resource allocation decisions for the entities based on
various performance metrics. The objective in making resource allocation decisions is to optimize consolidated
financial results.
The largest entity of the Group, the international and domestic passenger airline Icelandair ehf., including its
subsidiary Icelandair Cargo, has been identified for financial reporting purposes as a reportable operating segment.
Iceland‘s unique geographical position provides Icelandair with significant strategic advantages. This is
encapsulated in Icelandair‘s ability to serve four markets simultaneously (to, from, via and within Iceland). Icelandair
Cargo offers freight services by utilizing the capacity within the aircraft of the Icelandair passenger network as well
as with their own freighters.
Consolidated Financial Statements of Icelandair Group hf. 2021
17
Amounts are in USD thousand
6. Operating segments, contd.:
Reportable segments for the year 2021
Passenger and Other group
cargo operations
entities * Total
503,473 81,440 584,913
40,988 297
41,285
544,461 81,737 626,198
103,465 )(
9,671 )(
113,136 )(
135,106 )( 833 )( 135,939 )(
30,773 796 31,569
38,097 )( 1,009 )( 39,106 )(
8,182 0 8,182
0 9,083 9,083
55 3,903 )( 3,848 )(
134,193 )( 4,134 130,059 )(
1,396,742 63,378 1,460,120
174,787 9,290 184,077
1,368,557 56,151 1,424,708
Reportable segments for the year 2020
339,352 94,239 433,591
63,141 739 63,880
402,493 94,978 497,471
148,632 )( 11,711 )( 160,343 )(
82,859 )( 33,299 )(
116,158 )(
311,957 )( 51,038 )( 362,995 )(
14,233 767 15,000
32,734 )( 9,110 )( 41,844 )(
43,026 )(
0 43,026 )(
0 22,454 22,454
27,425 )(
2 27,423 )(
400,909 )( 36,925 )(
437,834 )(
1,463,838 66,894
1,530,732
48,193 4,207 52,400
1,318,483 53,659
1,372,142
* In year 2021 Iceland Travel is part of Other group entities for the period January to November
** Share of loss of an associate has been restated between segments
Gain on sale of subsidiary .........................................................
Share of profit (loss) of associates ** ........................................
Fair value change ......................................................................
Reportable segment (loss) profit before tax ..............................
Reportable segment assets .......................................................
Capital expenditure ....................................................................
Segment EBIT ...........................................................................
External revenue ........................................................................
Inter-segment revenue ..............................................................
Segment revenue ......................................................................
Depreciation and amortisation ...................................................
Notes, contd.:
Finance income .........................................................................
Finance costs ............................................................................
Gain on sale of subsidiary .........................................................
Impairment .................................................................................
Finance income .........................................................................
Finance costs ............................................................................
Fair value change ......................................................................
Share of (loss) profit of associates ** ........................................
Reportable segment loss before tax ..........................................
Reportable segment assets .......................................................
Capital expenditure ....................................................................
Reportable segment liabilities ....................................................
Depreciation and amortisation ...................................................
Segment EBIT ...........................................................................
Reportable segment liabilities ....................................................
External revenue ........................................................................
Inter-segment revenue ..............................................................
Segment revenue ......................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
18
Amounts are in USD thousand
6. Operating segments, contd.:
Revenue
2021 2020
626,198 497,471
41,285 )( 63,880 )(
584,913 433,591
Profit or loss
130,059 )( 437,834 )(
Assets
1,460,120 1,530,732
11,592 9,442
303,736 )( 505,936 )(
1,167,976 1,034,238
Liabilities
1,424,708 1,372,142
475,533 )( 570,713 )(
949,175 801,429
Other material items Reportable Consoli-
segment Adjust- dated
2021 totals ments
totals
135,939 )(
135,939 )(
31,569 18,327 )( 13,242
39,106 )( 18,327 20,779 )(
3,848 )(
3,848 )(
174,787 9,290 184,077
2020
362,995 )( 362,995 )(
15,000 12,265 )( 2,735
41,844 )( 12,265 29,579 )(
27,423 )( 27,423 )(
48,543 4,207 52,750
Geographic information
Revenues
2021 2020
21% 19%
54% 42%
13% 20%
3% 5%
2% 4%
7% 10%
100% 100%
Notes, contd.:
Consolidated total assets ........................................................................................
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities, and other material
items
Consolidated continuing profit before tax ................................................................
Total assets for reportable segments ......................................................................
Investments in associates .......................................................................................
Elimination of inter-segment assets ........................................................................
Total revenue for reportable segments ...................................................................
Elimination of inter-segment revenue ......................................................................
Consolidated revenue .............................................................................................
Finance income .........................................................................
Finance costs ............................................................................
Share of profit of associates ......................................................
Capital expenditure ....................................................................
North America .........................................................................................................
Iceland .....................................................................................................................
West Continental Europe ........................................................................................
Segment EBIT ...........................................................................
Share of profit of associates ......................................................
Total liabilities for reportable segments ...................................................................
Finance income .........................................................................
Elimination of inter-segment liabilities .....................................................................
Consolidated total liabilities .....................................................................................
Segment EBIT ...........................................................................
Other .......................................................................................................................
Finance costs ............................................................................
The geographic information analyses the Group's revenue as the majority of the Group's clients are outside of
Iceland. The vast majority of the Group's non-current assets are located in Iceland. In presenting the following
information the Group's revenues have been based on geographic location of customers.
Due to the COVID-19 pandemic and the associated wide-ranging travel restriction and decrease in travel demand,
the numbers for YTD 2021 are not directly comparable to the numbers for YTD 2020.
Total revenues .........................................................................................................
Scandinavia .............................................................................................................
United Kingdom .......................................................................................................
Capital expenditure ....................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
19
Amounts are in USD thousand
7. Assets held for sale
8.
Operating income
Transport revenue is specified as follows:
2021 2020
333,785 177,321
32,697 21,719
87,386
66,483
453,868 265,523
Other operating revenue is specified as follows:
4,763
12,864
41,966 18,069
20,405 16,207
2,887 1,758
8,243 7,882
10,105 46,549
88,369 103,329
9. Operating expenses
Salaries and other personnel expenses are specified as follows: 2021 2020
168,888 199,926
27,097 31,198
19,500 5,045
0 28,277 )(
215,485 207,892
2,087 2,621
2,393 1,531
55 / 45 52 / 48
Aviation expenses are specified as follows:
119,886
76,450
705 7,423
65,079 40,399
49,783 47,179
235,452 171,451
Other operating expenses are specified as follows:
5,785 6,648
21,423 17,887
13,284 9,443
19,785 19,885
2,958 2,671
13,908 17,530
23,590 20,664
26,043 8,625
2,339 14,704
27,664 22,685
156,779 140,742
Operating cost of real estates and fixtures .....................................................................
Gender ratio for employees (male / female) ....................................................................
Travel and other employee expenses .............................................................................
Other operating expenses ...............................................................................................
Customer services ..........................................................................................................
Total aviation expenses ..................................................................................................
Advertising ......................................................................................................................
Aircraft fuel ......................................................................................................................
Notes, contd.:
Passengers .....................................................................................................................
Other salary-related expenses ........................................................................................
Contributions to pension funds ........................................................................................
Total other operating revenue .........................................................................................
Sale at airports and hotels ..............................................................................................
Maintenance revenue ......................................................................................................
Other operating revenue .................................................................................................
Salaries ...........................................................................................................................
Cargo ...............................................................................................................................
Total transport revenue ...................................................................................................
Aircraft and cargo handling services ...............................................................................
Revenue from tourism .....................................................................................................
Total salaries and salary related expenses .....................................................................
Both in the beginning and end of year 2021, there were no assets held for sale. On 19 January 2021, the Company
decided to sell Iceland Travel. From that date, Iceland Travel was classified as an asset held for sale until the sale
was finalized by delivering shares against payment of USD 8.1 million on 1 December 2021. Total cash at that time
amounted to USD 5.0 million. In the period January to November total revenue amounted to USD 23.9 million and
total expenses to USD 23.4 million. The Group recognized a profit from the sale amounting to USD 4.4 million.
Passenger ancillary revenues .........................................................................................
Average number of full year equivalents * ......................................................................
Reduction of salary cost ..................................................................................................
** In year 2020 excluding employees that have been given notice.
* In year 2020 the average number of full year equivalents (FTEs) includes employees that were working on notice
period during the year. About a quarter of the FTEs were working on notice period and not delivering full time work.
Full time equivalents at period end ** .............................................................................
Gain on sale of operating assets .....................................................................................
Tourism expenses ...........................................................................................................
Allowance for bad debt ....................................................................................................
Aircraft handling, landing and navigation ........................................................................
Aircraft maintenance expenses .......................................................................................
Communication ...............................................................................................................
Cost of goods sold ..........................................................................................................
Booking fees and commission expenses ........................................................................
Aircraft lease ...................................................................................................................
Total other operating expenses .......................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
20
Amounts are in USD thousand
10. Auditor's fee
Auditor's fees are specified as follows: 2021 2020 2021 2020
412 375 39 21
54 100 0 0
466 475 39
21
11. Depreciation and amortisation
The depreciation and amortisation charge in profit or loss is specified as follows: 2021 2020
88,305 136,821
22,477 20,556
2,354 2,966
113,136 160,343
12. Finance income and finance costs
Finance income and finance costs are specified as follows: 2021 2020
321 854
276 452
3,723 1,429
8,922 0
13,242 2,735
8,750 9,867
7,299 8,300
0 3,755
4,730 1,510
0 6,147
20,779 29,579
8,182 10,452 )(
0 32,574 )(
8,182 43,026 )(
645 69,870 )(
13. Operating assets
Operating assets are specified as follows: Aircraft Other
and flight property and
Cost equipment Buildings equipment Total
791,107 103,511 91,195 985,813
37,767 1,813 2,209 41,790
54,421 )( 8,143 )( 4,855 )( 67,419 )(
0 405 )( 66 339 )(
210 )( 5,491 )( 275 )( 5,976 )(
774,243 91,285 88,340 953,869
168,993 77 1,031 170,101
239,051 )( 85 )( 1,810 )( 240,946 )(
133 )( 2,256 )( 152 )( 2,541 )(
704,052 89,021 87,409 880,483
Changes in fair value of derivatives, see note 36 ...........................................................
Balance at 31 December 2020 ...........................................
Additions .............................................................................
Sales and disposals ...........................................................
Interest income on cash and cash equivalents ...............................................................
Assets classified as held for sale .......................................
Balance at 1 January 2020 .................................................
Additions .............................................................................
Changes in fair value of warrants, see note 32 ...............................................................
Fair value changes ..........................................................................................................
Finance costs total ..........................................................................................................
Sales and disposals ...........................................................
Finance income total .......................................................................................................
Interest expense on loans and borrowings .....................................................................
Interest expenses on lease liabilities ...............................................................................
Effects of movements in exchange rates ...........................
Interest income on lease receivables ..............................................................................
Notes, contd.:
Amortisation of intangible assets, see note 18 ................................................................
Other services ....................................................................
Depreciation and amortisation recognized in profit or loss .............................................
Balance at 31 December 2021 ...........................................
Depreciation of operating assets, see note 13 ................................................................
Depreciation of right-of-use assets, see note 17 ............................................................
Audit ...................................................................................
Group auditors
Net currency exchange gain ...........................................................................................
Other interest income ......................................................................................................
Other auditors
Effects of movements in exchange rates ...........................
Interest on pre-delivery payments for aircraft (PDPs) .....................................................
Net currency exchange loss ............................................................................................
Other interest expenses ..................................................................................................
Net finance income (costs) .............................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
21
Amounts are in USD thousand
13. Operating assets, contd.: Aircraft Other
and flight property and
Depreciation and impairment
equipment Buildings
equipment Total
300,034 22,113 33,266 355,413
122,370 3,656 10,795 136,821
27,115 )( 1,396 )( 5,678 )( 34,189 )(
0 1,616 )( 133 1,483 )(
24 )( 1,005 )( 103 )( 1,132 )(
395,265 21,752 38,413 455,430
75,951 3,660 8,694
88,305
52,240 )( 43 )( 1,410 )( 53,693 )(
0 0 9 )( 9 )(
69 )( 647 )( 128 )( 844 )(
418,907 24,722 45,560 489,189
Carrying amounts
491,073 81,398 57,929 630,400
378,978 69,533 49,927 498,438
285,145 64,299 41,849 391,293
4-20% 2-6% 5-33%
14. Mortgages and commitments
15. Insurance value of aircraft and flight equipment
2021 2020 2021 2020
572,000 676,000 231,666 312,504
54,300 54,300 32,319 35,500
79,719 82,708 21,160 30,975
706,019 813,008 285,145 378,979
16. Insurance value of buildings and other operating assets
The principal buildings owned by the Group are the following:
Maintenance Staff Office Other Under
2021 hangers apartments buildings buildings construction Total
Official assessment value ........
38,256 6,705 14,461 12,570 0 71,992
Insurance value .......................
75,524 15,272 39,885 39,112 0 169,793
Carrying amounts ....................
25,230 4,452 14,824 19,704 89 64,299
Square meters .........................
31,814 6,813 13,262 17,916 0 69,805
Balance at 31 December 2020 ...........................................
Depreciation .......................................................................
Sales and disposals ...........................................................
Effects of movements in exchange rates ...........................
Balance at 1 January 2020 .................................................
Depreciation .......................................................................
Insurance value
Carrying amounts
Assets classified as held for sale .......................................
Balance at 31 December 2021 ...........................................
At 1 January 2020 ..............................................................
The Group's operating assets, aircraft and spare parts are mortgaged to secure debt. The remaining balance of the
debt amounted to USD 238.6 million at year-end 2021 (2020: USD 263.6 million). The Group owns 32 aircraft
including 20 Boeing 757, 4 Boeing 767 and 2 Boeing 737 MAX. At year-end, 4 aircraft were unencumbered.
Flight equipment .................................................................
Total aircraft and flight equipment ......................................
Other - 6 / 6 aircraft ............................................................
The insurance value and carrying amount of the Group's aircraft and related equipment at year-end is specified as
follows:
Notes, contd.:
Effects of movements in exchange rates ...........................
Depreciation ratios .............................................................
Acquisition of operating assets in 2021 amounted to USD 170.1 million (2020: USD 41.8 million) therof overhaul of
own engines and aircraft spare parts in the amount of USD 40.9 million (2020: USD 37.8 million). See further in
note 38.
At 31 December 2021 ........................................................
Assets classified as held for sale .......................................
Sales and disposals ...........................................................
At 31 December 2020 ........................................................
Boeing - 26 / 30 aircraft ......................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
22
Amounts are in USD thousand
16. Insurance value of buildings and other operating assets, contd.:
Maintenance Staff Office Other Under
2020 hangers apartments buildings buildings construction Total
Official assessment value ........
36,464 7,005 14,103 11,990 0 69,562
Insurance value .......................
70,481 14,268 37,459 37,731 0 159,939
Carrying amounts ....................
27,328 4,843 15,936 21,426 0 69,533
Square meters .........................
31,814 6,921 13,262 17,916 0 69,913
17. Right of use assets Land &
Real Estate Aircraft Other Total
9,351 124,043 641
134,035
747 )( 218 176 )(
706 )(
527 41 )(
13 500
3,594 0 344 3,938
4,496 )( 15,616 )( 444 )(
20,556 )(
2,097 0 4 2,101
459 0 18 477
10,785 108,604 401 119,790
993 )( 481 181 )(
693 )(
565 5,282 )( 14 4,703 )(
805 131,598 243 132,646
2,321 )( 19,833 )( 323 )(
22,477 )(
150 0 126 276
44 )( 0 1 )(
45 )(
8,947 215,568 279 224,794
18. Intangible assets and goodwill
Trademarks Other
Cost
Goodwill and slots intangibles Total
150,535 34,565 7,446 192,546
0 0 730 730
94,878 )( 0 336 )( 95,214 )(
1,988 0 4,253 6,241
257 0 365 622
57,902 34,565 12,458 104,925
0 0 293 293
0 0 1,466 )( 1,466 )(
1,870 )( 0 4,786 )( 6,656 )(
304 )( 0 6 )( 310 )(
55,728 34,565 6,493 96,785
Currency translation adjustment .........................................
Balance at 31 December 2020 ...........................................
Balance at 1 January 2020 .................................................
Disposals ............................................................................
Adjustments for indexed leases .........................................
Balance at 1 January 2020 .................................................
Adjustments ........................................................................
Adjustments ........................................................................
Adjustments for indexed leases .........................................
New or renewed leases ......................................................
Reclassified to assets held for sale ....................................
Depreciation .......................................................................
Official valuation of the Group's leased land for buildings at 31 December 2021 amounted to USD 14.6 million
(2020: USD 14.2 million) and is not included in the Consolidated Statement of Financial Position.
Insurance value of the Group's other operating assets and equipment amounted to USD 60.6 million at year-end
2021 (2020: USD 66.3 million). The carrying amount at the same time was USD 41.8 million (2020: USD 49.9
million).
Notes, contd.:
Balance at 31 December 2020 ...........................................
New or renewed leases ......................................................
Depreciation .......................................................................
Reclassified to assets held for sale ....................................
Intangible assets and goodwill are specified as follows:
Disposals ............................................................................
Effects of movements in exchange rates ...........................
Balance at 31 December 2021 ...........................................
Additions .............................................................................
Currency translation adjustment .........................................
Effects of movements in exchange rates ...........................
Assets classified as held for sale .......................................
Additions .............................................................................
Assets classified from held for sale ....................................
Balance at 31 December 2021 ...........................................
Consolidated Financial Statements of Icelandair Group hf. 2021
23
Amounts are in USD thousand
18. Intangible assets and goodwill, contd.: Trademarks Other
Amortisation and impairment losses
Goodwill and slots intangibles Total
11,957 2,605 2,753 17,315
0 0 2,966 2,966
116,158 0 0 116,158
94,878 )( 0 102 )( 94,980 )(
71 0 2,807 2,878
0 0 327 327
33,308 2,605 8,751 44,664
0 0 2,354 2,354
0 0 660 )( 660 )(
0 0 5,178 )( 5,178 )(
0 0 8 )( 8 )(
33,308 2,605 5,259 41,172
Carrying amounts
138,578 31,960 4,693 175,231
24,594 31,960 3,707
60,261
22,420 31,960 1,234 55,614
19. Impairment test
2021 2020
22,420 24,594
31,960 31,960
54,380 56,554
2021 2020 2021 2020
0 0 31,960 22,445
22,420 24,594 0 9,515
22,420 24,594 31,960 31,960
Assets classified as held for sale .......................................
Impairment, see note 19 .....................................................
Disposals ............................................................................
Notes, contd.:
Balance at 31 December 2021 ...........................................
These assets were recognized at fair value on acquisition dates. Goodwill and other intangible assets with
indefinite life are specified as follows:
The recoverable amounts of CGU was based on their value in use and were determined by discounting the future
cash flows generated from the continuing use of the CGU. Cash flows were projected based on actual operating
results and a revised 5 year business plan. Cash flows were extrapolated for determining the residual value using a
constant nominal growth rate which was consistent with the long-term average growth rate for the industry.
At 1 January 2020 ..............................................................
Effects of movements in exchange rates ...........................
