Icelandair: Challenging Conditions

• Total revenue up by 9% between years, to USD 399.0 million compared to USD 367.3 million last year.
• EBITDA USD 14.7 million, as compared to USD 40.6 million last year.
• Decline in results between years due to downward pressure on air fares, poorer passenger load factor and one-off cost of disruptions in flight schedule.
• Equity ratio 32% at the end of June.
• Net interest-bearing debt USD 92.5 million.
• Cash and short-term investments USD 250.8 million.
• EBITDA guidance USD 120-140 million.

Björgólfur Jóhannsson, President and CEO:

"We have been working on extensive changes in Icelandair Group, which will result in a still stronger enterprise for the future. Everything has been under review, including the Company's structure, strategy, route network, fleet composition, fare categories and sectors in which the Company intends to operate in the future. We have begun a process of divesting the Company of its hotel operations, a new connection bank in Iceland is under consideration alongside the current connection bank, and new Boeing MAX aircraft joined the fleet earlier this year. In addition, extensive changes have been made in the Company's structure. The objective is to sharpen still further the focus in our sales and marketing, on the one hand, and services to customers on the other hand, thereby strengthening the Company.

The results for the second quarter fell short of anticipations. Our forecasts of rising average air fares in the second half of the year have not materialised. This is in spite of the significant rise in fuel prices. Part of the reason is the competition in our markets, which has rarely been as fierce as it is now. We continue to anticipate that the rising prices of resources will in due course result in higher average air fares.

The current conditions in air carrier operations are indeed challenging. Nevertheless, Icelandair Group is well positioned to overcome these challenges and take advantage of any opportunities that these conditions may bring."