The year 2020 was heavily marked by the tremendous impact of the global COVID-19 pandemic on people‘s lives, businesses and society as a whole. Global aviation is one of the industries that has been hit the hardest, as closed borders and prolonged travel restrictions since March and throughout the year have made it almost impossible for airlines to continue normal operations. At the same time the importance of air transport has become even more evident during the pandemic. Airlines have played an essential role during the past months in ensuring vital connectivity and important transport of both people and cargo around the world.

As an island nation in the middle of the North Atlantic, Icelanders depend heavily on efficient air transport. It is an essential part of how we connect with the world and maintain a good quality of life. Icelandair, as the lead carrier in Iceland, has taken its responsibility very seriously during the pandemic to maintain vital air routes open for passengers and ensure important cargo transport.

Of course, the COVID-19 crisis has had a significant impact on the operations, people and the financial results of Icelandair Group. The management team and other employees of the Company have shown remarkable resilience since the pandemic hit, and stood by the Company through every challenge with tremendous effort and dedication. Swift actions were taken to adjust the Company to minimum operations and at the same time an extensive financial restructuring completed, which included a successful share offering. Through the resourcefulness of Icelandair Group‘s employees, the Company was able to seize various opportunities, for example in its cargo and aircraft leasing operations, securing new important revenue streams during this challenging time.

Having a broad shareholders base has never been as important and was demonstrated by the strong participation in the share offering in September 2020. Around ten thousand new shareholders joined our shareholders group during the year, increasing the number of shareholders from around three thousand to over 14 thousand in 2020. We are grateful for the trust and the support from our shareholders, new investors and the Icelandic public. As in the past two years, the Icelandair Group’s Board of Directors proposes that no dividends will be paid out to shareholders for the year 2020.

Icelandair’s route network is the heart of Icelandair Group’s business model, and Iceland is our hub and home. Our hub-and-spoke network is built upon the country's unique location in the North Atlantic and serves the markets to, from and within Iceland, but also provides extensive possibilities of connections between Europe and North America via Iceland. Historically, Icelandair Group’s business model has resulted in healthy profitability and our focus of steadily expanding our route network over the years has been key to enhancing Iceland’s position as an international connecting hub. Furthermore, Icelandair Group has been at the forefront in transforming Iceland into a year-round tourist destination through direct involvement and significant investments in key tourism services and infrastructure in Iceland. Through its efforts, Icelandair Group has contributed significantly to Iceland’s economy and society over the years with a direct contribution of around ISK 300 billion to the Icelandic economy in 2011-2019. Not to mention the extensive indirect economic impact of the Company’s operations.

Icelandair Group has over the decades built valuable strategic infrastructure that supports its business model and will prove essential in the rebound following the pandemic. First of all, the highly capable and loyal group of employees is one of the Company’s greatest strategic assets. In addition, the Company has a valuable ecosystem of subsidiaries supporting its core business and providing value for the Group, such as cargo operations, aircraft leasing and consulting services and domestic flight operations. Icelandair holds valuable slots at strategic airports which are instrumental for its hub business model. Furthermore, Icelandair has built a strong, international brand through its 83-year aviation history, recognized by customers for its value-for-money service. Extensive and effective distribution channels have been developed over a long time and valuable strategic partnership agreements with other airlines enable passengers to extend their journey above the Icelandair network. Finally, Icelandair Group’s operations are underpinned by its flexible fleet of varying sizes, capabilities and ownership cost. Preserving its key infrastructure during the hiatus mode has been crucial to be prepared to seize the opportunities that will arise as soon as air travel resumes.

We are proud of our direct contribution to the development of the tourism industry in Iceland over the past decade. We have, however, been in the process since 2019 to divest our tourism operations and shift our focus to our core business, aviation. In 2019 we divested our majority share in Icelandair Hotels and are now in the process of closing the sale of the remaining 25% share in the hotel company. In addition, we have announced that we have started the sales process of Iceland Travel, our tour operator and destination management company. As mentioned before, aviation is one of the main foundations for progress and quality of life in Iceland and we believe that by focusing on what we do best is how Icelandair Group will maximize its value creation going forward.

During its over 80-year history, the Company has experienced various crises related to the forces of nature, economic downturns and other challenges that have affected our operations. However, the spread of the COVID-19 pandemic is by far the most serious crisis that we and the airline industry as a whole have experienced in our times.

We believe that post-COVID there will be opportunities for Iceland as a tourist destination and as an important hub for cross-Atlantic connections. Following important short- and long-term actions during the year, Icelandair Group is in a good position to seize these opportunities. With a focused strategy, flexible route network that allows us to quickly adapt to changes in our markets, solid foundations, sound financial position and the vast experience and dedication of our employees, Icelandair Group has what it takes to be able to drive long-term sustainable value for our shareholders and at the same time continue to benefit the Icelandic society, economy and our valuable customers for the years to come.