Disposals ............................................................................
Trademarks and airport slots ..........................................................................................
At 31 December 2020 ........................................................
Trademarks and slots
For the purpose of impairment testing, goodwill is allocated to the units which represent the level within the Group
at which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill
allocated to each cash generating unit (CGU) are as follows:
Despite recent indications that the Covid-19 virus may be nearing its endgame the pandemic continues to pose
uncertainties to the Group‘s operations. While fewer people are getting critically ill and social and travel restrictions
are starting to be eased there is still a possibility that new variants will emerge. This makes effective planning
difficult for both the Group as well as its customers and passengers. The Group continues to monitor the situation
in all markets and strives to maintain the necessary flexibility to react swiftly to any changes in the external
environment.
Balance at 1 January 2020 .................................................
Amortisation .......................................................................
Total .................................................................................
The Group‘s long-term business plan was revised at the outset of the pandemic allowing the Group to tailor
capacity to changes in demand to the extent practicable. The plan assumed that the recovery would not
necessarily be linear and it will take several years for production and revenues to reach pre-COVID levels. The
current expectation is that those levels will be reached in 2023
Goodwill and other intangible assets that have indefinite life are tested for impairment annually and additionally at
each reporting date if there is an indication of impairment.
At 31 December 2021 ........................................................
Goodwill
Total ................................................................................................................................
Amortisation .......................................................................
Goodwill ...........................................................................................................................
Balance at 31 December 2020 ...........................................
Assets classified from held for sale ....................................
Effects of movements in exchange rates ...........................
Other Group entities ...........................................................
Passenger and cargo operations .......................................
Consolidated Financial Statements of Icelandair Group hf. 2021
24
Amounts are in USD thousand
19. Impairment test, contd.:
Passenger and
Other Group
2021
cargo operations
entities *
2.1% 2.1%
Revenue growth:
112.7% 73.4%
24.5% 21.0%
20.6% 4.1%
9.3% 16.6%
62.9% 64.6%
4.6%
4.8%
2020
1.5% 1.5%
Revenue growth:
-70.1% -57.0%
27.1% 22.1%
190.2% 203.4%
9.2% 15.3%
63.4% 56.0%
4.5% 3.7%
20. Investment in associates
Share of Share of
Ownership Carrying profit/loss in Carrying profit/loss in
amount associates amount associates
25%
1,017 171 )( 1,230 124
29%
7,323 216 6,291 2,093 )(
50%
3,095 26 1,893 12,792 )(
0%
0 3,903 )( 13 12,657 )(
157 16 )( 176 5 )(
11,592 3,848 )( 9,603 27,423 )(
EBK ehf. .......................................................
2020
2021
EBK ehf. operates jet fuel tank storage facilities, serving fuel to suppliers and airlines at Keflavík airport.
Lindarvatn ehf. is the owner of a property at Thorvaldsensstræti in downtown Reykjavík and other properties
located near Austurvöllur which are being rebuilt as a hotel.
Lindarvatn ehf. .............................................
The Group has interests in number of associates. The carrying amount and share of profit of the associates is as
follows:
WACC .............................................................................................................................
Pre tax interest rate for debt ............................................................................................
Weighted average 2020/2019 ......................................................................................
2020- 2025 ...................................................................................................................
Budgeted EBIT growth 2021-2025 ..................................................................................
Pre tax interest rate for debt ............................................................................................
WACC .............................................................................................................................
Budgeted EBIT growth 2022-2026 ..................................................................................
Notes, contd.:
Debt leverage ..................................................................................................................
Long-term growth rate .....................................................................................................
Weighted average 2021/2020 ......................................................................................
Icelandair Hotels ..........................................
Other investments ..............................................................
Total investments in associates .........................................
ITF 1 slhf. is a fund managed by Landsbréf. The Fund's purpose is to invest in Icelandic companies focusing on
entertainment and leisure activities for foreign tourists. The main focus is on full-year projects which contribute to
the better utilization of the infrastructure in the Icelandic Tourism industry.
ITF 1 slhf. .....................................................
The recoverable amounts of the cash-generating units at year end were estimated to be higher than carrying
amounts and no impairment was required.
2021- 2026 ...................................................................................................................
Debt leverage ..................................................................................................................
The values assigned to the key assumptions represent management's assessment of future trends in the airline,
transportation and the tourism industries and are based on both external and internal sources (historical data).
Value in use was based on the following key assumptions:
Long-term growth rate .....................................................................................................
* Weighted average of underlying CGU.
Consolidated Financial Statements of Icelandair Group hf. 2021
25
Amounts are in USD thousand
20. Investment in associates, contd.:
21. Deferred cost
2021 2020
0 4,656
0 1,119 )(
0 3,537
22. Non-current receivables and deposits
2021 2020
50 47
7,523 12,703
14,414 12,027
11,390 17,642
33,377 42,419
14,390 )( 20,733 )(
18,987
21,686
- 20,733
14,390 5,778
3,357 3,360
3,557 3,347
575 165
519 70
10,979 8,966
33,377
42,419
Contractual repayments mature as follows:
Total non-current receivables and deposits, including current maturities ......................
Total deferred cost ..........................................................................................................
Non-current receivables and deposits denominated in currencies other than the functional currency comprise USD
2.3 million (2020: USD 2.7 million).
Non-current receivables and deposits total .....................................................................
Maturities in 2021 ............................................................................................................
Current maturities ............................................................................................................
Non-current receivables and deposits are specified as follows:
Security deposits .............................................................................................................
Maturities in 2022 ............................................................................................................
Maturities in 2026 ............................................................................................................
Maturities in 2024 ............................................................................................................
Subsequent ....................................................................................................................
Maturities in 2023 ............................................................................................................
Maturities in 2025 ............................................................................................................
Non-current receivables consist of notes, deposits for aircraft and engine lease agreements and various other
travel related security fees.
Prepayments on aircraft purchases (see disclosure 38) .................................................
Deferred cost consists of engine overhauls and heavy maintenance of leased aircraft which will be expensed over
the lease period. Deferred cost is specified as follows:
Current portion, classified as prepayments among receivables .....................................
Loans, effective interest rate 6% / 6% ............................................................................
Lease receivable, interest rate 4% / 5% .........................................................................
The sale of the Company's 25% remaining share in Icelandair Hotels has been finalized with payment for and
delivery of the shares executed in early August. Gain on the sale of USD 4.7 million was recognized in the income
statement. Icelandair Hotels have twelve months to rebrand the hotel chain and cease use of the Icelandair brand.
In its capacity as parent company the Company had issued guarantees in relation to rental obligations for
Icelandair Hotels. The guarantees were provided in solidum. However, the Company has a back-to-back guarantee
from the buyer Berjaya Land Berhad. The Company has reserved USD 2.0 million against potential future cost
related to these guarantees. The amount will otherwise be recognized as revenue when the these guarantees have
formally been released.
Deferred cost ...................................................................................................................
Notes, contd.:
Until 9 July 2021 the Group held a 36% share in Cabo Verde Airlines (CVA) when the Cabo Verde government
nationalized the airline. The book value of the Group's holding in CVA was fully expensed in 2020 and thus no loss
is realized in relation to the government‘s actions. Reserves had further already been made against all receivables
on CVA.
Consolidated Financial Statements of Icelandair Group hf. 2021
26
Amounts are in USD thousand
23. Income taxes
(i) Amounts recognized in profit or loss
2021
2020
25,263 )(
61,658 )(
25,263 )(
61,658 )(
(ii)
Amounts recognized in other comprehensive income
3,911
3,902 )(
309 )( 1,318 )(
3,602
5,220 )(
(iii) Reconciliation of effective tax rate
130,059 )( 437,834 )(
20.0%
26,012 )(
20.0%
87,567 )(
0.1%)(
75
0.0%)(
90
1.3%
1,636 )(
0.5%)(
2,090
0.0%
0
5.3%)(
23,232
1.4%
1,817 )(
1.0%
4,491 )(
0.6%)(
770
1.3%)(
5,485
2.6%)(
3,357
0.1%
497 )(
19.4%
25,263 )(
14.1% 61,658 )(
(iv) Recognized deferred tax liabilities
Deferred tax liabilities are specified as follows:
2021 2020
Deferred tax liabilities 1 January ..................................................................................... 38,836 )(
25,679
25,263 )(
61,658 )(
3,602
5,220 )(
291 )(
2,022
141 341
60,647 )(
38,836 )(
(v) Deferred tax liabilities are attributable to the following:
2021 2020 2021 2020 2021 2020
Operating assets .....................
0 0 29,102 )( 45,954 )( 29,102 )(
45,954 )(
Intangible assets ......................
0 0 87 )(
259 )( 87 )( 259 )(
Derivatives ...............................
0 3,889 22 )( 0
22 )( 3,889
Trade receivables ....................
2,513 1,901 0 0 2,513 1,901
Operating lease .......................
1,547 1,765 0 0 1,547
1,765
Tax loss carry-forwards ...........
85,738 74,193
0 0 85,738 74,193
Other items ..............................
60 3,301 0 0 60 3,301
Total .........................................
89,858 85,049 29,211 )( 46,213 )( 60,647 38,836
(vi) Movements in deferred tax balance during the year Recognized
in other com-
Recognized Exchange prehensive Transferred
in profit rate income to asset
2021 1 January or loss difference and equity held for sale 31 December
Operating assets .....................
45,954 )(
16,798 189 0 135 )( 29,102 )(
Intangible assets ......................
259 )( 172 0 0 0 87 )(
Derivatives ...............................
3,889 0 0 3,911 )( 0 22 )(
Trade receivables ....................
1,901 614 47 )( 0 45 2,513
Tax loss carry-forwards ...........
74,193 11,447 126 0 28 )( 85,738
Operating lease .......................
1,765 219 )( 24 0 23 )(
1,547
Other items ..............................
3,301 3,549 )( 1 )( 309 0
60
Total .........................................
38,836 25,263 291 3,602 )( 141 )( 60,647
Deferred tax recognized in profit or loss .........................................................................
Effective portion of changes in fair value of cash flow hedge .........................................
Income tax according to current tax rate ............................
Effective tax rate .................................................................
Exchange rate difference ................................................................................................
Loss before tax ...................................................................
Liabilities
Income tax recognized in other comprehensive income .................................................
Warrants .............................................................................
Impairment ..........................................................................
Gain on sale of a subsidiary/associate ...............................
Deferred tax (assets) liabilities 31 December .................................................................
Share of loss of associates ................................................
Other items .........................................................................
Net
Total tax expense recognized in profit or loss .................................................................
Notes, contd.:
Total tax recognized in other comprehensive income .....................................................
Origination and reversal of temporary differences ..........................................................
Exchange rate difference ................................................................................................
Non-deductible expenses ...................................................
2021
2020
Assets
Deferred tax liabilities transferred to assets held for sale ...............................................
Deferred tax expense
Consolidated Financial Statements of Icelandair Group hf. 2021
27
Amounts are in USD thousand
23. Income taxes, contd.: Recognized
in other com-
Recognized Exchange prehensive Transferred
in profit rate income to asset
2020 1 January or loss difference and equity held for sale 31 December
Operating assets .....................
60,563 )( 14,680 226 0 297 )( 45,954 )(
Intangible assets ......................
307 )( 50 2 )( 0
0 259 )(
Derivatives ...............................
13 )( 0 0 3,902 0
3,889
Trade receivables ....................
409 1,489 43 )( 0 46 1,901
Tax loss carry-forwards ...........
35,394 43,765 4,966 )( 0 0 74,193
Operating lease .......................
1,572 197 4 )( 0 0 1,765
Other items ..............................
2,171 )( 1,477 2,767 1,318 90 )( 3,301
25,679 )( 61,658 2,022 )( 5,220
341 )(
38,836
2021
98,689
46,248
186,359
97,393
428,689
24. Inventories
2021 2020
20,642 19,636
3,756 3,747
24,398
23,383
25. Marketable securities
26. Trade and other receivables
2021 2020
47,632 33,258
17,126 6,894
20,187 10,300
2,623 5,400
16,174 13,323
14,675 30,159
118,417
99,334
Notes, contd.:
Prepayment and prepaid expenses which relate to subsequent periods amounted to USD 17.1 million (2020: USD
6.9 million) at year-end. The prepayments consist mainly of prepaid contractual obligations, insurance premiums,
software licenses and leases.
Trade and other receivables total ....................................................................................
The Group's exposure to credit and currency risks and impairment losses related to trade and other receivables is
disclosed in note 36.
Restricted cash ...............................................................................................................
Tax loss from 2021 expire 2031 ..............................................................................................................
Inventories are specified as follows:
Other inventories .............................................................................................................
At year-end trade receivables are presented net of an allowance for doubtful accounts of USD 17.6 million (2020:
USD 14.3 million).
Spare parts ......................................................................................................................
Trade and other receivables are specified as follows:
Trade receivables ............................................................................................................
Inventories total ...............................................................................................................
Lease receivables ...........................................................................................................
Prepayments ...................................................................................................................
Restricted cash is held in bank accounts pledged against credit cards acquirers, derivatives, airport operators and
tourism guarantees.
Tax loss carry-forwards total ...................................................................................................................
Based on the five year business plan and taking into a account the reversal of existing temporary differences, the
Group expects to utilize its carry forward tax loss.
Other receivables ............................................................................................................
Realized and unrealized gains and losses are included in the Consolidated Income Statement and other
Comprehensive Income as finance income and expenses.
Receivables due from related parties ..............................................................................
Tax loss carry-forwards are specified as follows:
Tax loss from 2018 expire 2028 ..............................................................................................................
Tax loss from 2019 expire 2029 ..............................................................................................................
Tax loss from 2020 expire 2030 ..............................................................................................................
At year-end marketable securities amounted to USD 58.2 million (2020: USD 41.7 million). Marketable securities
consist of unit shares in local mutual funds that are valued at their year-end market price. No restrictions apply to
the securities' redemption.
Consolidated Financial Statements of Icelandair Group hf. 2021
28
Amounts are in USD thousand
27. Cash and cash equivalents
2021 2020
30,021 39,216
174,481 78,179
265 262
204,767 117,657
28. Equity
Share capital
Share premium
Reserves
Reserves are specified as follows: Reserve for
Hedging Translation profit share Total
reserve reserve of associate reserves
29 24,300 21,120 45,449
4,438 )(
4,438 )(
10,615 )( 10,615 )(
5,274 )( 5,274 )(
38,442 )( 38,442 )(
21,693 21,693
16,720 )( 8,411 16,682 8,373
2,372
2,372
2,203 )( 2,203 )(
1,238 )( 1,238 )(
12,412 12,412
4,400 4,400
92 4,970 19,054 24,116
Dividend
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedged transactions that have not yet occurred.
Effective portion of changes in fair value
Currency translation differences ........................................
The Board of Directors proposes no dividend payment to shareholders in 2022 for the year 2021.
Cash on hand ..................................................................................................................
Effects of profit or loss of subsidiaries and associates ......
Cash flow hedges, reclassified to profit or loss ..................
The Company's share capital amounts to ISK 35,958,432 thousand according to its Articles of Association. Each
share carries one vote at shareholders' meetings. The shares are freely transferable unless otherwise stipulated by
law. All shareholders hold equal rights to dividend payments as declared from time to time. The Company issued
new shares in the nominal amount of ISK 7,520,771 thousand in 2021. A total of 5,659,094,470 shares were sold
to the Blue Issuer Designated Activity Company, a subsidiary of Bain Capital, and 1,861,676,632 shares were
issued in relation to the exercise of warrant class ICEAIRW130821 (see note 32). All the new shares were issued
within the same share class as all existing shares in Icelandair Group.
Share premium represents excess of payment above the nominal value (ISK 1 per share) that shareholders have
paid for shares sold by the Company. According to the Icelandic Companies Act, 25% of the nominal value of
share capital must be held in reserve. The balance of the share premium account can be used to offset losses not
covered by other reserves or to offset stock splits.
Cash and cash equivalents are specified as follows:
of cash flow hedges, net of tax .........................................
No dividend was paid to shareholders in 2020 and 2021.
Balance 1 January 2020 .....................................................
of cash flow hedges, net of tax .........................................
Bank deposits ..................................................................................................................
Balance at 31 December 2021 ...........................................
Cash flow hedges, reclassified to profit or loss ..................
Net loss on hedge of investment, net of tax .......................
The Company held no treasury shares at year-end 2021.
Currency translation differences ........................................
Balance at 31 December 2020 ...........................................
Effective portion of changes in fair value
Fixed term bank deposits ................................................................................................
The translation reserve comprises all currency differences arising from the translation of the financial statements of
subsidiaries having functional currencies other than the Group as well as from the translation of liabilities that
hedge net investment.
Cash and cash equivalents total .....................................................................................
Net loss on hedge of investment, net of tax .......................
Effects of profit or loss of subsidiaries and associates ......
According to the Icelandic Financial Statements Act, companies must retain, in a separate equity account,
recognized share in profit of subsidiaries and associates in excess of dividend received or declared.
Notes, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
29
Amounts are in USD thousand
29. Earnings per share
Basic earnings per share:
2021
2020
104,298 )(
366,567)(
31,605,606
12,054,099
0.33 )( 3.04)(
0.33 )( 3.04)(
30.
Loans and borrowings
Current Non-current
interest interest
bearing debt bearing debt Total
42,258 279,028 321,286
42,257 )(
21,874 )(
64,131 )(
42,257 )( 21,874 )(
64,131 )(
0
2,058 2,058
0 2,058 2,058
1 )(
3,942 3,941
0
434
434
1 )( 4,376 4,375
0 263,588 263,588
0 3,098
3,098
0 160
160
0 29 )(
29 )(
0 20,365 )(
20,365 )(
0 17,136 )(
17,136 )(
0 16,726
16,726
0 589 )(
589 )(
0 536 536
0 16,673 16,673
0 5,702 )(
5,702 )(
0
362
362
0 5,340 )( 5,340 )(
0 257,785 257,785
Loans and borrowings are specified as follows:
Non-current loans and borrowings: 2021 2020
238,612 263,588
19,173 0
257,785 263,588
35,646 )( 24,013)(
222,139 239,575
Current loans and borrowings:
35,646 24,013
35,646
24,013
257,785 263,588
Proceeds from loans and borrowings on assets held for sale ..................
Proceeds from other payables ..................................................................
Accrued interest added to the loans ........................................................
Weighted average number of shares for the year ...........................................................
Diluted earnings per share in US cent per share ............................................................
Loss for the year attributable to equity holders of the parent company ..........................
Notes, contd.:
Basic earnings per share in US cent per share ..............................................................
Basic earnings per share is calculated by dividing net loss attributable to equity holders of the Parent by the
weighted average number of outstanding shares during the year. The calculation of diluted earnings per share is
the same as basic earnings per share as the effect of warrants would not dilute the earnings per share only
increase loss per share.
Financing activities without cash flows .....................................................
Total interest-bearing debt 1 January 2021 .............................................
Currency exchange difference ..................................................................
Other liability related changes ..................................................................
Loans on assets held for sale ...................................................................
Financing activities without cash flows .....................................................
Other liability related changes ..................................................................
Secured bank loans ........................................................................................................
Current maturities ............................................................................................................
Repayment of borrowings .........................................................................
