ICELANDAIR GROUPPRESENTATION OF Q4 AND 12M 2015 RESULTS | 9 FEBRUARY 2016

Highlights

Full year

profit

increased

by 67%

1

Net profit

in Q4

for the

first time

2

EBITDA

guidance for

2016

245-250

USD million

3

2

FINANCIAL RESULTS BOGI NILS BOGASON ǀ CFO

USD million Q4 2015 Q4 2014 % Chg.

Operating Income 230.0 205.5 12%

Salaries and related expenses 77.2 65.1 19%

Aircraft fuel 41.7 53.5 -22%

Aircraft and aircrew lease 4.9 7.9 -38%

Aircraft handling, landing and comm. 17.2 16.9 2%

Aircraft maintenance expenses 17.2 16.4 5%

Other expenses 51.6 47.1 9%

EBITDA 20.1 -1.5 -

EBIT -1.0 -18.8 -

EBT -0.2 -17.7 -

Profit / loss for the period 0.3 -15.0 -

EBITDA ratio 8.7% -0.7% 9.5 ppt

EBITDAR 28.8 7.1 -

EBITDAR ratio 12.5% 3.4% 9.1 ppt

EBITDA ratio up by 9.5 percentage points in Q4

EBITDA and net profitUSD million

20

-1

76

-1

0

-15

-9-8

-2

Q4 15Q4 14Q4 11 Q4 12 Q4 13

Net Profit

EBITDA

4

Growth in all our businesses in Q4 2015

5

2

8

66

11

15

9

3

-2

21

16

18

Sold HRN

Hotels

Utilisation

(ppt) HRN

Hotels

Available

HRN Hotels

FTK

Cargo

ATK

Cargo

Sold BH

Charter

flights

Fleet

utilisation

Charter

flights

SLF (ppt)

Regional

and

Greenland

flights

ASK

Regional

and

Greenland

flights

Passengers

Regional

and

Greenland

flights

SLF (ppt)

Route

Network

ASK

Route

Network

Passengers

Route

Network

Year-on-year change in %

USD million 2015 2014 % Chg.

Operating Income 1,139.7 1,113.3 2%

Salaries and related expenses 280.2 273.2 3%

Aircraft fuel 229.3 271.9 -16%

Aircraft lease 22.9 26.7 -14%

Aircraft handling, landing and comm. 85.8 82.9 3%

Aircraft maintenance 68.8 75.9 -9%

Other expenses 233.8 228.5 2%

EBITDA 219.0 154.3 -

EBIT 135.2 79.0 -

EBT 140.2 79.9 -

Net Profit 111.2 66.5 -

EBITDA ratio 19.2% 13.9% 5.4 ppt

EBITDAR 254.0 193.4 -

EBITDAR ratio 22.3% 17.4% 4.9 ppt

Full year profit increased by 67%

EBITDA and net profitUSD million

219

154

144

110

85

111

6656

4436

2013 2014 20152011 2012

+158%

Net ProfitEBITDA

6

7

24%

25%

37%

32%

9%

11%

7%

6% 16%

18%

5%

6%

2%

2%

Increasing revenues originating in N-America

2015

2014

USD revenues increases

CAD

5%4%

USD

41%

43%

ISK

24%23%

Other*

8%7%

GBP

4%6%

EUR

17%17%

20142015

Operating income Operating expenses

30%30%

2%

Other*

2%

GBP

3%2%

EUR

11%

13%

CAD

1%1%

USD

53%52%

ISK

2015 2014

Other* mainly the Scandinavian currencies8

The growth is driven by the VIA market

1,744

38%

2011

2,020

42%

20%

37%

24%

15%

2015

36%

2014

2,603

16%

17%

45%

36%

2012

38%

48%

3,073

2013

2,257

49%

39%

+77%

FromTo Via

Absolute figures in thousands. 9

A record load factor was reach in all months 2015

1010

86

84

78

75

74

72

79

77

81

73

0

76

88

71

82

89

90

85

83

87

80

Mar Apr May Jul Aug Sep

2014

NovOct Dec

2015

Jan Feb Jun

The highest LF until now

reached in August:

89.2%

Effective fuel price paid in 2015 was 29% higher than the

average world fuel price

50

350

0

650

850

800

750

950

900

1,000

600

550

450

700

500

400

08.15 10.15 11.15 12.1507.15 09.1512.1411.1408.1403.14 03.1507.1406.1405.1402.14 05.15 06.1510.14 01.1504.14 04.1502.1509.1401.14

Effective Price

Average World Market Price

Figures: USD/ton.

+29%

11

PeriodEstimated

usage (tons)

Swap

volume

%

hedged

Average swap

price USD

January 2016 19.571 10.660 54% 606

February 2016 17.805 10.610 60% 639

March 2016 20.997 12.590 60% 588

April 2016 21.928 12.630 58% 616

May 2016 32.333 19.720 61% 643

June 2016 39.299 23.700 60% 637

July 2016 41.444 23.800 57% 591

August 2016 41.443 24.700 60% 536

September 16 35.951 20.600 57% 531

October 2016 28.352 16.500 58% 524

November 2016 22.443 10.500 47% 517

December 2016 21.630 9.500 44% 498

Total 343.196 195.510 57% 579

57% of estimated fuel usage in 2016 has been hedged

12

Q1

2016

58%

Q2

2016

60%

Q3

2016

58%

Q4

2016

50%

12M

2016

57%

13

Strong underlying cash flow

Changes in Cash in 2015USD million

Net cash from operations and as % of incomeUSD million

245

215

231

167

117

2014 20152011 2012 2013

Net cash from op. activities

194.6

245.1

184.8 -1.1

Net cash

used in

financing

activities

Cash

31.12.2015

Net cash

used in

investing

activities

Net cash

from

operating

activities

Currency

effect

-219.9

Cash

01.01.2015

-14.3

15% 19% 23% 19% 22%% of

income

Total investment amounted to USD 210 million in 2015

14

31

29

27 21

28

183

87

67

94 88

114

96

125

2011 2012 2013 2015

210

109

2014

Investment in operating assetsOther investment

All figures in USD million.

