Our way to sustainable, profitable growth


Our way to sustainable, profitable growth

The year 2019 has been a year of transformation at Icelandair. We have been hard at work at implementing our new strategy while simultaneously strengthening the company’s operations. We are becoming a more mature, efficient and effective organization with a clear plan into the 2020s. We are thus establishing a strong platform for profitable and sustainable growth going forward.

Magnús Þorlákur Lúðviksson

Strategy and Business Development Director, CEO Office

Operations in the year 2019

These financial statements comprise the consolidated financial statements of Icelandair Group hf. (the "Company") and its subsidiaries together referred to as the "Group". The Group operates in the airline and tourism sectors with Iceland as a cornerstone of an international route network. For the year 2019, loss amounted to USD 57.8 million and total comprehensive loss amounted to USD 34.8 million. Total equity at year end 2019 amounted to USD 482.5 million, including share capital of USD 44.2 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 during the year.

Suspension of the MAX aircraft

On 12 March 2019, the Boeing 737 MAX aircrafts were suspended which has caused adverse effects on Icelandair‘s operations. The suspension of the MAX aircraft has resulted in unprecedented impact on the operations of Icelandair in 2019. The Company’s MAX aircraft were intended to cover 27% of Icelandair’s passenger capacity in 2019. The key focus of management has been on minimizing the impact of the suspension on the company, the passengers and the Icelandic tourism industry by adding leased aircraft to the fleet during the summer and by placing emphasis on ensuring seating capacity to and from Iceland, with the result that the number of Icelandair’s passengers travelling to Iceland increased by 25% from 2018. Despite these mitigating measures the situation has had negative impact on revenue in the passenger network, increased expenses and restricted the utilization of the fleet and crew. Two partial compensation agreements were reached with Boeing in connection with the company’s loss due to the suspension. This was recognized partially as increased passenger revenue and partially as decreased aircraft lease expense in aviation expenses. Details on these agreements with Boeing are confidential. The estimated effect quantified to date on Icelandair Group's EBIT net the partial compensations is around USD 100 million in 2019.

There is still uncertainity when the MAX aircraft suspension will be lifted. The financial impact will however be considerably less in the year 2020 than in 2019 as Icelandair has been able to organize its operations in 2020 with this possible scenario in mind. The Company is in ongoing discussions with Boeing regarding further compensation for the financial loss resulting from the suspension

The Company is still expecting 10 MAX aircraft to be delivered. The initial delivery schedule was that 3 of these MAX aircraft were to be delivered in 2019, 5 MAX aircraft in 2020 and 2 MAX aircraft in 2021. The Company expects the 3 MAX aircraft that were to be delivered in 2019 to be delivered before the end of 2020. However, the Company realizes that further delays may be expected. The suspension has already had significant adverse effects on the Company’s operation and profitability and will continue to do so while the suspension remains. Therefore, the development of the situation with the MAX aircraft is closely monitored by the Company and rolling 12-18 months contingency plans are maintained to ensure that all mitigating actions are made during this time period.

In 2019 many operational improvements materialized but due to the negative impact resulting from the MAX suspension the full year operation resulted in net loss. The Company’s key goal in 2020 is to return to profitability by building on the operational improvements and mitigate the operational risk of the potential continued MAX suspension. With USD 301.6 million in liquidity and USD 482.5 million in equity, the company is well equipped to address challenges and seize opportunities and thereby generate long term profitable growth.

Decision to place greater focus on the Group's key competencies

Following a strategic decision in 2018 to place greater focus on the Group's key competencies, i.e. the airline industry, the Company signed a share purchase agreement (the “Agreement”) on 13 July 2019, with Berjaya Property Ireland Limited (“Berjaya”), a subsidiary of Berjaya Land Berhad, whereby Berjaya acquires a majority share in Icelandair Hotels and related real estate (the “Hotels”). The completion of the Transaction was set for year-end 2019. In December 2019, the Company granted Berjaya a two-month extension due to capital controls in Malaysia. Further information can be found in note 7 of the consolidated financial statement.

Shareholders meeting

At a shareholders’ meeting held 24 April 2019 a proposal was approved authorising the Board of Directors to increase Company’s share capital in the nominal value of ISK 625,000,000 with the sale of shares to PAR Capital Management Inc. and related companies. PAR Capital is an international investment fund focusing on long-term investments, mostly in travel services and airlines. The increase in share capital will strengthen the Company’s financial standing still further and enable it to develop its fleet of aircraft and thereby support profitable long-term growth of its route network. In addition, the Company will be better placed to seize any opportunities that may arise in the current operating environment.

The Board of Directors proposes no dividend payment to shareholders in 2020 for the year 2019.


Share capital and Articles of Association

The nominal value of the Company's issued share capital amounted to ISK 5.4 billion at year-end. The share capital is divided into shares of ISK 1, each with equal rights within a single class of shares listed on the Icelandic Stock Exchange (Nasdaq Iceland). Companies can acquire and hold up to 10% of the nominal value of treasury shares according to the Icelandic Company's Act. 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 Laws requiring companies with over 50 employees to ensure that the Board has representation from both genders and each gender is at least 40% when there are more than three Board members. The Board members are elected at the annual general meeting for a term of one year. Those persons willing to stand for election must give formal notice thereof to the Board of Directors 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 valid if it is approved by at least 2/3 of votes cast and is approved by shareholders controlling at least 2/3 of the share capital represented at the shareholders' meeting.

The number of shareholders at year end 2019 was 3,171 an increase of 155 during the year. At year end 2019 the 10 largest shareholders were:

Name Shares in ISK thousand Shares in %
PAR Investment Partners L.P. 745,250 13.71
Lífeyrissjóður verslunarmanna 642,361 11.81
Stefnir - ÍS 15 og ÍS 5 573,938 10.55
Gildi - lífeyrissjóður 393,761 7.24
Birta lífeyrissjóðurinn 381,562 7.02
Lífeyrissjóður starfsmanna ríkisins A deild og B deild 438,815 8.07
Frjálsi lífeyrissjóðurinn 154,480 2.84
Landsbréf - Úrvalsbréf 134,523 2.47
Brú - Lífeyrissjóður starfsmanna sveitarfélaga 96,136 1.77
Sólvöllur ehf. 91,214 1.68
3,652,040 67.16
Other shareholders 1,785,621 32.84
5,437,661 100.00

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 a high level of business ethics.

The framework for Corporate Governance practices within the Group consists of 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.


Non-Financial Reporting

According to Icelandic Financial Statements Act companies should disclose, in their management report, relevant and useful information on their policies, main risks and outcomes relating to at least environmental matters, social and employee aspects, respect for human rights, anticorruption and bribery issues in addition to a short description of the Company's business model. The Company's policies and outcome of these matters are further discussed in the NonFinancial Reporting in the consolidated financial statements.


Statement by the Board of Directors and the CEO

The consolidated financial statements for the year ended 31 December 2019 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 2019, its assets, liabilities and consolidated financial position as at 31 December 2019 and its consolidated cash flows for the year 2019.

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 2019 and confirm them by means of their signatures. The Board of Directors and the CEO recommend that the consolidated financial statements will be approved at the annual general meeting of Icelandair Group hf.

Reykjavík, 6 February 2020.

Board of Directors:

  • Úlfar Steindórsson, Chairman of the Board
  • Guðmundur Hafsteinsson
  • Heiðrún Jónsdóttir
  • Ómar Benediktsson
  • Svafa Grönfeldt


  • Bogi Nils Bogason