Accrued interest added to the loans ........................................................
Current maturities of non-current liabilities ......................................................................
Total non-current loans and borrowings ..........................................................................
Total loans and borrowings .............................................................................................
Total current loans and borrowings .................................................................................
Unsecured loans .............................................................................................................
Total loans and borrowings .............................................................................................
Total interest-bearing debt 31 December 2021 .......................................
Currency exchange difference ..................................................................
Transaction cost of long-term loans and borrowings ................................
Cash flows related to financing activities ..................................................
Proceeds from loans and borrowings .......................................................
Expensed borrowing cost recognized in finance cost ..............................
Repayment of borrowings .........................................................................
Expensed borrowing cost recognized in effective interests ......................
Cash flows related to financing activities ..................................................
Total interest-bearing debt 1 January 2020 .............................................
This note provides information on contractual terms of the Group's interest-bearing loans and borrowings, which
are measured at amortized cost, and changes during the year. For more information on the Group's exposure to
interest rate, foreign currency and liquidity risk, see note 36.
Consolidated Financial Statements of Icelandair Group hf. 2021
30
Amounts are in USD thousand
30. Loans and borrowings, contd.:
Terms and debt repayment schedule: Nominal
interest
rates year Year of
Currency end 2021 maturity 2021 2020
USD 3.3% 2023-2028 180,115
164,404
EUR 0.9% 2028 58,497 67,559
ISK
0 31,625
ISK 4.4% 2026 19,173 0
257,785
263,588
Repayments of loans and borrowings are specified as follows: 2021 2020
- 24,013
35,646 33,450
46,847 44,080
58,541 46,908
34,605 28,120
25,328 28,931
56,818 58,086
257,785
263,588
Secured bank loans .....................................
Secured bank loans .....................................
Included in Unsecured loans are deferred payroll tax payments that formed a part of general government measures
in 2020 and 2021 to mitigate the negative effects of COVID-19. The loans carry zero interest and are measured at
net present value. The calculated interest revenue USD 2.8 million is included in Other interest income. The
deferred payments granted in 2020 are payable in monthly installments over a 48-month period from July 2022 –
June 2026. Payments deferred in 2021 due in January 2022 were extended to six instalments from September
2022 to February 2023. The amount USD 9.3 millions is included in Other payables at year-end.
Total interest bearing liabilities ........................................................................................
Repayments in 2025 .......................................................................................................
Repayments in 2026 .......................................................................................................
According to the restructured terms, that took affect at the end of Q3 2020, the equity ratio will be the Group's
primary financial covenant in coming quarters, the minimum of which is aligned with the Group's conservative
ramp-
up plan with a certain flexibility built-in. The covenant is therefore set somewhat below management estimates. The
equity ratio shall be a minimum of 8-10% in terms of loan agreements with lenders and a minimum of 2% in terms
of the government guaranteed credit facility. The amended equity ratio covenant will be in place until Q1-Q3 2022,
depending on lenders, at which time the pre-COVID-19 financial covenants will resume to take effect.
Subsequent repayments .................................................................................................
Total loans and borrowings .............................................................................................
As part of its financial restructuring the Group signed deferral agreements with all major lenders. The deferral
agreements included renegotiated financial covenants of long-term loan agreements which cured any breaches
thereof. The Group was not in breach of any financial covenants at year-end.
Additionally, the Company has access to a government guaranteed credit facility in the amount of USD 120 million.
The facility is arranged through two local commercial banks and is 90% guaranteed by the government. The facility
was undrawn at year-end 2021.
Secured bank loans .....................................
Repayments in 2024 .......................................................................................................
Unsecured loans ..........................................
Repayments in 2022 .......................................................................................................
Total remaining balance
Notes, contd.:
Icelandair Group has two committed credit lines in place with local banks in the total amount of USD 52 million. The
lines were undrawn at year-end 2021.
Repayments in 2021 .......................................................................................................
Repayments in 2023 .......................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
31
Amounts are in USD thousand
31. Lease liabilities
Lease liabilities is specified as follows: 2021 2020
146,597 158,453
513 3,450
4,696 )( 85 )(
133,858
7,060
37,554 )(
30,906 )(
7,299 8,300
226 2,483
584 )(
2,159 )(
245,659 146,597
33,617 )( 26,890 )(
212,042
119,707
Land &
Rate Real Estate Aircraft Other Total
3.78% 128 233,825 35 233,988
3.97% 9,923 0 237 10,160
2.20% 972 0 0
972
2.93% 530 0 9 539
11,553 233,825 281 245,659
Maturity analysis 2021 2020
- 26,890
33,617 22,223
31,219 21,649
28,614 18,542
28,003 17,426
26,908 16,619
97,298 23,247
245,659 146,597
32. Warrant liabilities
Assumptions ICEAIRW ICEAIRW Bain Capital
180222 120822 120822
18.9.2020 18.9.2020
23.7.2021
18.2.2022 12.8.2022 12.8.2022
1.00 1.00 1.43
1.82 1.82 1.82
1.22 1.30 1.64
15.0% 15.0% 15.0%
23.9.2020 23.9.2020 24.7.2021
42.2% 38.3% 38.3%
2.8% 2.8% 2.8%
0.13 0.62 0.62
0.54 0.51 0.29
Lease liabilities in other currency .................
Volatility (annual) ......................................................................................
The Group has made lease agreements for two 737 MAX aircraft (sale and leaseback) that are scheduled to be
delivered in Q1 2022, and one 767 freighter that are scheduled to be delivered in the second half of 2022. The
lease liability for these three aircraft will amount to approximately USD 86.7 million.
Share price (ISK) at reporting date ...........................................................
Fair value per warrant (ISK) at reporting date ..........................................
First interest date ......................................................................................
Exercise price (ISK) ..................................................................................
Risk-free rate ............................................................................................
Interest rate (annual) ................................................................................
Balance at 31 December .................................................................................................
Lease liabilities in USD ................................
Repayments in 2024 .......................................................................................................
Total lease liabilities .....................................
Notes, contd.:
Subsequent repayments .................................................................................................
Total lease liabilities ........................................................................................................
Repayments in 2025 .......................................................................................................
Reclassified to liabilities held for sale ..............................................................................
Lease liabilities in ISK, indexed ...................
Payment of lease liabilities ..............................................................................................
Time to maturity (years) ............................................................................
Repayments in 2026 .......................................................................................................
New or renewed leases ...................................................................................................
Lease liabilities in GBP ................................
Share price (ISK) at issue date .................................................................
Interest of lease liabilities ................................................................................................
Current maturities ............................................................................................................
Repayments in 2021 .......................................................................................................
Exercise period end date ..........................................................................
Issue date .................................................................................................
Repayments in 2022 .......................................................................................................
Repayments in 2023 .......................................................................................................
Adjustments ....................................................................................................................
Adjustments for indexed leases ......................................................................................
Total non-current lease liabilities .....................................................................................
Warrant liabilities are specified as follows:
Currency translation adjustment .....................................................................................
This note provides information of the Group's lease liabilities, which are measured at amortized cost, and changes
during the year. For more information on the Group's exposure to interest rate, foreign currency and liquidity risk,
see note 36.
Balance at 1 January .......................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
32
Amounts are in USD thousand
32. Warrant liabilities, contd.:
Warrant liabilities ICEAIRW ICEAIRW ICEAIRW Bain Capital
130821 180222
120822 120822 Total
5,168 5,255 5,774 0 16,197
Loss on change
3,605 3,385 3,462 0
10,452
355 361 398 0 1,114
9,129 9,001 9,634 0 27,764
0 0 0 3,300 3,300
Gain on change
5,043 )( 997 )( 2,077 )(
65 )(
8,182 )(
9 139 )( 154 )( 108 )(
392 )(
4,095 )( 0 0 0
4,095 )(
0 7,865 7,403 3,127 18,395
33. Non-current payables
2021 2020
29,457 31,335
6,073 )( 14,248 )(
23,384
17,087
Non-current payables are scheduled to be repaid as follows:
- 14,248
6,073 4,768
7,145 332
3,159 8,692
4,024 3,033
360 262
8,696 0
29,457
31,335
On 24 July, the Company issued 1,414,773,617 warrants to Bain Capital in relation to their subscription to
5,659,094,470 new shares in the Company. Each warrant allow for subscription of one new share in the Company
at the price 1.43 per share plus 15% annual interest calculated according to 30/360-day convention from the
issuance date of the warrant until the date falling ten (10) days after the publishing of the Company‘s 1H 2022
interim financial statements.
Subsequent ....................................................................................................................
Notes, contd.:
The warrant liabilities are considered Level 2 liabilities on the fair value hierarchy as the determination of fair value
includes various assumptions about future activities, and the Company’s share price and historical volatility as
inputs. Warrant class ICEAIRW130821 was exerciseable in Q3 with 97.1% of warrant holders opting to exercise
their rights to purchase new shares in the Company at a price of 1.13 ISK pr. share. The total proceeds to the
Company amounted to USD 16.4 million. Warrant class ICEAIRW180222 will become exerciseable in February
2022. Warrant classes ICEAIRW120822 and the Bain Capital warrant will become exerciseable in August 2022.
The fair value of all of the outstanding warrants at their respective issue dates, amounting to USD 19.5 million was
recognized through retained earnings and as a liability. During the period from the issue date until 31 December
2021 the Company recognized loss on changes in fair value of its warrant liabilities in the amount of USD 2.3
million.
Repayments in 2021 .......................................................................................................
Total non-current payables .............................................................................................
in fair value of warrant liability ..................
Fair value at issuance date ..........................
If warrant holders in all classes exercise their warrants in full a total of 5.248.106.951 new shares in the Company
will be issued.
Repayments in 2025 .......................................................................................................
The warrants outstanding and the fair value (USD) of each class of warrants on the respective exercise dates are
as follows:
Foreign exchange difference .......................
Repayments in 2024 .......................................................................................................
Repayments in 2026 .......................................................................................................
Repayments in 2023 .......................................................................................................
Total warrant liabilities 31.12.2020 ..............
Issued warrants ...........................................
in fair value of warrant liability ..................
Total warrant liabilities 31.12.2021 ..............
Foreign exchange difference .......................
Exercised warrants ......................................
Total non-current payables, including current maturities ...............................................
Non-current payables correspond to accrued engine overhaul cost of leased aircraft and security deposits from
lease contracts to be realized after 2022. Non-current obligations are specified as follows:
Non-current payables ......................................................................................................
Current portion, classified in trade and other payables ...................................................
Repayments in 2022 .......................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
33
Amounts are in USD thousand
34. Trade and other payables
Trade and other payables are specified as follows: 2021 2020
25,658 13,662
0 27,942
6,073 14,248
112,005 85,848
143,736 141,700
35. Deferred income
Deferred income is specified as follows: 2021 2020
223,975 157,753
19,798 20,641
15,307 9,008
259,080 187,402
36. Financial risk management
Overview
- Credit risk
- Liquidity risk
- Market risk
Risk management framework
Total trade and other payables ........................................................................................
The amount allocated to sold unused tickets and vouchers is the book value of fares and fuel surcharges that the
Group has collected and is liable for to passengers. Thereof sold tickets with future travel dates amounted to USD
140.3 million (2020: USD 63.5 million) and vouchers amounted to USD 83.7 million (2020: USD 94.2 million). The
vouchers are generally valid for 3 years from the date of issuance.
Notes, contd.:
Other prepayments ..........................................................................................................
Current portion of engine overhauls and security deposits from lease contracts ...........
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group,
through its training and management standards and procedures, aims to maintain a disciplined and constructive
control environment in which all employees understand their roles and obligations.
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk
management framework. The Group's Risk Management Committee is responsible for developing and monitoring
the Group's risk management policies. The Committee reports regularly to the Board of Directors on its activities.
Other payables ................................................................................................................
Total deferred income .....................................................................................................
The Group has exposure to the following financial risks:
Sold unused tickets and vouchers ..................................................................................
Frequent flyer points ........................................................................................................
Sold unused tickets, fair value of unutilized frequent flyer points and other prepayments are presented as deferred
income in the Consolidated Statement of Financial Position.
As part of its financial restructuring the Group reached agreements with its main credit card acquirers whereby the
latter agreed to grant credit lines and payment plans to assists the Group in processing the vast amount of refunds
due to COVID-cancelled flights.
The credit lines were no longer needed, and thus abolished, ahead of schedule in April 2021. The payment plans
were further completed 6 months ahead of schedule in November 2021.
This note presents information about the Group's exposure to each of the risks above, the Group's objectives,
policies, and processes for measuring and managing risk, and the Group's management of capital. Further
quantitative disclosures are included throughout these Consolidated Financial Statements.
The Group's exposure to currency and liquidity risk related to trade and other payables is disclosed in note 36.
Trade payables ................................................................................................................
Credit lines from credit card acquirers ............................................................................
The amount allocated to frequent flyer points is estimated by reference to the fair value of the discounted services
for which they could be redeemed, since the fair value of the points themselves is not directly observable. The fair
value of the discounted services for which the points, granted through a customer loyalty program, can be
redeemed takes into account the expected redemption rate and the timing of such expected redemptions. That
amount is recognized as deferred income.
Consolidated Financial Statements of Icelandair Group hf. 2021
34
Amounts are in USD thousand
36. Financial risk management, contd.:
a. Credit risk
Exposure to credit risk
Note 2021 2020
22 18,987 21,686
Trade and other receivables .....................................................................
26 101,291 92,440
25 58,197 41,713
27 204,767 117,657
383,242 273,496
Trade and other receivables
2021 2020
11,151 9,364
36,481 23,894
47,632 33,258
70,785 66,076
118,417 99,334
Impairment losses
Allowance for Allowance for
Gross impairment Gross impairment
2021 2021 2020 2020
31,314 1,456)( 15,821 205)(
2,561 523)( 4,494 29)(
15,705 7,170)( 12,907 4,501)(
11,556 4,989)( 9,284 5,306)(
4,138 3,504)( 5,057 4,264)(
65,274 17,642)( 47,563 14,305)(
Notes, contd.:
Credit cards .....................................................................................................................
Cash and cash equivalents ......................................................................
The Group Audit Committee oversees how management monitors compliance with the Group's risk management
policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced
by the Group. In addition to the formal oversight performed by the Audit Committee the Company has in place
internal audit processes which act to continously monitor management controls and procedures, the results of
which are reported to the Audit Committee.
Trade and other receivables, see note 26 .......................................................................
Total ...................................................................................
Past due 1-30 days ............................................................
The aging of trade receivables and credit cards at the reporting date was as follows:
More than one year ............................................................
The carrying amounts of financial assets represent the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was as follows:
Marketable securities ................................................................................
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group's cash and cash equivalents, marketable
securities, which are kept with local and international banks with acceptable credit ratings, as well as receivables
from customers.
Past due 31-120 days ........................................................
At year-end 2021, the maximum exposure to credit risk for trade and other receivables by type of financial
instrument was as follows:
Credit risk is linked to trade receivables and agreements with financial institutions related to hedging. The relative
spread of trade receivables across counterparties is crucial for credit risk exposure. The Group is aware of
potential losses related to credit risk exposure and chooses its counterparties subject to business experience. The
Group has neither experienced higher than usual credit losses in the past two years despite the extraordinary
operating circumstances nor does it expect further losses in trade or other receivables than already accounted for.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of
trade and other receivables. The main components of this allowance are a specific loss component that relates to
individually significant exposures, and a collective loss component established for groups of similar assets in
respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based
on historical data of payment statistics for similar financial assets.
Other receivables ............................................................................................................
Past due 121-365 days ......................................................
Not past due .......................................................................
Carrying amount
Non-current receivables and deposits ......................................................
The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer.
Trade receivables ............................................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
35
Amounts are in USD thousand
36. Financial risk management, contd.:
2021 2020
14,305
7,750
2,832
6,556
493)(
634)(
998 633
17,642 14,305
Guarantees
b. Liquidity risk
Exposure to liquidity risk
Carrying Contractual Within 12 More than
31 December 2021 amount cash flows months 1-2 years
2-5 years 5 years
Non-derivative financial liabilities
Unsecured bank loans .............
19,173 22,344 3,719 5,125 13,500 0
Secured loans ..........................
238,612 262,485 42,445 47,862 112,057 60,121
Lease liability ...........................
245,659 299,054 46,100 82,344 89,830 80,780
Payables & prepayments .........
167,120 167,120 143,736 7,145 7,543 8,696
670,564 751,003 236,000 142,476 222,930 149,597
Derivative financial liabilities
Commodity derivatives ............
944 944 944 0 0 0
Margin accounts ......................
1,653 1,653 1,653 0 0 0
Forward exchange contracts ...
382)( 234 234 0 0 0
- Outflow .................................
16,464)( 16,472)( 16,472)(
0 0 0
- Inflow ....................................
16,633 16,706 16,706 0 0 0
Interest rate swaps ..................
498)(
1,514)( 676)( 396)( 374)( 68)(
1,717 1,317 2,155 396)( 374)( 68)(
Changes in the allowance for impairment in respect of trade receivables during the year were as follows:
Balance at 1 January .......................................................................................................
Exchange rate difference ................................................................................................
Notes, contd.:
Impairment loss allowance, increase ..............................................................................
Following are the contractual maturities of financial liabilities at the reporting date, including estimated interest
payments:
A significant part of the balance relates to customers that have a good track record with the Group. But based on
historical default rates and expected credit loss in the future, management believes that minimal impairment
allowance is necessary in respect of trade receivables not past due or past due by 30 days.
Balance at 31 December .................................................................................................
Amounts written off .........................................................................................................
The Group's policy is to provide financial guarantees only to wholly-owned subsidiaries. However, as part of the
sales process of Icelandair Hotels the Group remains a joint guarantor for agreements already in place at the date
of sale. See note 20.
The Group's management monitors its cash flow requirements by using a rolling forecast. Liquidity is managed
based on projected cash flows in different currencies.
The allowance account in respect of trade receivables is used to record impairment losses. If the Group believes
that no recovery is possible the financial asset is written off directly.
The Group aims to maintain the level of its cash and cash equivalents and marketable securities equal to the
estimated amount of three months' average fixed operating cost where 30% can be in the form of undrawn lines of
credit. At year-end the Group's cash and cash equivalents amounted to USD 204 million, and USD 58 million of
marketable securities with trusted counterparties, total USD 263 million.
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities, settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both
normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
Consolidated Financial Statements of Icelandair Group hf. 2021
36
Amounts are in USD thousand
36. Financial risk management, contd.:
Carrying Contractual Within 12 More than
31 December 2020 amount cash flows months 1-2 years 2-5 years 5 years
Non-derivative financial liabilities
Secured loans ..........................
263,588 290,935
30,768 41,476 131,439 87,252
Lease liability ...........................
146,597 166,794
29,786 27,096 66,789 43,124
Guarantees ..............................
0 4,184 0 0 1,293
2,891
Payables & prepayments .........
158,787 158,787 141,700 4,768 12,057
262
568,972 620,700 202,254 73,340 211,578 133,529
Derivative financial liabilities
Commodity derivatives ............
16,555)( 16,590)( 10,554)( 6,036)( 0 0
Margin accounts ......................
3,446 3,446 1,793 1,653 0 0
Forward exchange contracts ...
