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Endorsement and Statement by the Board of Directors and the CEO

Icelandair Group hf. is an Icelandic aviation company with decades' long history of operating in the international airline and tourism sectors. In 2018, the Company resolved to concentrate 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.

The Consolidated Financial Statements of Icelandair Group hf. for the year 2020 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. All amounts are stated in thousands of USD.

Operations in the year 2020

According to the Consolidated Income Statement and other Comprehensive Income, loss for the year 2020 amounted to USD 376.2 million. Total comprehensive loss for the year was USD 408.8 million. Equity at year-end amounted to USD 232.8 million, including share capital in the amount of USD 213.0 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.

Effects of Covid-19

The year 2020 was heavily marked by the COVID-19 pandemic whose impact continues to be felt in all realms of society, not least in the aviation and travel industries. This is clearly illustrated by the over 80% reduction in international passenger numbers and ASK year-on-year. Despite the relatively swift development of a vaccine uncertainty in the Company’s operating environment is expected to remain high in the short to medium term while vaccinations are being administered. In the longer term, it further remains unclear when global travel might resume its pre-COVID levels. Following some easing and tightening in the latter half of 2020, travel restrictions and/or strict border controls have been reinstated in nearly all of Scandinavia and continental Europe with a travel ban still in place to and from the US, one of the Group‘s most important geographical segments.

The Group’s business plan and schedule have been revised, and continue to be reiterated, in line with developments in each market. The current assumption is that a modest ramp-up will commence in Q2 but that it will take until 2024 for demand to reach pre-COVID levels. Management assumes that capacity will rationalize in all key markets as airlines will stress preservation of cash and liquidity. Post recent crisis in the 21st century, Icelandair has enjoyed solid operational performance in the years to follow. Iceland’s attraction as a clean, safe and sparsely populated destination is also assumed to be strong in the post-COVID world.

To respond to the situation brought on by the pandemic, the Group took immediate and extensive measures to get through an extended period of minimum operations. These included severely cutting its flight schedule, drastically reducing the number of employees and changes to its organizational structure. At the same time, the Group acted swiftly and seized opportunities arising from the circumstances, such as in the cargo and leasing operations. The Group's overall strategy during the low production period aims at securing the continuity of necessary core operations and safeguarding the flexibility needed for swift ramp-up when markets recover.

Financial restructuring

The Group underwent financial restructuring which was completed in September with the execution of a successful share offering whereby the Company raised ISK 23,000 million (approx. USD 169 million) in new equity. The offering was a key component in effectuating a series of deferral agreements that the Group had previously reached with various stakeholders that include lenders, lessors, acquirers, the Boeing Company and other vendors. A successful share offering was a condition for the Company's access to a government guaranteed credit facility that was approved by the Icelandic Parliament on 4 September 2020. The credit facility, arranged by two local commercial banks, is in the amount of USD 120 million, 90% of which is guaranteed by the government.

Additionally, investors that were allotted new shares in the offering were also issued warrants to buy additional shares in the Company at certain dates in the future. The warrants, amounting to 25% of the nominal value of new shares sold in the offering, were issued free of charge. If exercised in full, the warrants can raise up to approx. USD 42 million in additional equity for the Company over their lifetime which expires in the latter half of 2022. The warrants have been listed on the Nasdaq Iceland Main Market and can be traded freely independent of the Company’s shares until their respective exercise periods.

Agreements with lenders included renegotiated financial covenants. According to the restructured terms the equity ratio will be the Group's primary financial covenant in the 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 financial covenants will resume to take effect.

In addition to its market based financial restructuring efforts the Group has received various government offered COVID-19 relief options for companies. Most meaningful were the unilateral reduction of the employment ratio of hundreds of employees which made them eligible for special part-time unemployment benefits, funded by the government, to make up for the drop in salary income, and the lay-off of over 2,000 valued employees that entitled the Group to subsidies of salary costs during those employees' contractual notice periods.

Agreement to maintain certain flights

At the outset of the 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 in cases where these were not commercially viable. The agreements have since been extended several times and are still in effect with regards to flights to the East Coast of the USA.


MAX return to service

After being grounded for over 20 months the Boeing 737 MAX aircraft was re-certified by the FAA in November and by EASA in January 2021. The Company assumes to reintroduce the aircraft into its fleet in Q1 2021 following all necessary updates and inspections. As part of its restructuring the Group had prior to re-certification reached an agreement with Boeing regarding additional compensation for financial losses resulting from the grounding of the MAX in early 2019. In addition to financial compensation the agreement includes permanent cancellation of four out of the ten MAX aircraft that the Group is yet to take delivery of. The six aircraft still on order are expected to be delivered during the period Q2 2021 to Q1 2022. Once full delivery is completed the Group will have twelve MAX aircraft in its fleet.

