ICELANDAIR GROUP HF PRESENTATION OF Q RESULTS 31 JULY 2014

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1 ICELANDAIR GROUP HF PRESENTATION OF Q RESULTS 31 JULY 2014

2 FINANCIAL RESULTS BOGI NILS BOGASON ǀ CFO

3 INCOME STATEMENT Q2 USD thousand Q Q % Chg. Operating Income % Salaries and related expenses % Aircraft fuel % Aircraft lease % Aircraft handling, landing and comm % Aircraft maintenance expenses % Other expenses % EBITDA EBIT EBT Profit from continuing operations Profit for the period EBITDA and net profit (like-for-like*) USD million EBITDA Net Profit EBITDA ratio 15.2% 16.2% -1.0 ppt EBITDAR EBITDAR ratio 18.4% 20.6% -2.1 ppt -1 3 Q210 Q211 Q212 Q213 Q214 * not incl. figures for Bluebird in

4 MAIN CHANGES IN EBITDA Q214 VS Q213 IN USD MILLIONS EBITDA Q213 Allowance for bad debt change Labour dispute effect EBITDA chg. Tourism Services EBITDA chg. Route Network, excl. Icelandair EBITDA chg. Icelandair excl. labour dispute effect Other changes EBITDA Q214 4

5 REVENUE INCREASED BY 12% FROM LAST YEAR Operating revenue (like-for-like)* in USD million Other revenues Aircraft and aircrew lease Transport revenue Q210 Q211 Q212 Q213 Q214 * not incl. figures for Bluebird in

6 TRAFFIC DATA IN Q2 Year-on-year change in % Passengers Route Network ASK Route Network SLF (ppt) Route Network Passengers Regional and Greenland flights ASK Regional and Greenland flights SLF (ppt) Regional and Greenland flights Fleet utilization Charter flights Sold BH Charter flights ATK Cargo FTK Cargo Available HRN Hotels Sold HRN Hotels Utilization (ppt) HRN Hotels 6

7 % 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 703 THOUSAND PASSENGER CARRIED IN Q INTERNATIONAL ROUTE NETWORK Passengers and passenger mix Route Netowork in thousands Changes in Available Seat Kilometers (ASK) Route Network YoY in % Via From To % % 12% 17% % % 43% 47% N-America Europe Total Available seat kilometers (ASK) and Load factor (LF) Route Network Q Q % 25% 49% 23% 39% 17% 24% 21% 36% 36% 36% 76.4% 79.3% 82.1% 79.5% 80.0% ASK billions LF Q210 Q211 Q212 Q213 Q214 Q Q Q Q Q * not incl. figures for Bluebird in

8 INCOME STATEMENT JANUARY - JUNE USD thousand 6M M 2013 % Chg. Operating Income % Salaries and related expenses % Aircraft fuel % Aircraft lease % Aircraft handling, landing and comm % Aircraft maintenance expenses % Other expenses % EBITDA EBIT EBT Loss / Profit from continuing operations Loss / Profit for the period EBITDA and net profit (like-for-like*) USD million EBITDA Net Profit EBITDA ratio 6.5% 7.9% -1.4 ppt EBITDAR EBITDAR ratio 10.6% 13.4% -2.8 ppt M10 6M11 6M12 6M13 6M14 * not incl. figures for Bluebird in

9 BALANCE SHEET EQUITY RATIO 34% USD million Assets Operating Assets Intangible assets Other non-current assets Total non-current assets Other current-assets Marketable securities Cash and cash equivalents Total current assets Total assets USD million Equity and liabilities Stockholders equity Loans and borrowings non-current Other non-current liabilities Total non-current liabilites Loans and borrowings current Trade and other payables Deferred income Total current liabilites Total equity and liabilities Equity ratio 34% 42% Current ratio Net interest bearing debt Interest bearing debt

10 BALANCE SHEET CHANGES TOTAL ASSETS UP BY USD MILLION FROM YEAR-END 2013 ASSETS EQUITY AND LIABILITIES Changes in Jan-Jun 2014 Changes in Jan-Jun Operating assets Cash and marketable securities Other assets Equity Interest bearing loans Defferred income Other liabilities 10