1,301)(
1,182)( 1,182)( 0 0 0
- Outflow .................................
15,962)( 15,890)( 15,890)( 0 0 0
- Inflow ....................................
14,661 14,708 14,708 0 0 0
Interest rate swaps ..................
2,881)( 2,902)(
1,154)(
810)(
777)( 161)(
17,291)(
17,228)( 11,097)( 5,193)( 777)( 161)(
c. Market risk
Carbon risk
Fuel risk
The Group is exposed to fuel price risk. The Group's fuel price risk management strategy aims to provide the
airline with protection against sudden and significant increases in oil prices while ensuring that the airline is not
competitively disadvantaged in the event of a substantial price fall. The Group strategy as reflected in its currently
approved hedging policy is to hedge between 40% and 60% of estimated fuel consumption 12 months forward and
up to 20% from 13-18 months forward. However, the Group temporarily halted all fuel hedging at the outset of the
Covid-19 pandemic and has not entered any new hedge positions since February 2020. The Company's pre-Covid
positions were restructured in July 2020 with the last of the pre-existing contracts maturing in July 2022. The Group
closely monitors developments in the oil market and may resume hedging activities as opportunities arise. The
hedging policy allows for both swaps and options traded with approved counterparties and within approved limits.
All pre-existing hedge positions were forward contracts. Any new fuel hedging contracts will likely include some
type of stop-loss mechanism to limit the associated risk.
Undrawn secured credit lines at year-end 2021 amounted to USD 52.0 million (2020: USD 52.0 million). Thereof
USD 22.0 million are available until September 2025 and USD 30.0 million until April 2024. An undrawn
Government Guaranteed credit line amounting to USD 120.0 million (2020: USD 120.0 million) is available until
mid-
September 2022.
Carbon emission is a fixed proportion of the fuel consumption but the price volatility of carbon has been greater.
Carbon prices rose significantly in 2021. Procurement of emission allowances has material effects on the cost of
operations. Due to the COVID-19 pandemic and the lower-than-normal scope of operations, particularly in the first
half of the year, along with the residual allowance from 2020, the free allowances provided by the ETS will
materially counter the commitments for 2021. Therefore the risk has been non-existent in 2021, as ramp-up
progresses and usage will exceed the free allowance in 2022 the risk will arise again.
Notes, contd.:
Market risk emerges from changes in market prices, such as foreign exchange rates, interest rates, carbon prices
and fuel prices, as those changes will affect the Group's cash flows or the value of its holdings in financial
instruments. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return. The Company holds some of its ISK holdings in mutual funds
that invest in term deposits and bonds issued by rated domestic banks as well as government bonds. These
investments fall within the agreed risk management policy.
The Group uses spot and forward trading, swaps and options in order to manage market risks. All such
transactions are carried out within the guidelines set by the Board of Directors. The Group seeks to apply hedge
accounting in order to manage volatility in profit or loss.
Consolidated Financial Statements of Icelandair Group hf. 2021
37
Amounts are in USD thousand
36. Financial risk management, contd.:
Sensitivity analysis
2021 2020
1,760 2,884
1,760)( 2,884)(
Currency risk
Exposure to currency risk
ISK EUR GBP DKK SEK CAD
Receivables / payables, net .....
90,765 )( 102,256 )( 15,364 )( 13,705 )( 7,820 )( 10,728 )(
Marketable securities ...............
58,197 0 0 0 0
0
Cash and cash equivalents .....
30,556 9,380 5,833 4,079
4,678 2,160
Secured bank loans .................
0 59,091 )( 0 0 0 0
Unsecured loans ......................
19,173 )( 0 0 0 0 0
Warrants ..................................
18,395 )( 0 0 0 0
0
Lease receivables ....................
3,274 0 512 0
0 0
Lease liabilities ........................
116,266 )( 447 )( 972 )( 92 )( 0 0
Forward exchange contracts ...
16,706 2,265 )( 4,051 )( 1,523 )( 1,658 )(
1,572 )(
Net statement of
financial position exposure ....
135,866 )(
154,679 )( 14,042 )( 11,241 )(
4,800 )( 10,140 )(
Next 12 months
forecast sales ........................
298,958 242,710 53,489 21,816 55,203 41,402
Next 12 months
forecast purchases ................
514,683 )(
174,277 )( 20,925 )( 11,232 )( 6,634 )( 5,307 )(
Capex thereof ........................
28,989 )( 902 )( 0 0 0 0
Currency exposure ..................
351,591 )(
86,246 )( 18,522 657 )( 43,769 25,955
The Group is exposed to cash flow and balance sheet currency risk as shown in the table below, that are
denominated in currencies other than the respective functional currencies of Group entities.
The Group's exposure to currency risk in it's major currencies is as follows:
2021
Effect on equity
The Group seeks to reduce its foreign exchange exposure arising from currency mismatch in the cash flow by
netting receipts and payments in each individual currency and by internal trading within the Group. The shortfall of
ISK is financed by a surplus of European currencies, most importantly EUR and Scandinavian currencies but also
GBP and CAD. The COVID-19 pandemic has however temporarily changed both the cash flow and the balance
sheet exposure. The share offering in 2020 was conducted in ISK and therefore the ISK short 12 month cash flow
position shifted to a long position. As a result ISK denominated financial assets were more dominant than before.
The year 2021 saw a conversion back to pre-COVID-19 exposures.
Notes, contd.:
Decrease in fuel prices by 10% .......................................................................................
At year-end 2021 all open hedge positions were effective, changes in their market value are therefore confined to
equity until settlement.
Increase in fuel prices by 10% ........................................................................................
The following table demonstrates the sensitivity of the financial instruments in place at year-end to a reasonably
possible change in fuel prices, with all other variables held constant, on profit before tax and equity:
Consolidated Financial Statements of Icelandair Group hf. 2021
38
Amounts are in USD thousand
36. Financial risk management, contd.:
ISK EUR GBP DKK SEK CAD
Receivables / payables, net .....
100,558 )( 3,429 369 )( 21 29 )( 1,192
Marketable securities ...............
41,713 0 0 0 0 0
Cash and cash equivalents .....
83,912 2,860 624 424 35 322
Secured bank loans .................
31,720 )(
68,247 )(
0 0 0 0
Warrants ..................................
54,865
0 0 0 0 0
Lease receivables ....................
696 0 651 0
0 0
Lease liabilities ........................
13,019 )( 661 )( 1,236 )( 188 )( 0
0
Forward exchange contracts ...
14,742 4,911 )( 0 3,301 )( 3,062 )( 4,712 )(
Net statement of
financial position exposure ....
50,632 67,530 )( 330 )( 3,044 )( 3,055 )( 3,198 )(
Next 12 months
forecast sales ........................
93,467
75,882 16,723 6,821 10,027 20,133
Next 12 months
forecast purchases ................
147,627 )( 49,988 )( 6,002 )( 3,222 )(
539 )(
3,003 )(
Capex thereof ........................
11,473 )( 555 )(
0
0 0 0
Currency exposure ..................
3,529 )(
41,637 )( 10,391 556 6,433 13,932
2021 2020 2021 2020
0.0079 0.0074 0.0076 0.0078
1.18 1.14 1.13 1.23
1.38 1.28 1.35 1.36
0.80 0.75 0.79 0.79
0.16 0.15 0.15 0.17
0.12 0.11 0.11 0.12
Sensitivity analysis
Total
Directly in Profit or effect on
2021 equity loss equity
6,190 )( 17,060 10,869
181 12,193 12,374
324 799 1,123
122 777 899
133 251 384
126 685 811
7,109 )( 3,059 4,051 )(
393 5,010 5,402
0 26 26
264 21 )( 243
245 0 )( 244
377 121 )( 256
Notes, contd.:
CAD ..........................................................................................................
EUR ..........................................................................................................
GBP ..........................................................................................................
GBP ....................................................................................
ISK ............................................................................................................
SEK ...........................................................................................................
DKK ..........................................................................................................
DKK ....................................................................................
ISK ............................................................................................................
ISK ......................................................................................
2020
DKK ..........................................................................................................
CAD ..........................................................................................................
SEK ...........................................................................................................
GBP ..........................................................................................................
A 10% strengthening of the USD against the following currencies at 31 December would have increased
(decreased) post-tax equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant and omits the impact of deferred tax assets at reporting date.
Average rate
SEK ....................................................................................
Year-end spot rate
The following significant exchange rates of USD applied during the year:
2020
A 10% weakening of the USD against the above currencies would have had the equal but opposite effect on the
above currencies to the amounts shown above, on the basis that all other variables remain constant.
EUR ..........................................................................................................
CAD ....................................................................................
EUR ...................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
39
Amounts are in USD thousand
36. Financial risk management, contd.:
Interest rate risk
2021 2020
1,227 17,772 )(
58,629 )( 78,096 )(
57,402 )( 95,868 )(
262,699 159,108
268,221 )( 273,750 )(
5,522 )( 114,642 )(
Fair value sensitivity analysis for fixed rate instruments
100 bp 100 bp
increase decrease
8 )( 8
1,830 1,924 )(
1,822 1,916 )(
113 115 )(
2,438 2,563 )(
2,551 2,678 )(
Cash flow sensitivity analysis for variable rate instruments
100 bp 100 bp
increase decrease
44 )( 44
44 )( 44
917 )( 917
917 )( 917
Commodity derivatives and forward exchange contracts ...............................................
Interest rate swaps (Notional amount) ............................................................................
At the reporting date the interest rate profile of the Group´s interest bearing financial instruments was as follows:
Variable rate instruments
Amount
Fixed rate instruments
The Group designates derivatives for the purpose of fuel, carbon, currency and interest rate hedging as hedging
instruments under a fair value hedge accounting model. As such, market rates affect the mark to market of the
derivatives and the market value of fixed rate financial assets. In addition, interest rate changes affect the fixed
rate instruments carrying amount through equity.
Interest rate risk is the potential that a change in market interest rates will reduce the value of a bond or other fixed-
rate instruments. The fair value of a fixed rate instrument and the cash flow of a variable rate instruments will
fluctuate with changes in market interest rates. The Group follows a policy of hedging 40-80% of the net interest
rate cash flow exposure of long-term loans with up to a 5-year horizon.
Commodity derivatives and forward exchange contracts ...............................................
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and
profit or loss by the amounts stated below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant.
Fair value sensitivity (net) ...............................................................................................
Variable rate instruments ................................................................................................
Fair value sensitivity (net) ...............................................................................................
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and
profit or loss by the amounts stated below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant.
31 December 2020
Interest rate swaps ..........................................................................................................
Interest rate swaps ..........................................................................................................
31 December 2020
Variable rate instruments ................................................................................................
31 December 2021
Notes, contd.:
Cash flow sensitivity (net) ...............................................................................................
Commodity derivatives and forward exchange contracts (Carrying amount) .................
31 December 2021
Financial assets (Carrying amount) ................................................................................
Financial liabilities (Carrying amount) .............................................................................
Cash flow sensitivity (net) ...............................................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
40
Amounts are in USD thousand
36. Financial risk management, contd.:
Hedge accounting
31.12.2021
Closed YTD 1-6 months 7-12 months > 13 months Total
944 0 0
944
382 )(
0 0 382 )(
121 )( 195 )( 182 )( 498 )(
1,653 0 0 1,653
2,094 195 )( 182 )( 1,717
98 )( 39 36 23 )(
393 156 )( 146 )(
91
0 0 0 0 0
Dividend
37. Financial instruments and fair value
Carrying Carrying
amount Fair value amount Fair value
2021 2021 2020 2020
1,717 1,717 17,291 )(
17,291 )(
19,173 )( 19,308 )( 0 0
238,612 )( 248,043 )( 263,588 )(
279,654 )(
18,395 )( 18,395 )( 27,764 )(
27,764 )(
245,659 )( 245,659 )(
146,597 )( 146,597 )(
520,122 )( 529,688 )( 455,240 )(
471,306 )(
Fair value hierarchy:
31 December 2021
Financial assets
Level 1 Level 2 Level 3 Total
2,853 2,853
0 2,853 0 2,853
Financial liabilities
18,395 )( 18,395 )(
19,308 )( 19,308 )(
248,043 )( 248,043 )(
245,659 )( 245,659 )(
1,136 )( 1,136 )(
0 19,531 )( 513,010 )( 532,541 )(
Total ...................................................................................
Unsecured bond issue ........................................................
Lease liabilities ...................................................................
Warrants .............................................................................
Tax ...............................................................
Derivatives used for hedging ..............................................
Derivatives used for hedging ..............................................
Warrants .............................................................................
Lease liabilities ...................................................................
The Hedge Accounting Standards of IFRS 9 require hedge instruments to fulfill certain criteria so that the market
value of open hedge positions can be allocated to equity as hedge reserves until settlement day. One of these
qualifications is the requirement of effectiveness of the financial instrument against the identified exposure. The
exposure has to be considered highly likely on the basis of a robust forecast of operations. All outstanding fuel
hedges are effective.
Following table shows effective and ineffective hedges:
Fuel .............................................................
Currency ......................................................
Margin accounts ..........................................
Total derivatives, Payable ............................
Notes, contd.:
The Board of Directors has agreed not to propose a payment of dividends for the fiscal years 2020 and 2021 in
relation to the Group's financial restructuring and agreements made with stakeholders. However, for the longer
term the dividend policy is as follows: “The Company's goal is to declare 20-40% of annual net profit as dividend.
The final decision on dividend payments will be based on the financial position of the Company, operating capital
requirements and market conditions.”
Derivatives used for hedging, Equity ...........
Ineffective fuel derivatives, P&L .................
Derivatives used for hedging ..............................................
Secured loans ....................................................................
The fair value of financial assets and liabilities, together with the carrying amounts shown in the Statement of
Financial Position, are as follows. The table does not include fair value information for financial assets and
liabilities measured at fair value if the carrying amount is a reasonable approximation of fair value:
The table below analyses the fair value of assets and liabilities and their levels in the fair value hierarchy:
Secured loans ....................................................................
Unsecured bond issue ........................................................
Interest rate swap ........................................
Consolidated Financial Statements of Icelandair Group hf. 2021
41
Amounts are in USD thousand
37. Financial instruments and fair value, contd.:
31 December 2020
Financial liabilities
Level 1 Level 2 Level 3 Total
27,764 )( 27,764 )(
279,654 )( 279,654 )(
146,597 )( 146,597 )(
17,291 )( 17,291 )(
0 45,055 )( 426,251 )( 471,306 )(
Non-derivative financial liabilities
Derivatives
38. Capital commitments
Q1 2022
2
1
3
The Pre-Delivery Payments (PDP) of the three aircraft that remain undelivered are financed under the (PDP)
financing agreement with BOC Aviation (BOCA) signed in 2018.
Boeing 737 MAX9 ....................................................................................................................................
Total .........................................................................................................................................................
The remaining original order book deliveries of Boeing 737 MAX aircraft to the Group are scheduled as follows:
Secured loans ....................................................................
The fair value of forward exchange contracts is based on their quoted price, if available. If a quoted price is not
available, then fair value is estimated by discounting the difference between the contractual forward price and the
current forward price for the residual maturity of the contract. This methodology is also used when valuating
commodity forwards and swaps.
Boeing 737 MAX8 ....................................................................................................................................
In September 2021, the Group secured financing of these three aircraft with Aviation Capital Group (ACG). The
two 737 MAX 8 aircraft as sale-leaseback transactions and the one 737 MAX 9 under an asset-backed loan
agreement.
The fair value of interest rate swaps is based on broker quotes. If not available the fair value is based on the
discounted cash flow difference of the contractual fixed interest payment and the floating interest receivable.
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal
and interest cash flows, discounted at market rates as at the reporting date. In respect of the liability component of
convertible notes, the market rate of interest is determined by reference to similar liabilities that do not have a
conversion option.
The Group has taken delivery of nine 737 MAX8 / MAX9 aircraft out of the total twelve included in the purchase
agreement with the Boeing Company which was signed in 2013 and amended in 2020. Two of the undelivered
aircraft were scheduled to be delivered in Q4 2021, but delivery was postponted until Q1 2022.
The basis for determining the levels is disclosed in note 4.
Fair value reflects the credit risk of the instrument and includes adjustments to take account of the credit risk of the
Group entities and counterparties when appropriate.
Warrants .............................................................................
Notes, contd.:
Derivatives used for hedging ..............................................
Lease liabilities ...................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
42
Amounts are in USD thousand
39. Related parties
Identity of related parties
Transactions with management and key personnel
Incentive Number of
payments shares
Salaries Pension for held at
2021
and contri-
previous
year-end
Board of Directors: benefits bution year thousands *
65.1 7.5 8,555
68.7 7.9
63.0 7.2 2,941
18.6 2.9
59.4 6.8 10,833
42.0 4.8 17,656
Key employees:
518.0 119.6 20,708
1,940.9 345.1 30 40,377
65/35
2020
Board of Directors:
64.6 7.4 17,240
53.9 6.2 10,000
28.6 3.3 2,716
28.6 3.3
43.5 5.0
9.9 1.3
10.1 1.4 10,765
Key employees:
355.0 76.0 19,250
1,860.7 305.0 60,111
64/36
* Including financially related
** Number of executives were eight for the first four months of the year 2020
Transaction with associates
Transaction with shareholders
Nina Jonsson ......................................................................
Ómar Benediktsson, former board member .......................
The Group purchased and sold services to associates for immaterial amounts in 2021 and 2020. At year-end, the
Company had a long term receivable on its associate Lindarvatn amounting to USD 16.6 million.
Heiðrún Emilía Jónsdóttir, former board member ..............
Seven members of Executive committee ** .......................
Guðmundur Hafsteinsson ..................................................
There are no shareholders with significant influence at year-end 2021. Companies which members of the Board
and key employees control have been identified as being fifteen. These companies have been identified as related.
Transactions with them where immaterial in 2021.
No stock option contracts were open at year-end 2020 and 2021. However, as part of the 2020 share offering all
investors were allotted warrants which are listed on the Icelandic Stock Exchange. Investors can exercise these
warrants to buy additional shares. Members of management and those directors that participated in the offering
hold such warrants.
Salaries and benefits of management for their service to Group companies and the number of shares in the
Company held by management are specified below.
Nina Jonsson, Vice Chairman ............................................
Bogi Nils Bogason Group CEO ..........................................
Gender ratio for key employees (male / female) ................
Úlfar Steindórsson, former Chairman .................................
Seven members of Executive committee ...........................
Úlfar Steindórsson, Chairman ............................................
John F Thomas ..................................................................
Svafa Grönfeldt, Vice Chairman .........................................
John F Thomas ..................................................................
Guðmundur Hafsteinsson, Chairman .................................
Bogi Nils Bogason Group CEO ..........................................
Matthew Evans ...................................................................
Gender ratio for key employees (male / female) ................
Svafa Grönfeldt ..................................................................
The Group has a related party relationship with its shareholders with significant influence, subsidiaries, associates,
and with its directors and executive officers.
