Annual and Sustainability Report 2022
Chairman and CEO's address

Chairman and CEO’s address


Guðmundur Hafsteinsson



Bogi Nils Bogason


The year 2022 was characterized by a great turnaround of our business. Strong revenue generation with record passenger revenue in the second half of the year and significant EBIT improvement shows that our business model has proven its worth yet again. We are back on track, stronger than ever and in 2023 we will operate the largest flight schedule, in terms of frequency and destinations, in the history of Icelandair.

Rapid ramp-up to meet increased demand

Our strategy and actions throughout the pandemic ensured we were prepared to rapidly increase capacity to meet the steep increase in demand in all our markets. In 2022, we doubled our flight schedule and transported 3.7 million passengers to 51 destinations.

As the aviation industry as a whole, we experienced external operational challenges that affected the summer peak, in addition to severe weather conditions towards the end of the year. We were, however, in a good position to respond to these challenges and reduce the impact on our customers due to our extensive flight schedule, frequency of flights and the resourcefulness of our employees.

Opportunities in our cargo and leasing businesses

Icelandair Cargo has been an integral part in our recovery, ensuring important revenue generation throughout the pandemic and during the ramp-up. We believe that our plans of establishing a cargo hub in Iceland will provide great opportunities for the Company as well as Icelandic businesses. Furthermore, our leasing business emerged strongly from Covid with 2022 being one of the best performing years in the history of Loftleidir-Icelandic.

Strong financial recovery

The successful ramp-up of our operations resulted in a strong financial recovery with significant EBIT improvement and slight profit before taxes for the full year 2022. Assets amounted to USD 1,411 million at year-end 2022 and net financial liabilities were USD 326 million. Total liquidity was USD 318 million and equity amounted to USD 273 million with equity ratio at 19%. According to our estimates, the EBIT margin is expected to be in the 4-6% range for the full year of 2023.

Important impact on Icelandic economy and society

The successful ramp-up of our operations following the pandemic has been crucial for the recovery of Icelandic tourism and economy. In 2022, we brought around 740 thousand tourists to Iceland and recruited around 1,000 employees, bringing the number of FTEs to over 3,000 on average in 2022. The direct contribution of Icelandair to the Icelandic economy, which includes all taxes and fees paid to the government and municipalities, was USD 186 million in 2022 and in total USD 633 million from 2019. Additionally, the indirect impact of Icelandair's operations is significant. The tourists we transported to Iceland in 2022 spent around USD 1 billion on products and services in 2022. Icelandair also plays an important role in the Icelandic seafood industry by exporting fresh products to key markets on both sides of the Atlantic.

To safeguard the value that aviation and travel create, it is important to ensure a sustainable future of these industries. We have a strong focus on economic, social and environmental sustainability across our operations and are working with our key stakeholders towards our goals in this area.

Focus on environmental and social sustainability

Icelandair has set ambitious targets to reduce carbon emissions by 50% per operational ton kilometer (OTK) by 2030 and reach net zero emissions by 2050. We are already progressing towards our targets, largely due to our focus on fleet renewal which is currently the most effective measure to reduce emissions. We have invested USD 720 million in the more fuel-efficient Boeing 737 aircraft since 2018. A combination of further measures is required over the next years to reach the carbon reduction targets, such as the implementation of sustainable aviation fuels (SAF) and operational efficiencies. Another key sustainability focus for Icelandair is gender equality. Ensuring equal opportunities for all genders has been an important part of the recruitment criteria during the ramp-up process and is of continued focus within our operations, in line with our goals of increasing gender equality within management, crew and aircraft maintenance.

Icelandair is committed to the continued support of the United Nations‘ Global Compact and submitting The Communication on Progress.

Ambitious route network growth in 2023

Our operating environment will remain challenging this year with inflation and increased salary cost. We are, however, confident that people will continue to prioritize travel and there will be great opportunities for Iceland as a destination as we see reflected in our near-term booking flow. As measured in available seat kilometers, Icelandair's flight schedule in 2023 is set to grow by 15-20% and we project that the total number of passengers will be around 4.4 million, which is a 20% increase between years. Flights will be offered to 54 destinations, including four new destination – Detroit, Barcelona, Prague and Tel Aviv. In addition, Crete has now been added to the route network after having been operated as a popular charter flight destination for several years. The primary growth of the flight schedule results from increased frequencies to current destinations. Over 785 origin and destination markets will be served within the network and countless others through partnerships.

Future fleet to support profitable growth

The foundation for our future growth is a strong fleet that supports our business model and long-term plans. The year 2022 was an eventful year for fleet renewal in the international network. We took delivery of seven Boeing 737 MAX aircraft and plan to take delivery of a further four MAX aircraft this year, bringing the total number of these aircraft to twenty.

Further fleet renewal is planned in the coming years as we continue the phase-out the Boeing 757 aircraft and early this year we will be faced with one of the largest decisions that has been taken in the history of the Company – decision on the future Icelandair fleet. Our future fleet strategy is currently under review, where options for fleet renewal and growth have been identified. These re-fleeting options include the Boeing 737 MAX as well as the Airbus A320 family. Dialogue with the respective aircraft manufacturers is ongoing and we expect to reach a conclusion early this year.

Continued support from our shareholders

We are thankful for the support of our strong and broad shareholder base, with almost 16,000 shareholders at the end of 2022. We are proud of the fact that around 4% of the Icelandic nation are shareholders and also that strong global investors which have invested in the Company share our belief in Icelandair's long-term success. We would also like to thank our customers for their trust and our partners for their cooperation during the year. However, first and foremost, we would like to thank our employees for what we have achieved together. With our exceptional team, robust foundations of our business, healthy financial position and of course our extensive and flexible route network that allows us to constantly adapt, we look forward to seizing the opportunities ahead and continuing to bring the spirit of Iceland to the world.

Guðmundur Hafsteinsson, Chairman
Bogi Nils Bogason, CEO