Scheduled Airline Operations

Scheduled Airline Operations is an Icelandair Group business platform comprising three companies: Icelandair, the international full-service airline with a hub in Iceland; Icelandair Cargo, a full-service air-freight company and Icelandair Ground Services, which handles airlines and passenger services at Keflavik Airport. These companies work closely together and have long historical ties. In 2007 they accounted for roughly two thirds of the Group’s income.

Their main joint task is to run a profitable airline network operation and take advantage of any potential opportunities for growth. This involves aggressive sales and marketing activities on the part of all companies, as well as tight revenue management and cost control throughout the operation.

In 2007 the Icelandair network offered more flights and carried more passengers than ever before in its 70 year history. Icelandair increased its number of trips 6% from 2006 and passenger numbers were up by 4%. Load factor was affected by overcapacity in the market in Q2 and Q3 and was down in 2007 from the previous year. Icelandair’s business strategy is based on the geographical position of Iceland between huge passenger and freight markets in North America and Europe. By combining in its aircraft passengers visiting Iceland, passengers departing Iceland and passengers travelling across the Atlantic the network has grown steadily.

In 2007 Icelandair underperformed even if improved revenue management and capacity control in Q4 partially offset revenue shortcomings from Q2 and Q3. The Icelandic passenger market continued to be strong last year, but export and revenue at Icelandair Cargo was lower than anticipated. Maintenance cost was higher than anticipated in network and cargo operations. A renewal of Icelandair’s services and aircraft interiors is planned for the year 2008.

The total turnover in Scheduled Airlines Operations in 2007 was ISK 51.5 billion and EBITDA was ISK 2.7 billion.


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