Notes, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
43
Amounts are in USD thousand
40. Litigations and claims
41. Group entities
2021 2020
Passenger and cargo operations
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
67% 67%
Other Group entites
100% 100%
100% 100%
0% 100%
42. General government measures
Ownership interest
The Company held the following significant subsidiaries at year-end 2021 which are all included in the
Consolidated Financial Statements:
The bankruptcy estate of Wow Air has initiated litigation against Icelandair and claimed compensation due to
alleged predatory pricing in 2012-2016. It is claimed that Icelandair had a dominant position in the market for flights
to and from Iceland during the period and abused its position by predatory pricing. Icelandair rejects the claim since
the company's management is of the opinion that Icelandair's pricing in 2012-2016 was fully compliant with the
Icelandic Competition Act. Icelandair has already filed its counter-arguments in the case. The Icelandic
Competition Authority has ceased its investigation of Icelandair's alleged predatory pricing in 2012-2016.
The District Court of Reykjavik has ruled that Icelandair Group is jointly liable with Icelandair Hotels for lease
payments of up to ISK 138 million as a guarantor. The ruling has been appealed to the National Court. The said
amount may be claimed from Icelandair Group if the ruling of the District Court will be upheld and Icelandair Hotels
will also be unable to pay the amount.
Icelandair ehf. has received compensation claims from cabin crew members for bodily injury due to alleged lack of
air quality inside Icelandair's aircraft. Icelandair has rejected the claims since there is no evidence of lack of air
quality in the company's aircraft or any evidence linking such alleged lack of air quality to the bodily injury of
claimants.
The government also offered deferral of payroll tax payments. This was a general relief measure available to all
companies in Iceland that met the associated criteria. The deferred payments amounted to USD 9.3 million and are
payable in monthly installments from September 2022 to February 2023.
FERIA ehf. (VITA) .......................................................................................................
Loftleiðir - Icelandic ehf. .............................................................................................
IceCap Insurance PCC Ltd. ........................................................................................
The subsidiaries further own six minor operating companies that are also included in the Consolidated Financial
Statements. Two of those have non-controlling shareholders.
Iceeignir ehf. ................................................................................................................
Icelandair Cargo ehf. ..............................................................................................
Flugfélag Íslands ehf. .............................................................................................
CAE Icelandair Flight Training ehf. .......................................................................
As part of its COVID relief efforts the government offered loss-of-income subsidies to support business operators
who have suffered losses as a result of the pandemic. This was a general relief measure available to all
companies in Iceland that met the associated criteria. The Group's total subsides amounted to USD 1.5 milion.
Iceland Travel ehf. .......................................................................................................
Changes in legislation benefiting the Group and agreements to maintain minimum flights are as follows:
At the outset of the COVID-19 pandemic the Group and the Icelandic Government entered into agreements
whereby Icelandair committed to maintain a certain number of domestic and international flights per week to ensure
minimum passenger flight transportation to and from Iceland. Under these agreements, the Group received
payments from the Icelandic Government which have been accounted for as Other revenue of USD 0.6 million.
Icelandair ehf. .............................................................................................................
Company's subsidiary Loftleiðir Icelandic is the owner of an aircraft that is currently located in Cabo Verde and is
under CVA registry. The aircraft is in the process of being de-registered from the Cabo Verde aircraft registry but
the process has been delayed due to claims made by local authorities. The aircraft is expected to be de-registered
in the coming months.
Notes, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
44
Amounts are in USD thousand
43. Ratios
The Group's primary ratios at year end are specified as follows: 2021 2020
0.83 0.70
0.19 0.23
0.21 0.25
0.82 1.09
44. Investment and financing without cash flow effect
Investment and financing without cash flow effect: 2021 2020
17 132,646 )( 3,938 )(
31 133,858 7,060
2,460 )( 0
1,248 3,121 )(
16,726 0
16,726 )( 0
32 795 )( 16,197 )(
795 16,197
45. Significant accounting policies
a. Basis of consolidation
(i) Subsidiaries
(ii) Investments in associates
(iii) Transactions eliminated on consolidation
Notes, contd.:
The accounting policies set out in this note have been applied consistently to all periods presented in these
consolidated financial statements and have been applied consistently by Group entities.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has right to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. The financial statements of subsidiaries are included in the consolidated statements from the date on
which control commences until the date on which control ceases. When the Group looses control over subsidiary, it
derecognizes the assets and liabilities of the subsidiary, and any related NCI and other compnonents of equity. Any
resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair
value when control is lost.
Intrinsic value of share capital ...................................................................................
Current ratio ..............................................................................................................
Equity ratio .................................................................................................................
Equity ratio without warrants .....................................................................................
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Interests in associates are accounted for using the equity method. They are initially recognized at
cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements
include the Group's share of the profit or loss and other comprehensive income of associates, until the date on
which significant influence ceases.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised gains arising from transactions with associates are eliminated against the
investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
Warrants issued .............................................................................................
Retained earnings ..........................................................................................
Many investing and financing activities do not have a direct impact on current cash flows although they do affect the
capital and asset structure of the Group and should be excluded from the statements of cash flows. The exclusion
of non-cash transactions from the statement of cash flows as these items do not involve cash flows in the current
period.
Acquisition of right-of-use assets ...................................................................
New or renewed leases .................................................................................
Gain on sale due to sales and leaseback ......................................................
Non-current receivables .................................................................................
Loans and borrowings ....................................................................................
Trade and other payables ..............................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021
45
Amounts are in USD thousand
45. Significant accounting policies, contd.:
b. Currency exchange
(i) Currency transactions
(ii) Subsidiaries with other functional currencies
c. Operating income
(i) Transport revenue
(ii) Customer loyalty programmes
(iii) Aircraft and aircrew lease
(iv) Other operating revenue
For customer loyalty programmes, the fair value of the consideration received or receivable in respect of the initial
sale is allocated between the award credits (frequent flyer points) and other components of the sale. Awards can
also be generated through transportation services supplied by the Group. Through transportation services the
amount allocated to the points is estimated by reference to the fair value of the services for which they could be
redeemed, since the fair value of the points themselves is not directly observable. The fair value of the services is
calculated taking into account the expected redemption rate and timing of the redemptions. The amounts are
deferred and revenue is recognized only when the points are redeemed and the Group has fulfilled its obligations to
provide the services. The amount of revenue recognized in those circumstances is based on the number of points
that have been redeemed in exchange for services, relative to the total number of points that is expected to be
redeemed.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-
monetary items in a foreign currency that are measured based on historical cost are translated using the exchange
rate at the date of the transaction. Foreign currency differences arising on retranslation are recognized in profit or
loss, except for differences arising on a financial liability designated as a hedge of the net investment in a foreign
operation to the extent that the hedge is effective or qualifying cash flow hedges to the extent the hedge is effective,
which are recognized in other comprehensive income.
Currency differences are recognized in other comprehensive income, and presented in the translation reserve in
equity. However, if the operation is not a wholly owned subsidiary, then the relevant proportion of the translation
difference is allocated to the non-controlling interests.
Transactions in currencies other than functional currencies (foreign currencies) are translated to the respective
functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and
liabilities denominated in currencies at the reporting date are translated to the functional currency at the exchange
rate at that date. The currency gain or loss on monetary items is the difference between amortized cost in the
functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and
the amortized cost in currency translated at the exchange rate at the end of the year.
Revenue from aircraft and aircrew lease is recognized in profit or loss when the service has been provided and
IFRS 16 Lease standard does not apply.
Revenue includes revenue from tourism, sales at airports and hotels, maintenance service sold and other revenue.
Revenue is recognized in profit or loss when the service has been provided or sale completed by delivery of
products.
Gain on sale of operating assets is recognized in profit or loss when the risks and rewards of ownership are
transferred to the buyer.
Passenger ticket sales are recognized as revenue when transportation has been provided. Sold refundable
documents not used within twelve months from the month of sale are recognized as revenue. Non-refundable
documents are recognized as revenue two months after expected transport if not used. Revenue from mail and
cargo transportation is recognized when transportation has been provided.
Notes, contd.:
Assets and liabilities of foreign operations and subsidiaries with functional currencies other than USD, including
goodwill and fair value adjustments arising on acquisitions, are translated to USD at exchange rates at the reporting
date. Income and expenses are translated to USD at exchange rates at the dates of the transactions. Currency
differences arising on translation are recognized in other comprehensive income. When an operation is disposed of,
in part or in full, the relevant amount in the currency translation reserve within equity is transferred to profit or loss
as part of the profit or loss on disposal.
Consolidated Financial Statements of Icelandair Group hf. 2021
46
Amounts are in USD thousand
45.
Significant accounting policies, contd.:
d. Employee benefits
(i) Short-term employee benefits
(ii) Defined contribution plans
e. Leases
(i) As a lessee
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of
the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
- amounts expected to be payable under a residual value guarantee; and
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is
a change in future lease payments arising from a change in an index or rate, if there is a change in the Group´s
estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its
assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-
substance fixed lease payment.
- the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate early.
Notes, contd.:
Obligations for contributions to defined contribution plans are epensed when the related service is provided.
Short-term employee benefits are expensed when the related service is provided. A liability is recognized for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result
of past service provided by the employee and the obligation can be estimated reliably.
At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains
a lease if the contract conveys the right of control the use of identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group
uses the definition of lease in IFRS 16.
The Group recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred an estimate of costs to
dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less
any lease incentives receivable.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right of use asset reflects that the Group will exercise a purchase option. In that
case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on
the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by
impairment leases, if any and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group´s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as
the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing
sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
- fixed payments, including in-substance fixed payments;
Consolidated Financial Statements of Icelandair Group hf. 2021
47
Amounts are in USD thousand
45.
Significant accounting policies, contd.:
e. Leases, contd:
(ii) Short-term leases and leases of low-value
(iii) As a lessor
f. Finance income and finance costs
Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The
extension options held are exercisable by the Group only and not by the lessors. The Group assesses whether such
an option is reasonably certain to be exercised at the lease commencement date. A reassessment is made in case
of a significant event or significant changes in circumstances within the Group’s control.
The Group applies the derecognition and impairment requirements in IFRS 9 to the net investment in the lease. The
Group further regularly reviews estimated unguaranteed residual values used in calculating the gross investment in
the lease.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying asset. If head lease is a short-term lease to which the Group
applies the exemption described above, then it classifies the sub-lease as an operating lease.
Finance income comprises interest income on funds invested, dividend income, foreign currency gains, and gains
on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or
loss, using the effective interest method. Dividend income is recognized in profit or loss on the date that the Group's
right to receive payment is established.
If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the
consideration in the contract.
A sales and leaseback transaction is one where the Group sells and asset and immediately reacquires the use of
the asset by entering into a lease agreement. Any profit from the sale is deferred and amortized over the lease term.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of
the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance
lease; if not then it is an operating lease. As part of this assessment, the Group considers certain indicators such as
whether the lease is for the major part of the economic life of the asset.
The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value asset and
short-term leases, including IT equipment. The Group recognizes the lease payments associated with these leases
as an expense on a straight-line basis over the lease term.
Notes, contd.:
Finance costs comprise interest expense on borrowings, unwinding of discounts on provisions, foreign currency
losses, impairment losses recognized on financial assets, and losses on hedging instruments that are recognized in
profit or loss. Borrowing costs that are not directly attributable to the acquisition of a qualifying asset are recognized
in profit or loss using the effective interest method.
The Group recognizes lease payments received under operating leases as income on a straight-line basis over the
lease term as part of 'other revenue'.
Generally, the accounting policies applicable to the Group as a lessor in the comparative period were not different
from IFRS 16 except for the classification of the sub-lease entered into during current reporting period that resulted
in a finance lease classification.
Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending
on whether currency movements are in a net gain or net loss position.
At inception or on modification of a contract that contains a lease component, the Group allocates the consideration
in the contract to each lease component on the basis of their relative stand-alone prices.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an
operating lease.
Consolidated Financial Statements of Icelandair Group hf. 2021
48
Amounts are in USD thousand
45.
Significant accounting policies, contd.:
g. Income tax
h.
Inventories
i. Operating assets
(i) Recognition and measurement
(ii) Aircraft and flight equipment
(iii) Subsequent expenditure
(iv) Depreciation
Useful life
3-17 years
Cycles flown
17-50 years
3-20 years
Engines ..............................................................................................................................................
Buildings .............................................................................................................................................
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are
assessed and if a component has a useful life that is different from the remainder of that asset, that component is
depreciated separately.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to
a working condition for their intended use.
When parts of an item of operating assets have different useful lives, they are accounted for as separate items
(major components) of operating assets.
Any gain and loss on disposal of an item of operating assets (calculated as the difference between the net proceeds
from disposal and the carrying amount of the item) is recognized in profit or loss.
Aircraft and flight equipment, e.g. aircraft engines and aircraft spare parts, are measured at cost less accumulated
depreciation and accumulated impairment losses. When an aircraft is acquired the purchase price is divided
between the aircraft itself and engines. Aircraft is depreciated over the estimated useful life of the relevant aircraft
until a residual value is met. Engines are depreciated according to actual usage based on cycles flown. When an
engine is overhauled the cost of the overhaul is capitalised and the remainder of the cost of the previous overhaul
that has not already been depreciated, if any, is expensed in full.
Income tax comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to
items recognized directly in equity or in other comprehensive income.
Notes, contd.:
Items of operating assets are measured at cost less accumulated depreciation and accumulated impairment losses.
Items of operating assets are depreciated on a straight-line basis in profit or loss over the estimated useful lives of
each component unless other systematic method is considered appropriate. Leased assets are depreciated over
the shorter of the lease term or their useful lives. The estimated useful lives for the current and comparative periods
are as follows:
Aircraft and flight equipment ...............................................................................................................
Current tax is expected tax payable on taxable income for the year using tax rates enacted at the reporting date.
Subsequent expenditure is capitalised only when it is probable that future economic benefits associated with the
expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Other property and equipment ............................................................................................................
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognized for goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that do not affect
accounting, or taxable profit or differences relating to investment in subsidiaries.
Goods for resale and supplies are measured at the lower of cost and net realisable value. The cost of inventories is
based on first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them
to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
Consolidated Financial Statements of Icelandair Group hf. 2021
49
Amounts are in USD thousand
45.
Significant accounting policies, contd.:
j. Intangible assets and goodwill
(i) Goodwill and other intangible assets with indefinite useful lives
(ii)
Other intangible assets
Useful life
3 years
6-10 years
(iii) Subsequent expenditure
k. Assets held for sale
l.
Financial instruments
(i) Non-derivative financial assets
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is
initially measured at fair value plus, for an item not at fair value through profit or loss, transaction costs that are
directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially
measured at the transaction price.
Notes, contd.:
Goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units
and is tested annually for impairment.
Goodwill, trademarks and airport slots with indefinite useful lives are stated at cost less accumulated impairment
losses.
Trade receivables and debt securities are initially recognized when they are originated. All other financial assets and
financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the
instrument.
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather than through continuing use.
Once classified as held-for-sale, intangible assets and operating assets are no longer amortized or depreciated,
and any equity-accounted investee is no longer equity accounted.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less
costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets
and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets or deferred tax
assets which continue to be measured in accordance with the Group's other accounting policies. Impairment losses
on initial classification as held-for-sale or held-for-distribuiton and subsequent gains and losses on remeasurement
are recognized in profit or loss.
Software .............................................................................................................................................
Other intangible assets .......................................................................................................................
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is
recognized in profit or loss as incurred.
Other intangible assets acquired by the Group and have finite useful lives are measured at cost less accumulated
amortisation and impairment losses. Amortisation is recognized in profit or loss on a straight-line basis over the
estimated useful lives since this most closely reflects the expected pattern of consumption of the future economic
benefits embodied in the asset. The estimated useful lives for the current and comparative years are as follows:
All business combinations are accounted for by applying the purchase method. Goodwill represents amounts
arising on acquisition of subsidiaries. In respect of business acquisitions goodwill represents the difference between
the cost of the acquisition and the fair value of the net identifiable assets acquired.
Consolidated Financial Statements of Icelandair Group hf. 2021
50
Amounts are in USD thousand
45.
Significant accounting policies, contd.:
l.
Financial instruments, contd.:
Financial assets at fair value through profit or loss
Financial assets measured at amortized cost
(ii) Non-derivative financial liabilities
Financial liabilities other than derivatives comprise loans and borrowings and trade and other payables.
The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the
risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor
retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value
through profit or loss and financial assets measured at amortized cost.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis
are measured at FVTPL. These assets are subsequently measured at fair value. Net gains and losses, including
any interest or dividend income, are recognized in profit or loss.
Financial assets at fair value through profit or loss comprise marketable securities actively managed by the Group's
treasury department to address short-term liquidity needs.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Notes, contd.:
These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost
is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are
recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
The Company initially recognizes debt securities issued on the date that they are originated. All other financial
liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual
provisions of the instrument.
The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new financial liability based on the modified terms is recognized at
fair value.
The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial
liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortized cost using the effective interest method.
Financial assets measured at amortized cost comprise cash and cash equivalents and trade and other receivables.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as
at FVTPL:
– it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
– its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or
less.
Consolidated Financial Statements of Icelandair Group hf. 2021
51
Amounts are in USD thousand
45. Significant accounting policies, contd.:
l.
Financial instruments, contd.:
(iv)
Derivative financial instruments and hedge accounting
Cash flow hedges
Warrants are free standing financial instruments that are legally detachable and separately exercisable from the
underlying shares. Pursuant to the requirements of IAS 32 Financial instruments: Presentation, the warrants are
classified as financial liabilities because their exercise price is denominated in ISK, the Company's functional
currency is USD and the Company did not offer the warrants pro rata to all of its existing shareholders. The
outstanding warrants are recognized as warrant liabilities in the Consolidated Statement of Financial Position and
are measured at their fair value on their issuing date and are subsequently measured at each reporting period with
changes in fair value being recorded as a component of Change in fair value in the Consolidated Income Statement
and other Comprehensive Income according to IFRS 13, Fair Value Measurement.
When a derivative financial instrument is not designated in a hedge relationship that qualifies for hedge accounting,
all changes in its fair value are recognized immediately in profit or loss.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to
realize the asset and settle the liability simultaneously.
When the hedged item is a non-financial asset, the amount accumulated in equity is included in the carrying amount
of the asset when the asset is recognized. In other cases the amount accumulated in equity is reclassified to profit
or loss in the same period during which the hedged item affects profit or loss. If the hedging instrument no longer
meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked,
then hedge accounting is discontinued prospectively. If the hedged future cash flows is no longer expected to occur,
then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are
immediately reclassified to profit or loss.
When a non-derivative financial liability is designated as the hedging instrument in a hedge of a net investment in a
foreign operation, the effective portion of foreign exchange gains and losses is recognized in other comprehensive
income and presented in the translation reserve within equity. Any ineffective portion of the changes in the fair value
of foreign exchange gains and losses on the non-derivative is recognized immediately in profit or loss. The amount
recognized in other comprehensive income is reclassified to profit or loss as a reclassification adjustment on
disposal of the foreign operation.
When a derivative is designated as a cash flow hedging instrument in a hedge of the variability in cash flows
attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast
transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is
recognized in other comprehensive income and accumulated in the hedging reserve in equity. Any ineffective
portion of changes in the fair value of the derivative is recognized immediately in profit or loss.