Sale of Icelandair Hotels

The Company finalized the sale of a 75% equity share in Icelandair Hotels to Berjaya Property Ireland Limited in Q2 2020. The Company will retain its 25% share in the hotel company for a period of at least three years. The total cash consideration for the equity was USD 45.3 million.

The Board of Directors proposes no dividend payment to shareholders in 2021 for the year 2020.

Share capital and Articles of Association

The nominal value of the Company's issued share capital amounted to ISK 28.4 billion at year-end. The share capital consist of shares of ISK 1, 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's Board of Directors comprises five members, two women and three men. The gender ratio is thus in accordance with Icelandic laws requiring companies with over 50 employees to ensure that the Board has representation from both genders and that each gender comprises at least 40% of the Board Members when Board Members surpass three. The Board Members are elected at the Annual General Meeting each for a term of one year.

Those persons willing to stand for election must give formal notice thereof to the Board of Directors and Icelandair Group’s Nomination Committee at least seven days before the Annual General Meeting.

The Company's Articles of Association may only be amended at a legitimate shareholders' meeting, provided that amendments and their main aspects are clearly stated in the invitation to the meeting. A resolution will only be passed if it is approved by at least 2/3 of votes cast as well as by shareholders controlling at least 2/3 of the share capital represented at the respective shareholders' meeting.

The number of shareholders at year-end 2020 was 13,508 an increase of 10,337 during the year. At year end 2020 the 10 largest shareholders were:

Name Shares in ISK thousand Shares in %
Gildi - lífeyrissjóður 1,803,761 6.34
Lífeyrissjóður starfsmanna ríkisins A-deild, B-deild og S-deild 1,500,000 5.27
Stefnir - ÍS 15, ÍS 5 og Samval 1,388,591 4.88
Brú - Lífeyrissjóður starfsmanna sveitarfélaga 1,356,205 4.77
Arion Banki hf. 912,637 3.21
Íslandsbanki hf. 784,869 2.76
Bóksal ehf. 662,514 2.33
Lífeyrissjóður verslunarmanna 642,361 2.26
Sólvöllur ehf. 554,704 1.95
Almenni lífeyrissjóðurinn 544,402 1.91
10,150,045 35.67
Other shareholders 18,287,616 64.31
28,437,661 100.00

Further information on matters related to share capital is disclosed in note 28 in the Consolidated Financial Statements. Additional information on shareholders is provided on the Company's website

Corporate Governance

The Group's management is of the opinion that practicing good Corporate Governance is vital for the existence of the Group and in the best interests of shareholders, Group companies, employees and other stakeholders and will in the long run produce satisfactory returns on shareholders' investment. Corporate Governance exercised within Icelandair Group hf. ensures sound and effective control of the Company´s affairs and highly ethical business practices.

The 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.

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.

Information on matters related to financial risk management is disclosed in note 36 in the Consolidated Financial Statements. Information regarding operational risk management is disclosed in Operational Risk Appendix in the Consolidated Financial Statements.


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 corporate responsibilities according to the ESG Reporting Guide – Environment, Society and Governance - issued by Nasdaq.

Material issues regarding the environment that were monitored during the year were climate impacts and other environmental impacts. Material issues regarding society that were reported were passenger safety and wellbeing as well as other impacts on society. Regarding governance, material issues that were reported included employee health and safety, gender diversity, responsible procurement, business ethics and anti-corruption.

The Company's policies and outcome of these matters are further discussed in the Non-financial Reporting that form an appendix to the Consolidated Financial Statements.

Statement by the Board of Directors and the CEO

The consolidated financial statements for the year ended 31 December 2020 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 2020, its assets, liabilities and consolidated financial position as at 31 December 2020 and its consolidated cash flows for the year 2020.

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.

The Board of Directors and the CEO have today discussed the consolidated financial statements of Icelandair Group hf. for the year 2020 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.

Board of Directors:

  • Úlfar Steindórsson, Chairman of the Board
  • Svafa Grönfeldt
  • Guðmundur Hafsteinsson
  • John F. Thomas
  • Nina Jonsson


  • Bogi Nils Bogason