Birkir Hólm Guðnason CEO Icelandair

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Julia Lee
7 years ago
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1 Birkir Hólm Guðnason CEO Icelandair

2 Profitable growth The airline market Growth plans 2017 Future opportunities 2

3 Icelandair has grown significantly in recent years and the Route Network has developed and expanded, both in breadth and depth 92% % ASK* million: % % % 26% F Byrjun New destinations N-America Increased frequency N-America New destinations Europe Increased frequency Europe Total capacity* increase * Capacity = ASK = Available Seat Kilometres

4 The via market is the largest market and has led the growth from the domestic 13% market out of Iceland +85% 3,100 3,700 37% to the tourist market 37% with Iceland as a destination 2,020 38% 2,250 38% 2,600 36% 16% 36% 15% 13% via the international 50% market between Europe and N-America 20% 42% % 45% % % % 2016 forecast to from via Absolute figures in thousands.

5 The growth has been profitable, and the EBIT margin in Q was above the 5-year average Average EBIT margin in Q : 25.5% 23.3% 23.6% 20.8% 25.6% 34.2% 28.7% Q Q Q Q Q Q3 2016

6 EBIT comparison with peers is favourable across the board 42.6% 28.7% Icelandair EBIT margin in Q well above the average in the peer group 25.5% 16.4% 18.0% 18.2% 19.4% 18.8% 20.4% 20.6% 10.2% Peer Group Note: Q3 is May-July for SAS but July-September for others

7 Icelandair growth in ASK was higher than the peer group s in Q % 17% 11% 10% 9% 8% 8% 6% 4% 1% Source: Airline traffic reports. Q3 is May-Jul for SAS but Jul-Sep for others ASK = Available Seat Kilometres

8 Profitable growth The airline market Growth plans 2017 Future opportunities 8

9 12% 10% 8% 6% 4% 2% 0% Industry status: Two consecutive years of financial returns in excess of WACC in the industry 12% 10% Return on invested capital (ROIC) 8% 44% 6% Cost of capital (WACC) 4% 2% 0% F 2016F Source: IATA Economics June

10 68% 66% 64% 62% 60% 58% 56% Industry status: High aircraft utilisation and load factors well above break-even are the main contributors to improved profitability 70% 68% Achieved weight LF 66% 64% 6 ppt 62% 60% Break-even weight LF 58% F 2016F Source: IATA Economics June

11 Industry status: There has been downward pressure on yields due to lower fuel price and more competition, but there are signs that the pressure is easing according to IATA 1, % 1,000 Fuel price trend -3.9% % 600 Yield change YoY world -7.0% % * Source IATA Market Outlook June 2016, Bloomberg

12 Via market: Seat capacity on the Transatlantic market is currently growing more than the long term average +1% % % cagr +6% % % EUR-CA EUR-US F 2017F Absolute figures = Available Seats in millions, Data source: SRS Analyzer

13 Via market: Icelandair s capacity growth* on the Transatlantic market continues to outpace the total market in % 23% 17% 19% 14% 15% 9% 8% 6% 4% 0% 1% Total Icelandair F 2017F * Capacity growth = growth of Available Seat Kilometres (ASK) in July each year. Source: Total SRS Anlyzer, Nov 8, 2016 & Icelandair proprietary data.

14 Via market: Iceland is the strongest point of origin in Transatlantic flights from Scandinavia and growing faster Scheduled number of flights per week in summer Growth in Keflavik in 2017 is more than double the average in Scandinavia KEF CPH STO OSL HEL Others Icelandair Norwegian Source: SRS Anlyzer, Nov 8, SAS 14

15 To market: Further increases are anticipated in the number of tourists to Iceland in 2017 No. of tourists to Iceland 22% 2,200,000 2,100,000 2,000,000 1,900,000 1,800,000 1,700,000 1,600,000 1,500,000 1,400,000 1,300,000 1,200,000 1,100,000 1,000, , , , , , , , , , % 18% 25% 31% 24% 42% F2017** F2016* Source = Historic data: Icelandic Tourist Board Actuals Jan-Oct and Forecast Nov-Dec from ISAVIA based on various forecasts made by Icelandic banks and news reports from ISAVIA.

16 To and from market: Icelandair the largest provider of flights from Keflavik in % 10 largest airlines Keflavik airport Scheduled number of take-offs in July % 7% 3% 3% 2% 2% 2% 2% 2% 1% Other carriers Source: SRS analyzer as of November 8 th Based on number of take-offs for the month of July 2017.