Other non-trading derivatives
Notes, contd.:
Net investment hedges
The Group holds derivative financial instruments to hedge its foreign currency, fuel price and interest rate risk
exposures (see note 36). Derivatives are recognized initially at fair value; attributable transaction costs are
recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and
changes therein are generally recognized in profit or loss. The Group holds no trading derivatives.
On initial designation of the derivative as a hedging instrument, the Group formally documents the relationship
between the hedging instrument and hedged item, including the risk management objectives and strategy in
undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge
relationship as well as on an ongoing basis, whether the hedging instruments are expected to be highly effective in
offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the
hedge is designated, and whether the actual results of each hedge are within a range of 80-125 percent. For a cash
flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an
exposure to variations in cash flows that ultimately could affect reported profit or loss.
Consolidated Financial Statements of Icelandair Group hf. 2021
52
Amounts are in USD thousand
45. Significant accounting policies, contd.:
m. Share capital
n. Impairment
(i) Non-derivative financial assets
(ii) Non-financial assets
Repurchase and reissue of share capital
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset
or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into
the smallest group of assets that generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, for the purposes of goodwill
impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which
impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting
purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit
from the synergies of the combination.
Impairment losses are recognized in profit or loss. Impairment losses recognized in respet of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the
carrying amounts of other assets in the CGU (group of CGUs) on a pro rata basis.
The disappearance of an active market for a security because of financial difficulties; or
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine
whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of
impairment as a result of one or more events that have occurred after the initial recognition of the asset, and that
loss event had an impact on the estimated future cash flows of that asset which can be estimated reliably.
When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes
directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are
classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or
reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or
deficit on the transaction is presented in share premium.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the asset's
original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against
receivables. Interest on the impaired asset continues to be recognized. When an event occurring after the
impairment recognized causes the amount of impairment loss to decrease, the decrease in impairment loss is
reversed through profit or loss.
Objective evidence that financial assets are impaired includes:
Default or delinquency by a debtor;
Indications that a debtor or issuer will enter bankruptcy;
Adverse changes in the payment status of borrowers or issuers;
Observable data indicating that there is a measurable decrease in the expected cash flows from a group of financial
assets.
Restructuring of an amount due to the Group on terms that the Group would not consider otherwise;
The carrying amounts of the Group's non-financial assets, other than inventories and deferred tax assets, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists, then the asset's recoverable amount is estimated. Goodwill and indefinite-lived intangibles assets are tested
annually for impairment. An impairment loss is recognized if the carrying amount of an asset or cash-generating unit
(CGU) exceeds its recoverable amount.
Ordinary shares
Notes, contd.:
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognized as a deduction from equity, net of any tax effects.
Consolidated Financial Statements of Icelandair Group hf. 2021
53
Amounts are in USD thousand
45. Significant accounting policies, contd.:
n. Impairment, contd.:
o. Provisions
Overhaul commitments relating to aircraft under operating leases
p. Deferred income
Icelandair's frequent flyer program
q. Deferred tax asset
r. Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding, adjusted for treasury shares held, for the effects of all dilutive potential ordinary shares.
A deferred tax asset is recognized for unused tax losses and deductible temporary differences, to the extent that it
is probable that future taxable profits will be available against which they can be used. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realized.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, using tax rates enacted at the reporting date.
Sold unused tickets, fair value of unutilized frequent flyer points and other prepayments are presented as deferred
income in the statement of financial position.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to
the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been recognized.
The Group's corporate assets do not generate separate cash inflows and are utilised by more than one CGU.
Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of
the testing of the CGU to which the corporate asset is allocated.
Frequent flyer points earned or sold are accounted for as a liability on a fair value basis of the services that can be
purchased for the points. The points are recognized as revenue when they are utilized or when they expire.
Notes, contd.:
An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds its estimated
recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of
cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and
then to reduce the carrying amount of other assets in the unit (group of units) on a pro rata basis.
A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that
can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability.
With respect to the Group´s operating lease agreements, where the Group has a commitment to maintain the
aircraft, provision is made during the lease term for the obligation based on estimated future cost of major airframe
and certain engine maintenance checks by making appropriate charges to the profit or loss calculated by reference
to the number of hours or cycles operated.
Provisions are entered into the statement of financial position among non-current and current payables, as
applicable.
Consolidated Financial Statements of Icelandair Group hf. 2021
54
Amounts are in USD thousand
Notes, contd.:
45. Significant accounting policies, contd.:
s. Segment reporting
46. Standards issued but not yet effective
- IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts.
- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice statement 2)
- Definition of Accounting Estimates (Amendments to IAS 8)
- Reference to Conceptual Framework (Amendments to IFRS 3).
- Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
- Deferred tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
- COVID-19-Related Rent Concessions (Amendment to IFRS 16).
A number of new standards are effective for annual periods beginning after 1 January 2022 and earlier application
is permitted; however, the Group has not early adopted the new or amended standards in preparing these
consolidated financial statements.
- Onerous contracts – Cost of Fulfillinn a Contract (Amendments to IAS 37)
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16).
The following amended standards and interpretations are not expected to have a significant impact on the Group's
consolidated financial statements.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group's
other components. An operating segment's operating results are reviewed regularly by the CEO to make decisions
about resources to be allocated to the segment and assess its performance, and for which discrete financial
information is available. The major revenue-earning assets of the Group is the aircraft fleet, the majority of which is
registered in Iceland. Since the Group's aircraft fleet is employed flexibly across its route network, there is no
suitable basis of allocating such assets and related liabilities to geographical segments.
- Annual improvements to IFRS standards 2018-2020.
Inter-segment pricing is determined on an arm's length basis.
Segment results, reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly investments and related revenue, loans and
borrowings and related expenses, corporate assets and head office expenses, and income tax assets and liabilities.
Consolidated Financial Statements of Icelandair Group hf. 2021
55
Amounts are in USD thousand
The framework
Composition and activities of the Board of Directors and sub-committees
Health &
Board of Audit Nomination Strategy Safety
Directors Committee Committee Committee Committee Committee
Nr. of meetings in 2021 ........
27 4 4 8 4
3
Guðmundur Hafsteinsson ....
x (Chairm.) x (Chairm.)
Nina Jonsson ........................
x x x x
Svafa Grönfeldt ....................
x x x (Chairm.)
John F. Thomas ...................
x x x
x (Chairm.)
Matthew Evans .....................
x x
Ulfar Steindorsson ................
(half year) x
Alexander Edvardsson .........
x (Chairm.)
Hjorleifur Palsson .................
x (Chairm.)
Helga Arnadottir ...................
x
Internal controls
Audit Committee members:
Alexander Edvardsson, Chairman
John F. Thomas
Svafa Grönfeldt
Corporate Governance Statement
The Guidelines on Corporate Governance 6th edition issued on 21 July 2021 by the Iceland Chamber of
Commerce, Nasdaq Iceland and the Confederation of Icelandic Employers, along with the Company's Articles of
Association, and rules for Issuers of Securities listed on the Nasdaq Iceland, make up the framework for Icelandair
Group's Corporate Governance practices. The Company's Articles of Association are accessible on the Company's
website. The Guidelines on Corporate Governance are accessible on the website www.leidbeiningar.is and the
guidelines and the rules for Issuers are available on the website of Nasdaq Iceland.
The Company complies in all main respects to the rules mentioned above. No government organization has found
the Company to be in breach of any rule or regulation regarding corporate governance.
The oversight of compliance with the Company’s risk management policies and procedures resides with the Board´s
Audit Committee. Regular and ad hoc reviews of risk management controls and procedures are a part of the
Company's working procedures, the results of which are reported to the Audit Committee. The Committee oversees
the annual financial statements of the Company and the Group's consolidated financial statements including non-
financial information as well as the Company's annual report. The Committee is responsible for the evaluation of the
independence and the eligibility of both the Company's external auditor and auditing firm. The Committee shall
make suggestions to the Board of Directors regarding the selection of the Company's auditor. The Audit Committee
held four meetings in 2021.
As there are detailed rules of procedure in place for the Nomination Committee, a specific diversity policy has not
been implemented in relation to combination of the members of the Board of Directors. In its work, the Nomination
Committee considers the combination of the Board in terms of education, professional background, gender,
knowledge, experience and skills. The Company has set a goal that the gender ratio is never less than 40% of
either men or women in management positions.
Internal controls are applied at various levels in order to minimize the risk of fraud, abuse of funds and to achieve
operational, reporting and compliance objectives. The management establishes appropriate internal control, with
Board oversight, and holds individuals accountable for their responsibilities in the pursuit of objectives. Managing
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 aspires to implementing a centralized
enterprise risk platform that will be coordinated by Risk Management and overseen by the Risk Committee.
Icelandair has identified risks in the financial and accounting processes and selected and developed control
activities to mitigate those risks.
Remuneration
Consolidated Financial Statements of Icelandair Group hf. 2021
56
Values, Code of Ethics and Corporate Responsibility
The Company's values are:
Passion
Simplicity
Responsibility
Remuneration Committee
General Salary Development
The objective of the Remuneration Policy is to make employment with Icelandair Group and its subsidiaries an
attractive option for highly-skilled employees and thereby secure the Company's position as a leading competitor in
its field. Pursuant to said objective the Company must be able to offer competitive salaries and other variable forms
of payment, such as short-term cash incentives and equity-related long-term incentives.
Icelandair has a short-term incentive program in place for the Executive committee and senior managers 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 payouts based on this short-term incentive program are annual and capped at 25% of annual
base salary.
Any compensation to the management under the short term incentive program is based on the sole discretion of the
Remuneration Committee taking into account the factors above.
The international airline and aviation industry is a very regulated and highly unionized and Icelandair's operations
are no exception therefrom. This operational set-up means that typically about half of the workforce's terms and
conditions of employment – corrected for seasonality – is governed by collective wage agreements with the other
half operating under the law of supply and demand.
In terms of the local Icelandic general labor market industry pay developments vis-à-vis the ground- and office staff
is characterized by a complicated set up based on operational requirements of 24/7 opening functionality all year
around.
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.
Corporate Governance Statement, contd.:
The main tasks of the Remuneration Committee is 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 inquires about the results and outcomes of established human resource policies and
procedures on a regular basis.
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.
Consolidated Financial Statements of Icelandair Group hf. 2021
57
CEO Remuneration
Board of Directors' Remuneration
Remuneration Committee members:
Gudmundur Hafsteinsson, Chairman
Nina Jonsson
Nomination Committee
According to Icelandair Group's Remuneration Policy, the remuneration package for the President and CEO is
comprised of a fixed and variable salary component and needs to be competitive with other CEO's of publicly traded
companies in the Icelandic stock market as well as other airlines in the same market. In addition, the terms of
employment of the President and CEO shall take into account the financial and operating results of the Company
from time to time.
As stated above, the variable remuneration of the President and CEO is an integral part of the overall Executive
Committee remuneration policy which is linked to predetermined and quantifiable performance measures which are
reviewed and approved by the Remuneration Committee and the Board each fiscal year. The Remuneration
Committee typically reviews the President's and CEO's performance measures and makes a proposal for
appropriate changes to the Board of Directors to reflect a strategic or tactical directional change for the Group from
time to time.
According to Icelandair Group's Remuneration Policy, remuneration for the members of the Board of Directors and
members of the Board's sub-committees shall be based on the time spent by directors on the job and the
responsibilities associated with the role. When determining remuneration to the directors of the Board, consideration
shall be given to the remuneration paid to board directors of comparable companies. Members of the Board of
Directors are not remunerated in shares, purchase or put options, pre-emptive rights, warrants or any other
payments related to shares in the Company or the share price development in the Company.
Corporate Governance Statement, contd.:
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.
Icelandair Group operates a Nomination Committee which has an advisory role in the selection of members of the
Board of Directors. The Committee presents its proposal to the Annual General Meeting or other Shareholders'
meetings where election to the Board of Directors is on the agenda.
The Nomination Committee shall put forward its rationalized opinion concurrently to the notification of the AGM or as
soon as possible in conjunction with other shareholder meetings. The Committee's opinion shall be made available
to shareholders in the same way as other proposals to be submitted to the meeting. The Committee operates
according to rules of procedures which are set by the Committee itself and approved by the Board of Directors. The
Nomination Committee shall review its rules of procedure as needed and have any changes approved by the Board
of Directors annually.
The Nomination Committee consists of three members. The Shareholders' meeting elects two members, one man
and one woman, which are nominated by shareholders. Subsequently, the Board of Directors nominates one
member.
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
2021 it was agreed that the remuneration to the Board Members and Sub-Committee Members would be the same
as 2020.
Consolidated Financial Statements of Icelandair Group hf. 2021
58
Nomination Committee, contd.:
Nomination Committee members:
Hjorleifur Palsson, Chairman
Helga Arnadottir
Ulfar Steindorsson
Strategy Committee
Strategy Committee members:
Svafa Grönfeldt, Chairman
John F. Thomas
Nina Jonsson
Matthew Evans
Health & Safety Committee
Health & Safety Committee members:
John F. Thomas, Chairman
Nina Jonsson
The purpose of the Strategy Committee is to maintain oversight over the development and implementation of
Icelandair Group's strategy and the risks to it. In addition, the Committee serves as a forum for in-depth discussions
on Icelandair Group’s strategy and relevant considerations between the Board of Directors, the Executive
Committee, and functions responsible for strategy development and implementation. At the start of its term, the
Board of Directors selects up to four of its members to sit on the Strategy Committee.
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 eight meetings in 2021
and furthermore had meetings with Icelandair Group's management team and the largest shareholders.
Corporate Governance Statement, contd.:
The Strategy Committee was formed to foster closer involvement from the Board of Directors with Icelandair
Group's strategy development and implementation. As a whole, the Committee has extensive knowledge and
experience of airline strategy and strategic implementation in addition to a strong network within the industry. As a
result, it can provide valuable support to the Icelandair organization on strategic topics. The committee held four
meetings in 2021.
The purpose of the Health & Safety Committee is to maintain oversight over the development and implementation of
Icelandair Group's s Health & Safety policies and initiatives. In addition, the Committee serves as a forum for in-
depth discussions on Icelandair Group’s safety matters and relevant considerations to health and risk mitigation
strategies. At the start of its term, the Board of Directors selects up to two of its members to sit on the Health &
Safety Committee.
The Health & Safety Committee was formed to foster closer involvement from the Board of Directors with Icelandair
Group's Health & Safety policies. As a whole, the Committee has extensive knowledge and experience of airline
safety matters in addition to a strong background within the industry. As a result, it can provide valuable support to
the Icelandair organization on health & safety topics. The committee held three meetings in 2021.
Consolidated Financial Statements of Icelandair Group hf. 2021
59
The Board of Directors and Executive Committee
Board of Directors
At the Annual general meeting of Icelandair Group, held on 12 March 2021, the following were elected members of
the Board of Directors; Svafa Grönfeldt, Gudmundur Hafsteinsson, John F. Thomas, Nina Jonsson and Ulfar
Steindorsson. At a shareholder meeting on 23 July 2021, Matthew Evans was elected to the Board of Directors and
replaced Ulfar Steindorsson. Gudmundur Hafsteinsson took on the role of Chairman of the board.
Gudmundur Hafsteinsson, Chairman
Born in 1975. Member of the Board of Directors since 8 March 2018. Nationality is Icelandic and US.
Gudmundur Hafsteinsson is an investor and entrepreneur and previously led product development for Google
Assistant at Google. He joined Google in 2014 subsequent to the merger of Google and Emu, a chat-based virtual
assistant start-up he founded in 2012. Prior to the founding of Emu, he was VP Product at Siri, and stayed on after
the acquisition by Apple through the launch of Siri on iPhone 4S. Prior to Siri/Apple, Guðmundur was a Senior
Product Manager at Google, where he managed the initial launches of Google Maps for mobiles and Google Voice
Search. Guðmundur holds an MBA degree from MIT and a BSc. degree in Electrical and Computer Engineering
from the University of Iceland.
Gudmundur is independent of the company and has 8,555,555 shares.
Born in 1959. Member of the Board of Directors since 6 March 2018. Nationality is Australian and US.
John F. Thomas is owner and CEO of Waltzing Matilda Aviation LLC, a jet charter and aircraft management
company based in Boston that he founded in 2008. From 2016-2017, Mr. Thomas was Group Executive at Virgin
Australia Airlines where he led a financial turnaround as CEO of a AU$ 4.0bn (appr. USD 3bn) full service carrier
with over 6,000 employees and 125 aircraft, and from 1990-2016 he was with the global strategy consulting firm
L.E.K. Consulting, as a Managing Director/Senior Partner from 1993 and created and led the Global Aviation
Practice for over 16 years. Additionally he is a Senior Advisor to the management consultancy McKinsey & Co., the
aviation infrastructure firm Nieuport Aviation Infrastructure Partners GP and the tourism technology firm Plusgrade.
He also sits on the Board of SkyService Inc. the largest corporate aviation provider in Canada where he also Chairs
its Health and Safety committee. He continues to provide advisory work to the global airline industry. Mr. Thomas
holds an MBA degree from Macquarie University Graduate School of Business (which included 9 months at the
MBA program at INSEAD) and a Bachelor of Commerce degree from the University of New South Wales.
Corporate Governance Statement, contd.:
Nina Jonsson, Vice Chairman
Born in 1967. Member of the Board of Directors since 6 March 2018. Nationality is Icelandic and US.
Nina Jonsson is currently a Senior Advisor at aviation consultancy Plane View Partners and a board member at
aviation technology firm FLYHT. Between 2015 and 2017, she held the role of Senior Vice President Group Fleet at
Air France-KLM Group where she was responsible for group-wide fleet strategy, aircraft sourcing, leasing and sales.
Previously, Ms. Jonsson held a number of other executive positions within the aviation industry including Fleet
Management Officer at the Bristow Group (2012-15), Director Fleet Planning at United Airlines (2006-2011) and
Director Fleet Management at US Airways (2002-2005). Ms. Jonsson holds an MBA degree from Rensselaer
Polytechnic Institute and a B.Sc. degree in Air Transport Management from the University of New Haven.
Nina is independent of the company and has no shares.
John is independent of the company and has 2,941,900 shares.
John F. Thomas
Consolidated Financial Statements of Icelandair Group hf. 2021
60
Board of Directors, contd.:
Executive committee
Arni Hermannsson, Managing Director Loftleidir Icelandic
Elisabet Helgadottir, Chief Human Resources Officer
Gunnar Mar Sigurfinnsson, Managing Director Icelandair Cargo
Ivar S. Kristinsson, Chief Financial Officer
Jens Bjarnason, Chief Operating Officer
Tomas Ingason, Chief Revenue Officer
Born in 1965. Member of the Board of Directors since 8 March 2019. Nationality is Icelandic.
Svafa Grönfeldt is a Professor of Practice at the Massachusetts Institute of Technology. She is a founding member
of MIT's newest innovation accelerator DesignX focused on the design and development of technology and service-
based ventures created at MIT. Svafa is the co-founder of The MET fund, a Cambridge based seed investment
fund. She is a member of the Board of Directors of Össur since 2008 and Origo since 2019. Previous positions
include executive leadership positions at two global life science companies where she served as Chief
Organizational Development Officer of Alvogen and Deputy to the CEO of Actavis Group. Her executive career has
been focused on organizational design for high growth companies, strategy implementation, service process design
for operational improvement and performance tracking. She is a former President of Reykjavik University. Svafa
holds a Ph.D. from the London School of Economics where she examined the impact of customer-oriented
behaviours and service design on business outcomes.
