The framework for Icelandair's Corporate Governance practices is based on the Guidelines on Corporate Governance by the Iceland Chamber of Commerce, Nasdaq Iceland, and the Confederation of Icelandic Employers (6th edition from 21 July 2021), along with the Company's Articles of Association, the Rules for Issuers of securities listed on the Nasdaq Iceland and policies and procedures approved by the Company's Board of Directors. The Company's Articles of Association and the Corporate Governance Statement are accessible on Icelandair Group's website. The Guidelines on Corporate Governance are accessible on the website www.leidbeiningar.is and the guidelines and the Rules for Issuers are available on the website of Nasdaq Iceland.

In 2023, Icelandair was recognized for Excellence in Corporate Governance, an acknowledgement granted by the Icelandic Chamber of Commerce, Nasdaq Iceland and the Confederation of Icelandic Employers. The acknowledgement certifies that the working practices of the Company's Board of Directors are well organized, and that the implementation of the Board's duties is exemplary. The recognition is based on an assessment of Icelandair's governance practices that are evaluated based on the Guidelines on Corporate Governance. Stjórnvísi (e. Excellence Iceland), the country’s national body for quality management and performance improvement, is the coordinator of the recognition process.

We remain committed to ensuring that our affairs are conducted in accordance with high ethical standards. Icelandair’s management is of the opinion that practicing good Corporate Governance is vital for the success of the Company and in the best interests of all stakeholders. In the long run it will not only maximize long-term value for our shareholders, but also benefit employees, those that we do business with and the community as whole.

The supreme power of Icelandair affairs, within the boundaries put forth in the Company’ Articles of Association and Icelandic legislation, is in the hands of lawful shareholders’ meetings. An annual general meeting must be held within eight months from the end of the financial year where the following matters are addressed as set out in Icelandair’s Articles of Association:

• A report of the past year operation
• Confirmation of annual accounts, relevant handling of profit/loss and election of auditor
• Proposals of the remuneration policy and decision on the Board of Directors remuneration
• Election of the Board of Directors and of two members of the Nomination Committee
• Proposals from shareholders, and possible other matters, if any, on the agenda

Icelandair’s Articles of Association may only be amended at a legitimate shareholders’ meeting, if amendments and their main aspects are clearly stated in the invitation to the meeting. A resolution will only be passed if it is approved by at least 2/3 of votes cast as well as by shareholders controlling at least 2/3 of the share capital represented at the respective shareholders' meeting.

The Company's Board of Directors exercises the supreme authority in the Company's affairs between shareholders' meetings, and it is entrusted with the task of ensuring that the organization and activities of the Company's operation are at all times in correct and proper order.

The Board of Directors is instructed in the Company's Articles of Association to hire a Chief Executive Officer (CEO) for the Company and decide the terms of his or her employment. The Board of Directors and the CEO are responsible for the management of the Company. The Company's Board of Directors must at all times ensure that there is adequate supervision of the Company's accounts and the safeguarding of its assets and shall adopt working procedures in compliance with the Companies Act. Only the Board of Directors may assign powers of procuration on behalf of the Company. The signatures of the majority of the members of the Board are required to bind the Company.

The CEO is in charge of the day-to-day operation of the Company and is required to observe the policy and instructions set out by the Company's Board of Directors. Day-to-day operation does not include measures which are unusual or uncommon. Such measures can only be taken by the CEO with the specific authorization of the Board of Directors unless it is impossible to await the decision of the Board without seriously disadvantaging the operation of the Company. In such instances, the CEO is required to consult with the Chairman of the Board, if possible, after which the Board of Directors must immediately be notified of the measures.

The Rules on Working Procedures are accessible to the Board of Directors and the management through the Board's intranet, Admincontrol, as well at the Icelandair Group website. In accordance with article 14 of the Rules on Working Procedures the Board of Directors must annually evaluate its work, size, composition, and practices, and must also evaluate the performance of the Chairman of the Board, the CEO and others responsible for the day-to-day management of the Company and its development.

The annual performance assessment, made through self-evaluation, is intended to improve working methods, and increase the efficiency of the Board. The assessment entails e.g. evaluation of the strengths and weaknesses of the Board’s work and practices and takes into consideration the work components which the Board believes may be improved.

At Icelandair we are committed to foster a responsible corporate culture. To ensure our business meets high ethical standards we have implemented policies and grievance mechanisms to support good governance practices. Policies are accessible on the Company’s website to offer stakeholders a better vision and understanding of how the company operates and to encourage more active stakeholder engagement.

We strive to uphold a high level of integrity in our corporate culture and business conduct by providing guidance to all employees, with information and training on the Code of Ethics as well as on the Anti-corruption and bribery policy and procedures on the expected behavior. The purpose of the procedure for reporting non-compliance (whistleblowing) is to prevent and investigate any misconduct, criminal or otherwise, at the earliest opportunity. The policy includes guidelines of the prevention of corruption and bribery and is designed to help employees to take practical and preventative actions by immediately reporting inappropriate behavior, emphasizing on non-tolerance to bribery and corruption.

Our corporate governance efforts ensure an open and transparent relationship between the Company's management, Board of Directors, shareholders and other stakeholders. At the same time, we are aware of our position as an extensive purchaser and the importance of a fair behavior and therefore want to assure that suppliers meet our standards of good business conduct. As part of our procurement process management, suppliers have to comply with the Supplier Code of Conduct.

Icelandair works primarily in Iceland, where there are clear laws and legal frameworks for human rights and therefore it has not been deemed necessary to establish a human rights policy. Icelandair’s operations take place partially through subsidiaries but Icelandair Group as the parent company is responsible for the governance of the group. The above rules and policies are established at the group level and lay the foundation for the Company corporate governance practice. Icelandair operates its information systems in a certified environment of information security management system in accordance with the ISO/IEC 27001 standard.

The Board’s Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks that the Company is faced with. In addition to the formal oversight performed by the Audit Committee, the Company has in place internal audit processes which act to monitor management controls and procedures, the results of which are reported to the Audit Committee.

Our key takeaways from our Double Materiality Assessment (DMA), which forms part of the CSRD, in terms of business conduct are:

The following sub-topics were identified as material:

G1.1 Corporate culture

G1.2 Protection of whistle-blowers

G1.3 Animal welfare

G1.4 Political engagement and lobbying for activities

G1.5 Supplier management including payment practices