In 2023, Icelandair reached an important milestone by turning a profit after taxes following many challenging years. Revenue generation was strong during the year, with strong demand in all markets, especially North America to Iceland, resulting in record unit revenues.

As measured in available seat kilometers, Icelandair’s capacity increased by 18% compared to 2022. Flights were offered to 55 destinations, including five new ones. The new destinations were Detroit in North America, Barcelona, Verona and Prague in Europe, and Tel Aviv in Israel. In addition, Crete was added to the route network after having been operated as popular charter flight destination for several years. The primary growth of the flight schedule resulted from increased frequencies to current destinations on both sides of the Atlantic. Over 785 origin and destination markets were served within the network and countless others through partnerships.

In 2023, Icelandair offered the highest number of destinations, frequencies, and connectivity in the Company’s history to provide good service to its customers. The airline continued to serve core destinations like Copenhagen four times per day, but many destinations on both sides of the Atlantic were served two, three, or more times per day by operating three connecting banks in Iceland.

Icelandair transported 4.3 million passengers in 2023, 17% more than in 2022. The “to” market with Iceland as a destination and the “via” market between Europe and N-America were Icelandair’s largest markets in 2023 each accounting for 38% of total passengers. The “from” market, with travel originating in Iceland, accounted for 18% of Icelandair’s total passengers. The domestic operation “within” Iceland amounted for 6% of total passengers. Seismic activity in the last two months of the year and an eruption in Southwest Iceland had no effect on flights to and from Iceland. However, global media coverage of the events significantly slowed sales to Iceland. Up to the fourth quarter, the increase in passenger numbers between years had been the greatest in the market to Iceland, or around 20%, but was only 3% in Q4. The passenger load factor over the year 2023 was 81.5% increasing by 1.5 percentage points between years.

Despite aforementioned impacts of the seisemic activities in the later months of 2023 and weather disruptions affecting our operations, we reached our best on-time performance in years. The on-time performance for the year was 77.1% increasing by 3.5 percentage points year-on-year. Additionally, Icelandair was named one of the most punctual airlines in Europe in 2023.

Freight carried, measured in freight Ton Kilometers (FTK) increased by 30% year-on-year, however freight tons increased less due to longer flight distances compared to last year. Cargo markets were challenging in 2023 and resulted in a considerable operating loss. Various actions have been taken to improve the cargo operation, which resulted in improved results in the last quarter of 2023.

The leasing business continued to perform well with good results in 2023. One aircraft will be added on lease to the Company's largest customer in the spring which, after the addition, will lease five aircraft from the Company. The Company's world tours are going well, and the number of such projects will increase in 2024. Increase in sold block hours amounted to 3% year-on-year.

Icelandair reached an important milestone in 2023 by turning a profit after taxes for the first time following many challenging years.. Profit amounted to USD 11 million, a turnaround from a loss of USD 6 million last year. Revenue generation was strong during the year, with strong demand in all markets especially North America to Iceland, resulting in record unit revenues (RASK). Total revenue was USD 1.5 billion up by 20% from 2022. EBIT amounted to USD 21 million, up by USD 2 million, with an EBIT ratio of 1.4%.

Total passenger revenue amounted to USD 1,289.9 million, up by 23% between years. Passenger revenue counted for 85% of the Company’s total operating income. Of this figure, passenger revenues amounted to USD 1.204 million compared to USD 975.3 last year and ancillary revenues amounted to USD 85.9 million and increased by 19% year over year. Revenue generation was strong during the year, with strong demand in all markets especially North America to Iceland. However, the seismic activity in Southwest Iceland in November, with the consequent global media coverage, weakened demand and, thereby, revenue generation at the end of the year. Cargo revenue decreased by 3% compared to 2022 and amounted to USD 88.3 million.

Revenue from aircraft and aircrew leases increased by 22% from USD 58.5 million in 2022 to USD 71.3 million in 2023. The leasing operation continued to perform well this year, sold block hours increased by 3%, and the profitability improved strongly over last year. Other revenue totaled USD 74.1 million in 2023, up from USD 68.2 million from the preceding year. Thereof revenue from tourism increased from USD 31.1 million in 2022 to USD 39.4 million in 2023.

Operating expenses excluding depreciation amounted to USD 1,367.1 million and increased by USD 239.7 million from 2022. The main drivers are a larger scope of business, salary increases and significant price increases from key service providers. The capacity measured in available seat kilometers increased by 18% between years in Icelandair’s route network.

Salaries and salary-related expenses amounted to 391.6 million, increasing from USD 308.6 million. The first salary increase for flight and cabin crew since 2020 became effective from 1 June 2023 for pilots and 1 September 2023 for cabin crew. Icelandair employed an average of 3,638 full-time employees in 2023, 19% more than in 2022.

Fuel expenses amounted to USD 371.3 million and decreased by 1% between years on a 18% capacity increase in the passenger network. The difference is explained by a 16% decrease in in the effective fuel price and a larger B737 MAX fleet which continued to contribute positively to fuel savings. The average effective price (including hedges) in 2023 was USD 967 m/ton, as compared to USD 1,156 m/ton in 2022.

Other operating expenses amounted to USD 339.7 million, compared to USD 248.2 million in 2022. Customer related costs totaled USD 66.1 million compared to USD 51.5 million last year. Tourism expenses incresed with the divestment of Iceland Travel in December 2021. The main reason for the increase in other expense categories is mainly a larger scope of business.

Net finance cost totaled USD 13.7 million in 2023 and decrease by USD 10.7 million. The finance income amounted to USD 27.3 million up from USD 8.8 million in 2022. Finance cost totaled USD 41.0 million up by USD 8.4 million between years. A net currency exchange loss of USD 0.3 million was included in the finance cost in 2023.