Corporate Governance Statement, contd.:
Svafa is independent of the company and has 10,833,334 shares.
Matthew Evans
Matthew Evans joined Bain Capital Credit in 2009. He is a Managing Director in the Industry Research team based
in Bain Capital Credit’s New York office, where he oversees investments in the Aviation, Aerospace & Defense, and
Industrials sectors. Mr. Evans sits on a number of portfolio company boards and has also led the development of
several external partnerships and joint ventures within the aviation sector. Mr. Evans received a B.A. Phi Beta
Kappa, summa cum laude from Yale University.
Matthew is independent of the company. He sits on the Board representing Bain Capital Credit. He neither holds
shares nor share options in the Company.
Bogi Nils has served as President and CEO of Icelandair Group since December 2018 after having served as CFO
since 2008 and Interim President and CEO from August 2018. He was the CFO of the investment bank Askar
Capital from January 2007 and the CFO of the international seafood company Icelandic Group from 2004 to 2006.
Bogi Nils served as an Auditor and Partner at KPMG in Iceland during the years 1993-2004. He holds a Cand.
Oecon. Degree in Business from University of Iceland and is a Chartered Accountant.
Born in 1969. Nationality is Icelandic
Born in 1986. Member of the Board of Directors since 23 July 2021. Nationality is US.
Bogi has 20,708,334 shares but holds no share options and has no no interest links with the Company’s main
clients, competitors, or major shareholders.
The Company's Board of Directors exercises the supreme authority in the Company's affairs between shareholders'
meetings, and it is entrusted with the task of ensuring that the organisation and activities of the Company's
operation are at all times in correct and proper order.
The Board of Directors is instructed in the Company's Articles of Association to appoint a President and CEO for the
Company and decide the terms of his or her employment. The Board of Directors and President and CEO are
responsible for the management of the Company.
The executive committee held 76 meetings in 2021. Birna Osk Einarsdottir, CCO, Eva Soley Gudbjornsdottir, CFO
and Jens Thordarson, COO left the Company during the year. Further information about the Executive committee
members can be found on the Icelandair Group website.
Svafa Grönfeldt
Bogi Nils Bogason, President & CEO
Consolidated Financial Statements of Icelandair Group hf. 2021
61
Board of Directors, contd.:
The Board of Directors elects a Chairman and Deputy Chairman from its members, and otherwise allocates its
obligations among its members as needed. The Chairman calls Board meetings. A meeting must also be held if
requested by a member of the Board of Directors or the President and CEO. Meetings of the Board are valid if
attended by a majority of its members. However, important decisions shall not be taken unless all members of the
Board have had an opportunity to discuss the matter, if possible. The outcome of issues is decided by force of vote,
and in the event of an equality of votes, the issue is regarded as rejected. The President and CEO attends meetings
of the Board of Directors, even if he or she is not a member of the Board, and has the right to participate in
discussions and submit proposals unless otherwise decided by the Board in individual cases. A book of minutes is
kept of proceedings at meetings and must be signed by participants in the meeting. A Board member who disagrees
with a decision made by the Board of Directors is entitled to have his or her dissenting opinion entered in the book
of minutes. The same applies to the President and CEO. The Chairman is responsible for the Board's relations with
the shareholders and he shall inform the Board on the views of the shareholders.
On 12 September 2007 the Board of Directors approved Rules on Working Procedures for the Board which were
amended on 10 August 2012 and 9 February 2018. The Rules on Working Procedures are accessible to the Board
of Directors and the management through the Board's intranet, Admincontrol. In accordance with article 14 of the
Rules on Working Procedures the Board of Directors must annually evaluate its work, size, composition and
practices, and must also evaluate the performance of the CEO and others responsible for the day-to-day
management of the Company and its development. The annual performance assessment is intended to improve
working methods and increase the efficiency of the Board. The assessment entails e.g. evaluation of the strengths
and weaknesses of the Board's work and practices and takes into consideration the work components which the
Board believes may be improved.
The Board of Directors elects the members of the Remuneration Committee and the Audit Committee. These sub-
committees adhere to the Rules on Working Procedures. The Nomination Committee has its own Rules of
Procedures which are approved by the Board. The Board of Directors convened 27 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 2021 with the
exeption of Matthew Evans, who entered the Board representing the largest shareholder in July 2021.
The Company's Board of Directors must at all times ensure that there is adequate supervision of the Company's
accounts and the safeguarding of its assets and shall adopt working procedures in compliance with the Companies
Act. Only the Board of Directors may assign powers of procuration on behalf of the Company. The signatures of the
majority of the members of the Board are required to bind the Company. The President and CEO has charge of the
day-to-day operation of the Company and is required in his work to observe the policy and instructions set out by the
Company's Board of Directors. Day-to-day operation does not include measures which are unusual or extraordinary.
Such measures can only be taken by the President and CEO with the specific authorization of the Board of
Directors, unless it is impossible to await the decision of the Board without seriously disadvantaging the operation of
the Company. In such instances, the President and CEO is required to consult with the Chairman of the Board, if
possible, after which the Board of Directors must immediately be notified of the measures. The President and CEO
shall ensure that the accounts and finances of the Company conform to law and accepted practices and that all
assets belonging to the Company are securely safeguarded. The President and CEO is required to provide the
members of the Board of Directors and Company auditors with any information pertaining to the operation of the
Company which they may request, as required by law.
The Company's Board of Directors consists of five members elected at the Annual General Meeting for a term of
one year. Those who intend to stand for election to the Board of Directors must inform the Board in writing of their
intention at least seven days before the AGM, or extraordinary shareholders’ meeting at which elections are
scheduled. Only those who have formally informed the Board of their candidacy are eligible.
Corporate Governance Statement, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
62
Business Model
Icelandair Group’s approach to sustainability
Non-Financial Reporting
The heart of the Icelandair Group’s business model is its international route network and the unique location of
Iceland which serves as a connecting hub between Europe and North America and is the foundation for the
Company’s value creation for its shareholders and other stakeholders. In addition, the Company runs both cargo
and aircraft leasing and consulting services that complement and further strengthen its core network operations.
During 2021, Icelandair Group continued to further align its operations to its core business, aviation, and the
importance of Iceland as its hub and home. The vision of bringing “the spirit of Iceland to the world” and the mission
of offering “smooth and enjoyable journeys to, from, via and within Iceland – our hub and home”, are supported by
five strategic initiatives. These are: Sustaining a “culture of teamwork and high performance”, becoming “the most
customer-focused airline in our markets”, achieving “excellence in all operations” as well as achieving „commercial
excellence“, in addition to operating an “agile and sustainable network.”
As the leading airline in Iceland and an important employer, Icelandair Group takes its responsibility towards all its
stakeholders seriously. Defined key stakeholders are employees, customers, shareholders, suppliers and partners,
the tourism industry, various NGOs and the Icelandic authorities.
The Company has approached groups of stakeholders for their views on which sustainability matters relating to
Icelandair Group’s decisions and activities are material for them.
Based on this stakeholder dialogue, and in line with macroeconomic trends and industry-specific developments, as
well as the Company’s corporate strategy and approach to sustainability, the following matters have been defined as
the most material when it comes to sustainability in Icelandair Group’s operations: climate impact, other
environmental impact, passenger safety and well-being, employee health and safety, employee satisfaction and
development, gender equality and diversity, contribution to the Icelandic economy, responsible procurement,
business ethics and anti-corruption, as well as governance.
Icelandair Group’s sustainability strategy is based on the United Nations’ Sustainable Development Goals (SDGs)
and four goals have been chosen as key focus areas. These are climate action, gender equality, responsible
consumption and production and decent work and economic growth. The Company issues an annual report where
its sustainability information is presented in accordance with the Nasdaq's ESG Reporting Guide– Environment,
Society and Governance. The Company previously worked towards implementing the Global Reporting Initiative
(GRI) standards but has postponed the work for now and will be re-evaluated for next year. Specific targets have
been set for the Company’s key sustainability focus areas and action plans developed. Following is further
information on the responsible actions Icelandair Group has taken during the pandemic, as well as an overview of
the key areas of sustainability according the ESG Reporting Guide.
Consolidated Financial Statements of Icelandair Group hf. 2021
63
The effects of Covid-19 on operations in 2021
2021 2020 2019
Turnover rates
7% 69% 12%
FTEs year end
2393 1531 4256
Environment SDG#13
Icelandair Group's Environmental Policy
Emissions
• 40% reduction of CO2 emissions from ground vehicles by 2025 compared to 2015
In 2021 the Company continued to be impacted by the global pandemic, like the airline and tourism industries as a
whole. From spring 2021, the number of flights began to increase and the fleet that had been in storage gradually
returned to service. The Company kept the focus on meeting demand for cargo transport, protecting important
export from Iceland and importing necessities to the country. In the year 2021 the Company also took on special
projects all around the world through its leasing operations. The total emissions from aviation in 2021 were 484,955
tCO2e, a reduction of 64% compared to 2019. The emission from the route network now includes domestic and
regional routes.
• 50% reduction of CO2 emissions per OTK from flight operations by 2030 compared to 2019
Sustainable business growth requires the Company to address its environmental impact, both globally and locally.
As part of this effort, Icelandair Group participates in the work of various environmental working groups, such as with
the International Air Transport Association (IATA) and Airlines for Europe (A4E).
Furthermore, Icelandair Group participates in the incentive project of Responsible Tourism in Iceland along with over
300 companies, with the purpose of maintaining Iceland’s status as an optimal future destination for tourists by
supporting sustainability for future generations.
Icelandair Group's Environmental Policy was updated in 2021, further information can be found on Icelandair
Group's website.
Icelandair Group adheres to the industry goals IATA has set to address the global challenge of climate change,
aiming to achieve net zero emissions by 2050, and monitors fuel efficiency and CO2 emissions from flight and
ground operations, accordingly. In addition, the Company has set specific targets for reducing emissions by 2030.
The aviation and tourism industries started to recover in 2021 although they continued to be affected by the COVID-
19 pandemic. Icelandair focused both on short- and long-term measures during the year. This involved gradually
ramping up its services, using its flexibility to adapt to the changes in its markets and according to the developments
of the pandemic. At the same time, the Company took actions to streamline and strengthen its operations for the
long term. This was supported by maintaining flexibility within the workforce and during the period from April to
August, the number of employees increased by 1,000. Health and safety of employees and customers has been at
the forefront ever since the start of the pandemic, with extensive measures taken across the Company and on board
its aircraft. Good service to customers has also remained a top priority, providing flexibility and meeting the
increased need for information. The development of effective technical solutions, to shorten response times,
continued during 2021. Turnover rates and FTEs year end for 2019 include Icelandair Hotels.
Icelandair Group is an environmentally-conscious company and recognises the impact that air travel has on the
environment. The Company is dedicated to minimising its environmental impact by addressing its responsibilities to
reduce emissions, conserve natural resources, as well as optimise the use of sustainable energy and recyclable
materials. Icelandair is certified to the highest level of the IEnvA environmental assessment program from IATA,
which requires demonstration of ongoing environmental performance improvements.
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
64
Emissions, contd.:
2021 2020
Total CO2 emissions 484,955 347,372
kgCO2 emissions per OTK 0.93290 1.29688
Waste
2021 2020
Amount of waste
688 tons 535 tons
Sorted waste
40% 43%
General waste 60% 57%
Carbon Compensation
Society SDG#8
Employees
Non-Financial Reporting, contd.:
Icelandair Group‘s employees are one of the Company‘s greatest strategic assets. All employees are part of the
same team and the Company‘s core values, passion, simplicity and responsibility, are guiding the Company to
maintain a strong and motivating company culture.
Along with the ramp up of Icelandair’s operations during the year the number of employees increased by 1000.
Icelandair Group 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". As an example, Icelandair supports Icelandic music through Iceland Airwaves and Icelandic
Music Experiments. Icelandair has also been a proud sponsor of the main sports federations in Iceland. To support
the development of tourism in Iceland, the Company is a founding member of the Icelandic Tourism Fund, which
invests in innovation in tourism. The Company also partners with Iceland's main volunteer search-and-rescue team
on safe travel as well as flight safety and emergency response. Furthermore, together with contributions from its
passengers, Icelandair supports the Children Special Travel Fund which helps families with children with long-term
illnesses and children who live in difficult circumstances.
Icelandair Group's goal is to minimise waste and increase recycling in all operations where restrictions by laws and
regulations do not restrict waste separation.
The Company has, in co-operation with its waste service provider, changed the frequency of the waste collection to
eliminate unnecessary trips with empty waste containers
The Company's Boeing 737 MAX aircraft were gradually returned to service in 2021. They are of a new generation
of more environmentally friendly aircraft and therefore an important part of reducing carbon emissions in the
operation. Fuel efficiency is measured in fuel burn per operational tonne kilometre (OTK) which takes into
consideration the weight of the aircraft, passengers and cargo. The implementation of the MAX aircraft resulted in
better fuel efficiency numbers in 2021 than in 2019 despite a lower load factor in the passenger network of 65.2% for
the full year 2021 compared to 82% load factor in 2019.
Icelandair has offered passengers the option to offset the carbon footprint of their air travel since September 2019.
Passenger participation in this program in 2021 has contributed to the planting of around 5000 trees during 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.
As the airline that brings the majority of tourists to Iceland and as an important employer in the country, a successful
ramp-up of its operations in 2021 is vital for Icelandic tourism, the local economy and society at large. Icelandair
Group contributes directly to the Icelandic economy in the form of salary, 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.
Consolidated Financial Statements of Icelandair Group hf. 2021
65
Employees, contd.:
Health and safety
Equal Rights
2021 2020
Overal gender ratio, men / women
55% / 45% 52% / 48%
Extensive measures were taken during the continued pandemic in 2021 to ensure the health and safety of Icelandair
Group employees. Special preventive arrangements were made to ensure the safety of all employees. The
Company continued to make necessary changes to work schedules to ensure the safety of employees and to
ensure that the Company complied with all rules and regulations, with regards to restrictions on gatherings of
people, number limits, proximity limits and mask use.
Non-Financial Reporting, contd.:
One of Icelandair Group's sustainability focus areas is gender equality. The Company emphasizes equality, diversity
and non-discrimination. This focus, which ensures that all employees are provided with equal opportunities and
equal rights, is an integral part of the Company's Equal Rights Policy and Equal Rights Plan.
The Company promotes equality by providing equal job opportunities and fairness for employees and job applicants.
Rich emphasis is on building diverse teams and any discrimination is not tolerated. Diversity in our leadership team
is specially important.
The Company implemented a new policy regarding remote working called 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 always 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.
Icelandair was awarded a World Class Workplace, number one globally, by Effectory, a leading European provider
of HR solutions. This award is awarded to high performing organizations once a year that show excellence in
employership and is based solely on the opinions of employees. Following a company-wide survey, the results are
compared to Effectory's reliable benchmarks. The results demonstrate that Icelandair Group's employees are very
satisfied and engaged.
The past year the Company continued emphasizing on strong communication and information flow from leadership
and necessary support in remote working. The Company is proud of how its team of people has adapted to new
working conditions and constant changes regarding Covid-19 restrictions.
General health and well-being of Icelandair Group's employees is a priority where the Company is committed to
providing an attractive and exciting place to work where people can thrive at their best. The Company has in place a
comprehensive Health & Attendance Policy under which – among other things – Icelandair Group offers various
health-related programs and initiatives to further its employee's health and wellbeing. Promoting good health among
employees is high on the Company's agenda and initiatives have been launched with the overall aim of improving
the well-being of all employees. Further to this the Company has a service agreement with Health Protection Service
(Heilsuvernd) on confidential medical services ensuring employee's access to health care.
4256
4715
1531
2621
2393
2084
FTEs at period end No. of avg. FTEs
2019 2020 2021
Consolidated Financial Statements of Icelandair Group hf. 2021
66
Equal Rights, contd.:
Equal pay policy
Responsible Business SDG#12
Human Rights
Icelandair Group respects human rights, as set out in the UN Universal Declaration of Human Rights and requires
all its employees to treat others with trust, dignity, respect, fairness and equity. Icelandair has implemented an e-
learning module on the Company's Code of Conduct which is mandatory for all new employees from 2020.
In 2021 the Company continued to work to centralise and improve procurement functions across all its operations as
responsible procurement has been identified as a material issue for Icelandair Group. In 2020 the Company
implemented a Code of Conduct for suppliers and set targets with regards to responsible procurement and to ensure
a repsonsible supply chain. By end of 2020 all critical domestic suppliers have received Icelandair Group's Supplier
Code of Conduct and as of 2021 it is an integral part of most new and renewed contracts.
In 2021 a risk screening model to evaluate suppliers was developed and actions to act on the assessment were
established. The current procurement processes involve the risk screening model to be one of the decision factors
when choosing a supplier before a contract with a supplier is signed. The goal was that all significant suppliers had
gone through the risk screening model by end of 2021 but due to the operating circumstances caused by the
pandemic that was not possible but the Company will continue to work towards that in 2022.
Importance is placed on ensuring that employees respect the equal rights policy and conduct themselves within its
spirit. All discrimination, such as on the basis of gender, age, origin, religion, operating field, opinions or position in
other respects, is not permitted.
Icelandair Group's policy and its related actions against bullying, and sexual and gender-related harassment and
violence include clear procedures and preventive measures. Information on the policy can be accessed on the
Company’s intranet, together with a plan of action that details the options available to employees who feel
victimised. All managers received appropriate training and open lectures were held for all employees to attend.
All cabin crew members have been trained in relation to human trafficking awareness and preventive actions. The
Company respects fair labour practices and contractors, sub-contractors or work agencies working for Icelandair
Group shall ensure that wages, wage-related obligations and safety in the workplace all comply with Icelandair
Group's standards.
According to the Act on Equal Status and Rights Irrespective of Gender no. 150/2020 all companies and institutions
that have 25 or more employees must make an Equality Plan or integrate equality matters into their personnel
policies. The Company updated their Equality plan in 2021. The Equality Plan contains goals that are defined and a
project execution plan where responsibilities and key steps are stated. The equality plan consists of more than 20
actions.
Non-Financial Reporting, contd.:
Icelandair Group implemented an equal pay policy in 2018. The purpose of the Equal Pay Policy is to ensure gender
pay equality in the Company through the implementation of an Equal Pay System. Icelandair Group commits to
ensure that equal wages are paid for jobs of equal value, irrespective of gender. Enforcement of the Policy and
ensuring full observance of gender equality in decisions on wages is the responsibility of management. The
Executive Board of Icelandair Group will annually establish equal pay objectives based on measurements derived
from a pay analysis. Two companies within Icelandair Group, Icelandair and Icelandair Cargo had been certified by a
third party and received Equal pay certification in 2021. Icelandair and Icelandair Cargo were audited in 2021 and
will be recertified 2022-2025.
