The year 2021 was a year of recovery where the total capacity in the passenger network increased by 87% compared to previous year. The ramp-up of the network started in June and the capacity was up to 50% of pre-covid capacity with 68% load factor in the third quarter. The capacity in the fourth quarter was up to 65% of pre-covid levels and the load factor reached 70%. There were some roadblocks on the way during the ramp up with the Delta variant in August and September and the Omicron negatively impacting load factor and results in December. The ramp-up was however very successful with almost 70% load factor in the second half of the year.

The total number of passengers on international and domestic flights was around 1.5 million in 2021 compared to 891 thousand in 2020, an increase of 64%. Icelandair divides its route network into four markets – to, from, via and within Iceland. The market “to” Iceland was the largest market and accounted for 47% of total passengers. As a leading airline in Iceland the recovery of Icelandair’s flight operation is vital for the Icelandic tourism industry and economy. The “via” market which was almost nonexistent majority of last year due to the travel restrictions between North America and Europe accounted for 23% of total passengers for the year. Passenger on the “from” market accounted for 14% of total passengers and domestic passengers “within” for 15%.

Carried freight measured in freight ton kilometers (FTK) increased by 24% compared to previous year and exceeded 2019 FTK’s by 7%. Demand was strong and carried freight increased between years in all markets with the largest increase, 51%, on the transit market.

The leasing operation continued to be significantly impacted by COVID-19 in 2021 and sold block hours on charter flights decreased between years by 5%.

After having focused on preserving our infrastructure, knowledge and maintaining financial strength throughout the pandemic, Icelandair was in a strong position for an efficient ramp-up as soon as passenger demand started to increase in 2021. The first half of the year progressed slowly; and then came the turnaround in the second half with improvements in terms of operating income and profitability. The Company turned a profit from regular operations in the third quarter for the first time in two years.

Net loss for the year amounted to USD 104.8 million compared to a loss of USD 376.2 million in 2020. EBIT was negative of USD 135.9 million compared to negative EBIT of USD 363.0 million in 2020. Cargo operations were strong with volumes and revenues exceeding pre-Covid levels, especially on the transit market. Although the leasing operation was challenging during the year, new opportunities were seized on this front that contributed to the Company´s revenue generation.

Transport revenue totaled USD 453.9 million, up by 71% between years. Transport revenue counts for 78% of the Company’s total operating income. Of this figure, passenger revenues amounted to USD 333.8 million and increased by 88% compared to last year. Icelandair divides its route network into four markets – to, from, via and within Iceland. The increase in passenger revenue was greatest in the “to” market with Iceland as a destination, but passenger revenue also increased significantly in the three other markets with increased demand and capacity. Cargo revenue increased by 31% compared to 2020 and amounted to USD 87.4 million. Cargo volume increased by 24% between years, driven by increased demand in all markets especially in the transit market.

Revenue from aircraft and aircrew lease decreased from USD 64.7 million in 2020 to USD 42.7 million in 2021. Included in 2020 figures is revenue from an extensive cargo charter project from China to Europe and the US. Other revenue totaled USD 88.4 million in 2021down from USD 103.3 million from the preceding year. Included in other revenue 2020 is compensation from The Boeing Company due to loss incurred from the MAX suspension which account for the largest share. The decrease in sale in hotels and airports is primarily due to the divestment of Icelandair Hotels end of Q1 2020. Revenue from tourism increased significantly between years, amounted to USD 42.0 million compared to USD 18.1 million in 2020.

Operating expenses excluding depreciation amounted to USD 607.7 million and increased by USD 87.6 million from 2020. The main drivers are a larger flight schedule and higher fuel price. Icelandair went from serving only four destinations with 10 weekly departures from Iceland early in the year to 200 departures a week to 34 destinations during the summer peak. The capacity measured in available seat kilometers increased by 87% between years and Icelandair had reached 65% of the 2019 capacity at the end of the year.

Salaries and salary related expenses amounted to 215.5 million, increasing from USD 207.9 million. Repayments of notice period payments from the Icelandic Government, in accordance with Icelandic act no. 50/2020, due to those actions amounted to USD 28.3 million in 2020. The number of full-time employees at year-end was 2,393 in 2021 compared to 1,531 in 2020. Fuel expenses amounted to USD 119.9 million, up by USD 43.4 million, which represents a 57% year-on-year increase. The difference between years is explained by the ramp-up of the operation and 45% increase in fuel price. The average price in 2021 was USD 665/ton, as compared to USD 458/ton in 2020. Other operating expenses amounted to USD 272.3 million compared to USD 235.7 million in 2020. Main deviation between years is directly related to the ramp-up of operations especially in the second half of the year.

Net finance income totaled USD 0.6 million in 2021, as compared to net finance cost of USD 69.9 million in 2020. The finance income amounted to USD 13.2 million up from USD 2.7 million in 2020. Thereof net currency exchange gain amounted to USD 8.9 million. Finance cost totaled USD 20.8 million down by USD 8.8 million between years. Net currency exchange loss of USD 6.1 million was included in finance cost in 2020. Fair value changes were positive of USD 8.2 million in 2021 compared to negative changes of fair value in 2020 of USD 43.0 million.