Icelandair Group hf. - Company Announcement

Icelandair Group hf- Great increase in Icelandair passenger numbers in 2010 and load factors the best in history

  --  1,5 million passengers in 2010, 14,4% increase on 2009
  --  78,4% load factor in 2010, the highest in Icelandair history
  --  17% growth planned for 2011
  --  Booking to Iceland in Q1 2011 up by 10% from last year

Icelandair load factor in scheduled operations was the best in the history of
the company, or 78,4%, which is 3,4 ppt higher than the year before when it was
75%. Load factor has improved in recent years due to increased booking control
and management. 

Icelandair increased capacity by 14% in 2010 and passenger numbers were up
14.4% or about 200 thousand passengers, from 1,3 million in 2009 up to 1,5
million in 2010 

Icelandair splits its passengers into three market segments, i.e. travelers to
Iceland, travelers from Iceland and travelers between Europe and North-America
via the hub in Iceland. 2010 saw quite a change in the share of these three
groups. Travelers to and from Iceland were approximately the same number as the
year before, but passengers flying across the North-Atlantic grew by 51% and
were almost 40% of the total number. 

“These are positive numbers and confirm the great work of our fantastic staff
last year. The volcanic eruption challenged our flexibility and performance but
we rose to the challenge and the Inspired by Iceland campaign played a great
part”, says Birkir Hólm Guðnason, Icelandair CEO. 

This year Icelandair will add 17% to its capacity over last year and thus
likely transporting around 250 thousand additional passengers, bringing the
total passenger number over 1,7 million, the highest in the company's history. 

“We see opportunities in the market between North-America and Europe, and have
implemented a growth strategy to go after these opportunities. Demand is strong
while capacity is not growing as fast as we have seen in similar situations at
earlier times. This is caused by the production delays at Airbus and Boeing ,
but also because the traffic increase in Asia is pulling aircraft capacity away
from our part in the world. This will change, and our 2012 growth will probably
be less than this year”, says Guðnason. 

Icelandair has 13 Boeing 757 aircraft planned for the passenger operations this
summer. A final decision on adding the 14th aircraft will be made by the end of
January on the basis of booking status, but also in view of proposed government
plans of imposing higher taxes and charges. 

“The booking status now is promising, but it is still early days. We see 10%
increase in bookings to Iceland in Q1. Icelandair is running advertizing
campaigns in all key markets abroad and our tactics will depend on the
development in the next few weeks”, says Birkir Hólm Guðnason. 

Attached is the Icelandair Group Traffic Data for December 2010

Attachments:

Traffic Data - December2010.pdf