Icelandair Group hf. - Financial Statement Release

Icelandair Group - good performance in 2010 and financial restructuring completed

Performance in 2010

  -- Total turnover was ISK 88.0 billion, increasing by 10% between years
  -- EBITDA was ISK 12.6 billion, as compared to ISK 8.1 billion at the same
     time last year
  -- EBIT was ISK 6.3 billion, as compared to ISK 1.5 billion last year.
     Depreciation amounted to ISK 6.3 billion, down by ISK 0.3 billion from the
     preceding year
  -- Financial costs amounted to ISK 3.5 billion, as compared to ISK 6.0 billion
     in the preceding year
  -- Profit after tax was ISK 4.6 billion, while the loss after tax amounted to
     ISK 10.7 billion in 2009
  -- Cash and cash equivalents and marketable securities at the end of 2010
     amounted to ISK 13 billion, as compared to ISK 1.9 billion in the preceding
     year
  -- Total assets amounted to ISK 84.2 billion and the equity ratio was 33.7% at
     the end of 2010, as compared to ISK 89.1 billion and 16.4% respectively at
     the end of 2009



Fourth quarter performance in 2010

  -- Total turnover was ISK 18.8 billion, increasing by 3% between years
  -- EBITDA was ISK 1.1 billion, as compared to a negative result of ISK 0.2
     million in the corresponding period of last year
  -- EBIT was negative by ISK 1.0 billion, as compared to a negative result of
     ISK 2.9 billion at the same time last year. Depreciation and amortisation
     amounted to ISK 2.1 billion, down by ISK 0.6 billion from the preceding
     year
  -- Gains on sales of assets in connection with the restructuring of the
     Company's balance sheet amounted to ISK 4.2 billion
  -- Financial costs amounted to ISK 0.6 billion, as compared to ISK 2.9 billion
     in the preceding year
  -- Profit after tax was ISK 1.4 billion, as compared to a loss of ISK 9.6
     billion for the corresponding period of last year



Björgólfur Jóhannsson, President and CEO:

“One of the most eventful years in the history of the Company is now behind us.
Firstly, the Company returned the best operating results in its history, with
EBITDA at ISK 12.6 billion, ISK 4.4 billion over the 2009 figure. This
performance is much better than anticipated in our original budget and also
exceeds our last profit warning, which projected an EBITDA of ISK 11.5 billion.
The improved performance is primarily a result of the significant increase in
Icelandair's passenger revenues. The number of passengers in the North Atlantic
market grew substantially, accounting for 38% of the company's total number of
passengers, as compared to 28% in 2009. Also, the improved load factor and good
revenue control increased passenger revenues. On top of that, it is satisfying
to be able to report that most of our subsidiaries showed good results in 2010. 

Secondly, the Company and its staff showed unprecedented resilience and nerve
following the Eyjafjallajökull eruption last April. At the same time that
virtually all airline communications in Europe were paralysed for a week or so,
we managed to maintain our schedule by transferring our hub to Glasgow and
flying to Akureyri instead of Keflavik. Even though the volcanic eruption
proved expensive for the Company in the short term, it is my belief that the
promotional value of the eruption for Iceland will, over the long term, result
in an increase in the number of passengers visiting Iceland. 

Finally, the financial restructuring of the Company was brought to a conclusion
at the end of the year.   I am very pleased with the results of that work. The
restructuring was divided into three principal factors: an issue of new shares,
a conversion of the debts to the company's largest creditors into shares, and a
reduction in interest-bearing debt resulting from a sale of assets. This
resulted in an increased equity ratio from 16.4% at the end of 2009 to 33.7% at
the end of 2010. 

We have simplified the Company's strategy, and the focus will now be on the
Company's core operation, which is based on Icelandair's route network and
related operations. We do not expect the results of 2011 to match those of
2010. Higher fuel prices will cut into profits, and in addition we anticipate
reductions in passenger yields. Also, it is likely that the expected rises in
taxes and charges will have a negative impact on demand, and thereby the
operations of the Group. Wage contracts with all Group employees have expired.
Such circumstances certainly entail significant uncertainty, but I am hopeful
that the conclusion of negotiations will be acceptable for all parties.
Competition will harden in the course of the year, and it is important for us
to enter the increased competition with agreements in place with all the
Group's employees. Nevertheless, I see no reason for anything but optimism in
the coming months. The long-term prospects of the Group are favourable, our
business model has, in our opinion, proven its worth and following the
restructuring the Company's balance sheet is sound, and our liquidity position
is good.” 



For further information, please contact:

Björgólfur Jóhannsson President and CEO Icelandair Group    Tel: +354 896 1455
Bogi Nils Bogason        CFO Icelandair Group                           Tel:
+354 665 8801

Attachments:

Icelandair Group_Financial statement 31.12 2010.pdf

Icelandair Group_Pressrelease_Q4 og 2010.pdf