11 CASH FLOW NET CASH FROM OPERATIONS USD 83.6 MILLION USD million Q Q Working capital from operations Changes in Cash in January - June 2014 USD million Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Increase in cash and cash equivalents Effect of exchange rate fluctuations on cash held Cash and cash equivalents at the beginning of the period Cash and cash equivalents at 30 June Comments Total Capex in Q USD 10.7 million Dividend payment USD 19.0 million Repayment of long term loans USD 33.9 million Cash Net cash from operating activities Net cash used in investing activities Net cash Currency used in effect financing activities Cash

12 JET FUEL HEDGING POSITION Fuel hedge positions end of June Icelandair Group total Period Estimated usage (tons) Option volume Swap volume Total swap and option contracts % hedged Av. Hedge price USD Bought call strike Sold put strike Jul 14 31,333 4,000 11,400 15,400 49% 977 1, Aug 14 31,312 9,000 6,400 15,400 49% 970 1, Sep 14 26,087 8,000 5,200 13,200 51% 997 1, Oct 14 20,839 6,000 4,200 10,200 49% 990 1, Nov 14 17,639 3,000 5,200 8,200 46% Dec 14 16,393 3,000 5,200 8,200 50% 964 1, Jan 15 13,958 3,000 3,000 6,000 43% 947 1, Feb 15 12, ,000 2,000 17% 960 Mar 15 16, ,000 3,000 19% 993 Apr 15 17, % 0 May 15 23, % 0 Jun 15 29, % 0 Total 255,903 36,000 45,600 81,600 32%

13 OUTLOOK BJÖRGÓLFUR JÓHANNSSON ǀ PRESIDENT AND CEO

14 WAGE AGREEMENTS Icelandic Airline Pilots Association Icelandic Cabin Crew Association Icelandic Aircraft Maintenance Technicians Association Wage agreement valid until 30 September 2014 Wage agreement valid until 31 August 2015 Wage agreement valid until 31 August

15 OUTLOOK IN MAIN BUSINESSES Route Network The outlook has improved since the labour disputes with unions in May and June Slow down of bookings in May and June has largely recovered Booking outlook for the remainder of the year in line with capacity increase Regional & Greenland Charter Cargo Hotels The domestic operation facing a challenging environment Demand from Icelanders not recovered since 2008 Efforts being made to increase the number of foreign tourist on domestic flights Prospects for the charter operations favourable Six aircraft assigned in charger projects The Company has withdrawn from freight charter operations Improved results in cargo operations Two cargo aircraft used on scheduled routes Additionally the cargo operations has 38 destinations in Europe and N-America through the international passenger network The booking status for the summer is good, but bookings are arriving with shorter notice than in recent years Icelandair Hotel Reykjavik Marina is currently being enlarged. The new hotel extension will open in May 2015 New hotel opened downtown Reykjavik in

16 EBITDA FORECAST UP TO USD MILLION EBITDA development in USD million Assumptions: EUR/USD exchange rate 1.35 Fuel price (excluding hedging): USD 978/ton in July and 1,000/ton for the period August- December Prospects in international flights better than in spring and early summer during the labour dispute 144 Booking status in the international flight operation for the remainder of the year in line with the capacity increase Operations in tourist-related services are showing good results Prospects for cargo and charter operation favourable The improved collecting on claims in charter operations is a significant factor in the increased EBITDA forecast Act 10 Act 11 Act 12 Act 13 For 14 16

ICELANDAIR GROUP Reykjavík Airport 101 Reykjavík Iceland Tel: +354 50 50 300 Fax:

Highlights Q EBITDA forecast for 2015 raised to USD million. Higher passenger revenue and lower fuel price resulting in higher EBITDA

Highlights Q EBITDA forecast for 2015 raised to USD million. Higher passenger revenue and lower fuel price resulting in higher EBITDA ICELANDAIR GROUP PRESENTATION OF Q2 2015 RESULTS 28 JULY 2015 Highlights Q2 2015 1 2 3 EBITDA USD 50.3 million improving by USD 5.0 million from 2014 Higher passenger revenue and lower fuel price resulting