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
positions, 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%
• Increase the number of male cabin crew positions by 25%
• Increase the number of female aircraft maintenance technicians by promoting the job and education to girls
Consolidated Financial Statements of Icelandair Group hf. 2021
67
Anti-corruption and bribery policy
ESG Accounting
Environmental Metrics
E1 GhG Emissions
Units 2021 2020
Total amount, in CO2 equivalents, for Scope 1 tCO2e 486,064 355,779
Total amount, in CO2 equivalents, for Scope 2 tCO2e 213 214
Total amount, in CO2 equivalents, for Scope 3 tCO2e 68 174
E2 Emissions Intensity
Total GhG emission per output scaling factor tCO2e per USDk 0.83 0.82
tCO2e per FTEs 233 143
tCO2e per
passenger
0.33 0.47
E3 Energy Usage
Total amount of energy directly consumed (fossil fuels) kWh 1,973,201,386 1,474,663,115
Total amount of energy indirectly consumed (electricity
and heat)
kWh 22,904,111 24,223,530
E4 Energy Intensity
Total direct energy usage per output scaling factor kWh per USDk 3,413 3,457
kWh per FTEs 957,824 603,660
kWh per
passenger
1,366 1,965
E5 Energy Mix
Non renewable energy (fossil fuels aret he primary
energy source)
% 99% 98%
Renewable energy % 1% 2%
E6 Water Usage
Total amount of water consumed m3 346,556 330,923
Total amount of water reclaimed m3 - -
E7 Environmental Operations
Does your company follow a formal Environmental Policy Yes/No Yes Yes
Does your company follow specific waste, water, energy,
and/or recycling policies
Yes/No Yes (fossil fuel) Yes
Does your company use a recognized energy
management system
Yes/No Yes (fossil fuel) Yes (fossil fuel)*
E8 Climate Oversight / Board
Does your Board of Directors oversee and/or manage
climate-related risks
Yes/No No No
* Restated
Icelandair Group conducts all its business in an honest and ethical manner and the integrity of each and every
member of staff serves to maintain the good reputation and trust of the Company. All persons, representing or
performing services for or on behalf of Icelandair Group must comply with applicable anti-bribery and anti-corruption
legislation and policies, and Icelandair Group’s Code of Conduct.
Icelandair Group's anti-corruption and bribery policy applies to the entire Icelandair Group workforce at all levels and
grades (whether permanent, fixed-term or temporary), and all operations, subsidiaries and affiliates in all countries
that the company operates in. The policy can be found on the Company website.
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
68
Environmental Metrics, contd.:
E9 Climate Oversight / Management
Units 2021 2020
Does your Senior Management Team oversee and/or
manage climate-related risks
Yes/No No No
E10 Climate Risk Mitigation
Total amount invested, annually, in climate-related
infrastructure, resilience, and product development
- -
Social data metrics
S1 CEO Pay ratio
CEO total compensation to median FTE total
compensation
ratio 6.4 4.58
Does your company report this metric in regulatory filings
Yes/No Yes Yes
S2 Gender Pay Ratio
Gender pay analysis (basic earnings) %
women 0,4%
lower than men
women 0,93%
lower than men
Gender pay analysis (regular earnings) %
men 3% higher
than women
men 2,8% higher
then women
S3 Employee Turnover
Year-over-year change for full-time employees % 7% 69%
S4 Gender Diversity
Total enterprise headcount held by men and women women/men% 55/45 48/52
Entry- and mid- level positions held by men and women women/men% - -
Senior- and executive-level positions held by men and
women (only executive committee)
women/men% 25/75 38/62
S5 Temporary Worker Ratio
Total enterprise headcount held by part-time employees women/men% - -
Total enterprise headcount held by contractors and/or
consultants
women/men% - -
S6 Non-Discrimination
Does your company follow a sexual harassment and/or
non-discrimination policy
Yes/No Yes Yes
S7 Injury Rate
Frequency of injury events relative to total workforce time - -
S8 Global Health & Safety
Does your company follow an occupational health and/or
global health & safety policy
Yes/No Yes Yes
S9 Child & Forced Labour
Does your company follow a child and/or forced labour
policy
Yes/No Part of CoC Part of CoC
If yes, does your child and/or forced labor policy also
cover suppliers and vendors
Yes/No Part of SCoC Part of SCoC
S10 Human Rights
Does your company follow a human rights policy Yes/No Yes Yes
If yes, does your human rights policy also cover suppliers
and vendors
Yes/No Yes Yes
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
69
Governance Metrics
G1 Board Diversity
Units 2021 2020
Total board seats occupied by women (as compared to
men)
% 40% 40%
Committee chairs occupied by women (as compared to
men)
% 25% 25%
G2 Board Independence
Does company prohibit CEO from serving as board chair Yes/No Yes Yes
Total board seats occupied by independants % 80% 100%
G3 Incentivized Pay
Are executives formally incentivized to perform on
sustainability
Yes/No No No
G4 Collective Bargaining
Total enterprise headcount covered by collective
bargaining agreements
% 97% 97%
G5 Supplier Code of Conduct
Are your vendors or suppliers required to follow a Code
of Conduct
Yes/No Yes Yes
G6 Ethics & Anti-Corruption
Does your company follow an Ethics and/or Anti-
Corruption policy
Yes/No Yes Yes
If yes, what percentage of your workforce has formally
certified its compliance with the policy
%
100% of new
employees
100% of new
employees
G7 Data Privacy
Does your company follow a Data Privacy policy Yes/No Yes Yes
Has your company taken steps to comply with GDPR
rules
Yes/No Yes Yes
G8 ESG Reporting
Does your company publish a sustainability report Yes/No Yes Yes
Is sustainability data included in your regulatory filings Yes/No Yes Yes
G9 Disclosure Practices
Does your company provide sustainability data to
sustainability reporting frameworks ?
Yes/No Yes No
Does your company focus on specific UN Sustainable
Development Goals (SDGs)
Yes/No Yes Yes
Does your company set targets and report progress on
the UN SDGs
Yes/No Yes Yes
G10 External Assurance
Are your sustainability disclosures assured or validated
by a third party
Yes/No No No
More Information
Further information about Icelandair Group's Corporate Social Responsibility and non-financial aspects of the
business is published in the Company's Annual Report and on the Company's website.
Non-Financial Reporting, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
70
Overview
- macroeconomic and competition risk - safety and security risk
- regulatory risk - environmental and sustainability risk
- technical risk - labor market risk
- reputational risk
Macroeconomic and competition risk
Safety and security risk
The Group considers the following to be its main operational risks:
Operational Risk
Icelandair Group operates an international passenger airline and route network as well as ground handling,
maintenance, cargo, and charter operations. The Company’s business, and demand for its services are therefore
highly susceptible to general macroeconomic conditions in all its markets. A slowing economy, whether globally or
locally, might decrease consumer spending e.g., in the event of lower employment levels, higher interest and/or
inflation rates, diminished access to credit, or exchange rates fluctuations. All this can adversely affect the
Company's operations and financial standing.
Uncertain economic and, as a result financial market conditions, can affect jet fuel prices, interest rates and
currency exchange rates. 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.
The ongoing Covid-19 pandemic has and will continue to have meaningful negative effects on the global economy
not least the aviation sector. Although 2021 saw some recovery from the unprecedentedly low 2020 operational
levels the recovery was slower than initially anticipated. Moreover, the recovery has not proved linear due to new
variants of the virus causing renewed fear and consequently tightened travel and social restrictions in most of the
Company’s markets.
Competition amongst airlines is high which heavily influences pricing decisions. In general, the airline industry is
susceptible to fare discounting due to the low marginal costs of adding passengers to otherwise empty seats. New
market entrants, especially low-cost carriers, mergers, acquisitions, consolidations, new partnerships, and
transparency of pricing in the air travel market are examples of factors influencing competition. Unless the Group
can offer a competitive product, it stands the risk of not meeting its revenue and profit targets.
The Group monitors trends and demand in its key markets closely through regular surveys and discussions with
trade partners. The Company further imposes strict cost control in all its operations to stay competitive while
safeguarding its ability to offer attractive value propositions to its customers.
The loss or grounding of an aircraft, such as due to an accident, design defects or operational malfunction would
cause significant losses for the Group and impact its reputation and customer confidence. Such incidents and
wreckages can be the result of various factors ranging from human error or misconduct to adverse or extreme
weather to deferred maintenance. Should this risk materialize it would bring about both direct costs such as repair or
replacement costs and passenger claims as well as indirect costs such as the potentially poorer perception of the
safety of the Company’s chosen fleet.
Demand for airline travel is moreover highly vulnerable to events outside the Company's control such as natural
disasters, terrorist attacks, armed conflicts and pandemics. Such events could individually or collectively cause
disruptions to flight schedules that in extreme cases can lead to prolonged suspension of certain routes and closure
of airports as well as the future operational environment and regulatory burden of airlines.
The acute nature of these events limits the Company's ability to mitigate the associated risks. Nonetheless, the
Company has in previous crisis demonstrated a high level of flexibility and resilience that has allowed the Company
to withstand short to medium-term demand shocks. The Company has in place, and regularly reviews, safety
measures, emergency response protocols and working procedures that prioritize the safety and security of its
passengers and staff.
Consolidated Financial Statements of Icelandair Group hf. 2021
71
Regulatory risk
Environmental and sustainability risk
Technical risk
Operational Risk, contd.:
Climate change poses significant financial risks to the aviation business. 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 achive those targets. Action plans relate to
Sustainable aviation fuels, operational improvements, 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.
The legal and regulatory landscape of airlines is ever evolving, as indeed newly demonstrated by the plethora of
governmental restrictions, protective measures and sanitation procedures introduced in relation to the spread of
Covid-19, which by necessity were implemented practically overnight. Another evolving and growing issue for
airlines is government regulations aimed at environmental protection such as taxation on jet fuel, mandates on
implementing SAF et.al. to reach goals of reducing carbon dioxide emissions. Moreover, the industry is subject to
various local restrictions around airports such as to reduce noise and pollution. This can concern opening hours of
airports, availability of slots and the usage of airspace. Congestion and environmental restrictions can for example
lead to delays or increase the complexity of departure and approach maneuvers which may act to reduce
productivity and increase costs.
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.
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.
Consolidated Financial Statements of Icelandair Group hf. 2021
72
Technical risk, contd.:
Labor market risk
Reputational risk
Serious or repeated interruptions to services, or a perception that the Company is not conducting itself in a socially
or environmentally responsible manner, can result in a decline in demand for the Company's products and services
thus hurting revenue generation. It further brings on the risk of tarnishing the Company's reputation and/or its
individual brand names that might take a long time to repair.
The airline and tourism industries are inherently labor-intensive industries. Most of the Company's employees are
unionized; and represented by several unions, each of which has its own collective agreement on salaries and
benefits with the Group's companies. Each union's contract comes up for renegotiation every few years, bringing
with it a risk that the parties will not reach an immediate agreement, resulting in a jeopardy of production disruptions
through strikes.
The Company seeks to maintain good relations with its union representatives through active dialogue and regular
meetings to foster a culture of mutual respect and understanding.
The Company collects and retains personal information received from customers and is therefore subject to the
EU's General Data Protection Regulation (EU) 2016/679 (“GDPR”) aimed at protecting personal data held by
businesses and other organizations. These requirements include but are not limited to implementing certain policies
and processes, developing an effective internal data protection management system and appointing a data
protection officer. If found non-compliant to the GDPR regulators can, determined by the level of the infringement,
levy fines of up to 4% of a company’s annual worldwide turnover. The Executive Committee considers the Company
to be GDPR compliant.
Icelandair Group makes every effort to minimize the risk of disruption with the aim of securing the Company's
business continuity. Among measures that the Company has in place are documented procedures regarding access
to information and other systems, the back-up and storing of data, remote access via virtual private network clients
and the disposal of confidential or otherwise sensitive material. Virus protection for all computers and servers are
centrally managed, internet connectivity is secured by firewalls and web security gateways, and all services open for
external usage are secured by an application firewall. The Company offers regular seminars to its employees to
guard against fraud and phishing e-mail attempts.
computer faults, accidents, labor unrest, weather conditions, delays by service providers, congestion, and
unexpected maintenance. Additionally, increased focus on ESG factors requires the Company to address its
environmental and social impact, both globally and locally.
Operational Risk, contd.:
Consolidated Financial Statements of Icelandair Group hf. 2021
73
Unaudited summary of the Group's operating results by quarters:
Q1 Q2 Q3 Q4 Total
Year 2021
Operating income
35,556 55,008 206,829 156,475 453,868
11,009 7,804 9,601 14,262 42,676
10,763 14,712 41,094 21,800 88,369
57,328 77,524 257,524 192,537
584,913
Operating expenses
35,290)(
52,503)(
60,395)( 67,297)( 215,485)(
21,395)( 39,027)( 90,173)( 84,857)( 235,452)(
18,695)( 22,934)( 66,531)( 48,619)( 156,779)(
75,380)(
114,464)(
217,099)( 200,773)( 607,716)(
18,052)( 36,940)( 40,425 8,236)( 22,803)(
28,158)(
25,292)( 32,246)(
27,440)( 113,136)(
46,210)( 62,232)( 8,179 35,676)( 135,939)(
7,512 4,519)(
14,229 16,577)( 645
0 0 4,653 4,430 9,083
1,464)(
1,181)( 1,144)( 59)( 3,848)(
40,162)( 67,932)( 25,917 47,882)( 130,059)(
10,062 12,993 1,615)( 3,823 25,263
30,100)( 54,939)( 24,302 44,059)(
104,796)(
6,393
9,663 4,683)( 1,998 13,371
23,707)( 45,276)( 19,619 42,061)( 91,425)(
45,294)( 65,025 25,193
5,688 50,612
10,951)( 44,855 26,714)(
2,560)( 4,630
7,879)( 8,264)( 64,291
15,334)( 32,814
(Loss) profit ........................................................
Other comprehensive profit (loss) .....................
Total comprehensive (loss) income ...................
Net cash from (used in) operating activities ......
Net cash from financing activities ......................
Net cash (used in) from investing activities .......
Income tax .........................................................
Depreciation, impairment ...................................
Operating (loss) profit (EBIT) .........................
Net finance .........................................................
Share of loss of associates ................................
(Loss) profit before income tax (EBT) ...........
Gain on sale of associate/subsidiary .................
Quarterly statements (unaudited)
Transport revenue .............................................
Other operating expenses .................................
Operating (loss) profit bef. depr. (EBITDA) ...
Aircraft and aircrew lease ..................................
Other operating revenue ....................................
Salaries and salary related expenses ................
Aviation expenses ..............................................
Consolidated Financial Statements of Icelandair Group hf. 2021
74
Amounts are in USD thousand
Traffic
APM
ASK ..............................................
RASK ............................................
CASK ............................................
RPK ..............................................
PAX - Passenger ..........................
OTP ..............................................
Passenger flights ..........................
LF .................................................
BH .................................................
FTK ...............................................
Passenger mix:
To ..............................................
From ..........................................
VIA ............................................
Within ........................................
Capital sturcture
APM
Total cash and
marketable securities ….......
Liquidity .........................................
Net interest-bearing debt ..............
Net lease liabilities ........................
Current ratio .................................
Equity ratio ....................................
Equity ratio without warrants ........
Intrinsic value of share capital ......
Other
APM
Effective fuel price ........................
CAPEX, gross ..............................
CAPEX, net ..................................
FTE ...............................................
Revenue passenger kilometers, the number of revenue passengers carried on
scheduled flights multiplied by the number of kilometers those seats were flown
Alternative performance measures (APMs)
Definitions
Available seat kilometers, which is the total number of seats available on scheduled
flights multiplied by the number of kilometers these seats were flown
Total revenues on a given flight divided by the ASK on that same flight
Total operational cost per available seat kilometer is calculated by dividing total
operational cost on a given flight by availble seat kilometers (ASK) on that flight
The tourist market with Iceland as the destination
Each passenger is counted by the number of flight coupons his journey requires. A
passenger flying KEF-CPH is counted as one passenger, a passenger flying NYC-
KEF-CPH is counted as two passengers
Arrival on time performance, a measure of flights arriving within 15 minutes of
scheduled arrival time. OTP is calculated by diving the number of arrivals that arrive
within 15 minutes of scheduled arrival time with the total number of arrivals
Flight flown by an airline for the purpose of carrying passengers, freight and mail
according to a published timetable for which it receives commercial remuneration
Passenger load factor, calculated by dividing RPK by ASK
Block hours - the time computed from the moment the blocks are removed from the
wheels of the aircraft until they are replaced at the next point of landing
The number of tonnes of freight carried, obtained by counting each tonne of freight on
a particular flight (with one flight number)
Indicates the book value of each share and is calculated by dividing total equity with
share capital
The Icelandic domestic market where Iceland is the point of departure
The interantional market between Europe and North America
The domestic operation within Iceland
Definitions
Cash and cash equivalents (including cash from assets held for sale) and marketable
securities
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
As warrants are reversable over retained earnings (if used or not) we adjust the equity
ratio for warrants. This is calculated by dividing total equity and warrants with total
equity and liabilities less warrants
Average full time employee equivalent
Definitions
Cost of jet fuel and surcharges, including hedging results, but excluding de-icing and
emissions trading cost (pr. tonn)
Capital expenditure of operating assets, intangible assets and deferred cost
Capital expenditure of operating assets, intangible assets and deferred cost less
proceeds from sale of operating assets
Consolidated Financial Statements of Icelandair Group hf. 2021 75
2021 2020
Traffic YTD YTD
5,963,027
3,190,603
6.7 7.5
9.2 15.9
3,894,555 2,144,126
1,461,446 890,905
84.0% 85.0%
7,661 4,730
65.3% 67.2%
13,492 14,180
142,713 114,956
Passenger mix
687,113 446,054
207,841 156,604
341,071 161,981
225,421 126,266
2021 2020
Capital structure 31.12
31.12
262,965 159,370
434,965 331,370
314,965 211,370
5,179 )( 104,218
238,137 133,894
0.83 0.70
0.19 0.23
0.20 0.25
0.82 1.09
2021 2020
Other YTD
YTD
727 892
184,077 49,159
12,959 )( 23,433
2,087 2,621
CAPEX, net ...........................................................................................................
FTE .......................................................................................................................
Intrinsic value of share capital ...............................................................................
Via ......................................................................................................................
Total cash and marketable securities (USD '000) .................................................
Within .................................................................................................................
Effective fuel price (USD pr. Metric tonn) ..............................................................
CAPEX, gross .......................................................................................................
LF ..........................................................................................................................
BH .........................................................................................................................
FTK (´000) .............................................................................................................
To .......................................................................................................................
From ...................................................................................................................
Alternative performance measures (APMs), contd.:
Net lease liabilites (USD ´000) ..............................................................................
Current ratio ..........................................................................................................
Equity ratio ............................................................................................................
Equity ratio without warrants .................................................................................
ASK (´000) ............................................................................................................
CASK (USD cent) ..................................................................................................
RASK (USD cent) ..................................................................................................
RPK (´000) ............................................................................................................
PAX .......................................................................................................................
OTP .......................................................................................................................
Passenger flights ...................................................................................................
Liquidity (USD ´000) ..............................................................................................
Liquidity (USD ´000) without government guaranteed credit facility .....................
Net interest-bearing debt (USD ´000) ...................................................................
Consolidated Financial Statements of Icelandair Group hf. 2021 76
+ Icelandairgroup.is