As described by the European Commission, the EU Taxonomy is a classification system for determining sustainable economic activities. It provides companies, investors, and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable with regards to the six environmental objectives that have been established. The Taxonomy Climate Delegated Act has been in force since 2021 for two environmental objectives within the EU Taxonomy – Climate change mitigation and Climate change adaptation – and were amended with additional activities in 2023. In 2023, the EU also published an Environmental Delegated Act specifying activities for the remaining four environmental objectives – Sustainable use and protection of water and marine resources, Circular economy, Pollution & prevention control, and Biodiversity & ecosystems.

Icelandair has reached out to an external consultancy to understand the extent of legal obligations for the Company associated with the EU Taxonomy. An initial screening and interpretation of the criteria of the amended Climate Delegated Act was done in the fall of 2023 to determine whether Icelandair’s business activities were eligible. According to the screening, Icelandair is eligible for four economic activities, as listed here below. Subsequently, for the financial year 2023, Icelandair will report on turnover, capital expenditures and operating expenditures related to these activities.

The Company will continue to work on alignment, minimum safeguards, and further implementation of the EU Taxonomy to prepare for disclosure for the financial year 2024.

3.21 Manufacturing of aircraft

Description of the activity: Manufacture, repair, maintenance, overhaul, retrofitting, design, repurposing and upgrade of aircraft and aircraft parts and equipment.

Icelandair does have financial streams relating to manufacturing of aircraft, specifically repair and maintenance.

6.18 Leasing of aircraft

Description of the activity: Renting and leasing of aircraft and aircraft parts and equipment.

Icelandair does have financial streams relating to leasing of aircraft. Through its leasing business, Loftleidir Icelandic, Icelandair is involved in the leasing of aircraft for airlines and tour operators.

6.19 Passenger and freight air transport

Description of the activity: Purchase, financing, and operation of aircraft including transport of passengers and goods. The economic activity does not include leasing of aircraft referred to in Section 6.18.

Icelandair does have financial streams relating to passenger and freight air transport. Icelandair operates an international passenger airline and route network, specifically flying to and from Europe and North America. The focus of Icelandair’s airfreight and logistics operations is on air freight services to and from Iceland, by leveraging the passenger route network together with scheduled air freighter flights, operating designated cargo aircraft.

6.20 Air transport ground handling operations

Description of the activity: Manufacture, repair, maintenance, overhaul, retrofitting, design, repurposing and upgrade, purchase, financing, renting, leasing and operation of equipment and service activities including ground services activities at airports and cargo handling, such as loading and unloading of goods.

Icelandair does have financial streams relating to ground handling operation. Ground handling involves a range of services provided on the ground to aircraft, passengers, and cargo.

Icelandair's business activities that are currently not included in the EU Taxonomy, and thus not assessed as Taxonomy eligible, comprise the Taxonomy non-eligible percentage (%).