Investment in

aircraft and aircraft

components

totalled

USD 115 million

in 2015

USD million 31.12 2015 31.12 2014

Equity and liabilities

Stockholders equity 456.5 365.1

Loans and borrowings non-current 55.4 49.7

Other non-current liabilities 44.1 33.0

Total non-current liabilites 99.5 82.6

Loans and borrowings current 10.1 12.3

Trade and other payables 219.7 214.3

Deferred income 186.1 174.9

Total current liabilites 415.9 401.5

Total equity and liabilities 972.0 849.2

Equity ratio 47% 43%

Current ratio 0.80 0.83

Net interest bearing debt -148.6 -153.7

Interest bearing debt 65.5 61.9

Equity ratio 47%

15

USD million 31.12 2015 31.12 2014

Assets

Operating Assets 419.1 319.3

Intangible assets 172.7 176.0

Other non-current assets 45.8 18.9

Total non-current assets 637.6 514.2

Other current-assets 120.3 119.4

Marketable securities 19.5 30.9

Cash and cash equivalents 194.6 184.8

Total current assets 334.4 335.0

Total assets 972.0 849.2

OUTLOOK BJÖRGÓLFUR JÓHANNSSON ǀ PRESIDENT AND CEO

24%of net income

3,500ISK million

26.9USD million

Dividend proposal in the amount of ISK 3,500 million to

shareholders

17

Our Dividend Policy:

The goal is to pay 20-40% of each year’s net profit as dividend. Final annual dividend payments

will be based on the financial position of the Company, operating capital requirements and

market conditions.

The Board of Directors proposes to pay as a dividend in 2016:

24% capacity increase in the Route Network in 2016

Total

capacity

increase

New

destinations

24.0%

4.5%

Increased

capacity NA

9.3%

10.2%

Increased

capacity

EUR

Change in capacity* 2016 vs 2015

* Capacity = Available Seat Kilometers (ASK)18

One extra

B-757 aircraft

added

to the fleet

and Orly added

as new airport

in France

Additional capacity since September 2015

Announced YoY increase in flight schedule for 2016 in September 2015

15% increase in passenger numbers in the Route Network in

January 2016

19

-6

-4

6

11

15

29

13

31

4

-2

19

15

Sold HRN

Hotels

Utilisation

(ppt) HRN

Hotels

Available

HRN Hotels

FTK

Cargo

ATK

Cargo

Sold BH

Charter

flights

Fleet

utilisation

Charter

flights

SLF (ppt)

Regional

and

Greenland

flights

ASK

Regional

and

Greenland

flights

Passengers

Regional

and

Greenland

flights

SLF (ppt)

Route

Network

ASK

Route

Network

Passengers

Route

Network

Year-on-year change in %

Continued focus on utilising the belly space

20

34-38tons capacity

per trip

4-14tons capacity

per trip

1-3.5tons capacity

per trip

Icelandair Passenger Aircraft

25 B 757 aircraft

2 B 767 aircraft – opening new opportunities

Freighter Aircraft2 B757 aircraft

Air Iceland Passenger Aircraft2 Bombardier Q200

3 Bombardier Q400

Three Bombardier

Q400 aircraft

to replace

five Fokker-50

aircraft

Kangerlussuaq

in Greenland

a new destination

summer

2016

Bombardier Q400

aircraft used

in the international

Route Network to

serve Aberdeen

Our regional operation developing further in 2016

Good prospects in our aircraft leasing business in 2016

22

2B 757-200

2B 737-800

1B 737-700

2B 767-300

+Leasing of excess

capacity in the

Route Network

in off-season

Good opportunities in tourist related services in Iceland

23

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

1999

1995

1996

1990

1992

1998

1997

2001

1994

1993

1991

2000

2009

2008

2007

2004

2003

2002

2005

F2

016

F2

015

2013

2012

2014

2006

2011

2010

Double digit

growth

in number of

tourists

visiting Iceland

expected

in 2016

* Source = Icelandic Travel Buro

Number of tourists

visting Iceland

Continued growth in our hotel operation

2015-2017Build-up of a

Hotel at

Mývatn

in the North

of Iceland

2016

Opening in

cooperation with

Hilton Worldwide

115 rooms

2017Opening of a

luxury hotel

downtown

Reykjavik

50 rooms

2017Opening of a

luxury hotel

downtown

Reykjavik

160 rooms

24

Main assumptions:

Ι Continued focus on profitable organic growth

Ι Capacity increase in the Route Network 24% and

booking situation is favourable

Ι Good outlook for cargo and charter operations

Ι Favourable prospects in the tourist services in

Iceland

Ι Expansion in the hotel operation with the opening

of a new Canopy hotel (115 rooms) downtown

Reykjavik in summer 2016 in co-operation with

Hilton Worldwide

Ι EUR/USD rate assumed 1.08

Ι Average fuel price (excluding hedging) 385

USD/ton in January, 314 USD/ton in February and

350 USD/ton in March - December

EBITDA development2011-2016 in USD million

EBITDA guidance for 2016 USD 245-250 million

25

219

154

144

110

2014 Guidance

2016

245-250

20122011 2015

ICELANDAIR GROUP

Reykjavík Airport

101 Reykjavík Iceland

Tel: +354 50 50 300

Fax: +354 50 50 389

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