Other Carriers Icelandair 2017 high-season : 2,500 2,000

17 To and from market: A total of 26 airlines are flying to Iceland in summer 2017 No flights Kef Airport 3,500 3,000 Other Carriers Icelandair 2017 high-season : 2,500 2,000 1,500 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

18 To and from market: But many of them are only flying to Iceland during the summer No flights KEF Airport 3,500 3,000 Other Carriers Icelandair airlines in off-season : 2,500 2,000 1,500 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

19 To and from market: Icelandair is the largest carrier on 18 of 20 largest routes to and from Iceland 20 largest routes to and from Iceland 2016 Number of seats added largest routes CPH LGW BOS CDG OSL LHR AMS HEL MAN MUC IAD 147 (37%) 95 (63%) 110 (73%) 135 (100%) (64%) (64%) 192 (52%) 213 (68%) 300 (85%) (64%) JFK 225 (74%) 305 FRA 159 (71%) 225 YYZ ARN SEA BWI MSP DEN 81 (66%) 161 (73%) 172 (100%) EWR 118 (100%) 115 (100%) (100%) (100%) LGW BOS CDG YYZ AMS CPH BWI EWR FRA MUC ICE Other airlines Data Source: SRS analyzer Absolute figures = Annual Available Seats in thousands Proportional figures: Icelandair s share of seats on the route

20 Profitable growth The airline market Growth plans 2017 Future opportunities 20

21 21 44 destinations & 477 connections in our Route Network in 2017

22 44 destinations & 477 connections in our Route Network in 2017 Change in capacity* 2017 vs 2016F Change in trips 2017 vs 2016F 8% 14% 3% 7% 3% 5% 1 additional destination in North America opens up more than 25 new route connections 1% 1% New destinations Increased capacity EUR Increased capacity NA Total capacity increase New destinations Increased number of trips EUR Increased number of trips NA Total increase in number of trips * Capacity = Available Seat Kilometres (ASK) 22

23 Icelandair has over 90 agreements worldwide with partners, which significantly extends the scope of our network

24 Profitable growth The airline market Growth plans 2017 Future opportunities 24

25 The total Icelandair fleet has doubled in size from 2012 and will comprise 30 aircraft in 2017 Fleet overview Investments in aircraft components USD million Passenger comfort a priority Investment in B757 AC usually USD 4-6 million New seats, In-Seat Entertainment system, overall refurbishment, cockpit systems etc Number of B767 Number of B M 2016

26 B737 MAX will be added to the fleet in 2018 to increase flexibility and support our growth plans The total number of confirmed orders for B737 MAX is 16 until Increased value of mixed fleet as the network grows Taking advantage of new aircraft technologies Hedging against fuel price volatility Development of new markets with smaller aircraft Improving profitability of existing thinner routes (higher RASK) Replace smaller aircraft with larger as markets grow 1 B737 MAX B737 MAX 8

27 In 2018 we will introduce the B737 MAX and start to leverage its potential All year Enables aircraft right sizing, potential for 2 nd daily frequency on existing routes as well as introduction of new routes Winter Lower trip cost of the B737 MAX will enable year-round service on some routes and greater frequency on others * Map shows potential use of the B737 MAX in 2018 within the current Route Network and is subject to change.

28 Boeing is on track to deliver the B737 MAX on time in the first half of 2017 Recent accomplishments Meeting performance and schedule commitments Flight test program progressing Engine certification on track and on target B737 MAX program Focus Right at first flight - Reliability and maintainability Flight test execution Amended type certification (ATC) Production ramp rate 2012 firm concept Source: The Boeing company, November firm configuration 2014 design 2015 build first flight 2017 First delivery 2018 First delivery to Icelandair

29 The seat count will range from in the future fleet with superior passenger experience compared to LCCs* +108 B737 MAX8 B737 MAX9 B Saga Class seats Economy Class seats B737 MAX8 B737 MAX9 B B B Icelandair LCC Icelandair LCC Icelandair LCC * LCC = Low Cost Carrier. Seat count represents a typical cabin layout.

30 Our current fleet plan assumes continued growth, but it is flexible. For example, we can adjust the number of B757 s in operation in line with market conditions +46% MAX MAX /

31 Icelandair operates 2 banks out of Iceland and is considering the 3 rd bank to further grow the Route Network bank l l l l l l l l l l l l l l l l l l l l l l l l hours N-America Europe N-America bank l l l l l l l l l l l l l l l l l l l l l l l l hours Europe N-America

32 Strategic focus in 2017 on our 80 th anniversary 2 B allocated to largest routes Lean management and operational efficiency Improved social media services Improved On-Time performance, especially in KEF Global Stopover campaign Stronger ancillary revenue streams Strengthening of Network Control Center in KEF Digital business: improvements throughout the journey Increased maintenance capacity in KEF with new hangar

33 Fjárfestadagur Icelandair Group 11. nóvember 2016

SAS Q3 2014/2015 TELECONFERENCE 08.09.2015

SAS Q3 2014/2015 TELECONFERENCE 08.09.2015 Q3 brief summary Q3 update Commercial initiatives paying off EuroBonus members up 15% - now 4 million Summer program with 47 seasonal routes well received by