Icelandair exceeding expectations

Icelandair, the largest airline in Iceland, is beating the worldwide travel downturn, starting new routes, upgrading services and shifting its sales focus to optimize potential in harder times. As a result the airline emerged as Icelandair Group’s star company in the quarterly report to investors, which was unveiled on Friday.

Icelandair has been using an array of opportunities to keep its strong market position at a time when all airlines are struggling. Icelandair Group, Icelandair’s parent company, released its first-quarter report on Friday which showed a smaller loss than predicted in the always-difficult first three months of the year. Icelandair and Travel Service were credited with the Group’s best performances.

Investors were happy to find out from Icelandair Group’s first quarter report 2009 that Icelandair’s EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) were the highest in the first quarter since the company’s establishment in its current form in 2001.

Icelandair CEO Birkir Holm Gudnason said the business’s ability to quickly change sales focus from the Icelandic market to overseas helped to offset a serious drop in Icelandic passengers travelling overseas following the banking crisis. Tourists have been encouraged to visit Iceland by the favourable Icelandic krona exchange rate.

The numbers of foreign visitors to Iceland flying with Icelandair went up by 11 percent in the first quarter and now account for over half the airline’s passengers for the first time ever.

Icelandair’s brave route planning is also having an effect, with Seattle flights via Iceland coming on stream in July. The new route is in response to SAS’s withdrawal from the route.

Icelandair will be the only airline linking Scandinavia with the west coast USA as of July. The airline is confident to make the move because its efficient, low-cost aircraft make operating the route easier for Icelandair than some of its competitors. Also, with the stopover in Iceland, planes from Seattle will not rely solely on Scandinavia-bound passengers, but also tourists to Iceland.

Because of Iceland’s ideal location, Seattle to Europe flight distances are nearly the same as for direct flights.

2009 will be a tough for airlines, but Icelandair is satisfied with spring and summer demand to date, optimistic about its new routes and seems well-placed to make the most of the global economic recovery the moment it arrives.

More details on Icelandair, including Friday’s first-quarter investors’ report, can be found at http://www.icelandairgroup.com/investor-relations/news/

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Gudjon Arngrimsson

Corporate Communications

Icelandair

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