Interim report
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Interim Financial Statements of Icelandair Group hf. 30 September 2026 Contents Endorsement and Statement by the Board of Directors and the CEO ...................................................................................... 2 Consolidated Income Statement and Other Comprehensive Income ....................................................................................... 4 Consolidated Statement of Financial Position ........................................................................................................................... 5 Consolidated Statement of Changes in Equity .......................................................................................................................... 6 Consolidated Statement of Cash Flows .................................................................................................................................... 7 Notes to the Consolidated Financial Statements ...................................................................................................................... 8 1. Reporting entity .......................................................................................................................................................... 8 2. Basis of accounting .................................................................................................................................................... 8 3. Functional and presentation currency ......................................................................................................................... 8 4. Use of estimates and judgments ................................................................................................................................ 8 5. Changes in accounting policies .................................................................................................................................. 8 6. Seasonality ................................................................................................................................................................. 9 7. Operating segments ................................................................................................................................................... 9 8. Operating income ..................................................................................................................................................... 11 9. Operating expenses ................................................................................................................................................. 11 10. Depreciation and amortization .................................................................................................................................. 11 11. Finance income and (finance cost) ........................................................................................................................... 12 12. Loans and borrowings .............................................................................................................................................. 12 13. Lease liabilities ......................................................................................................................................................... 13 14. Deferred income ....................................................................................................................................................... 13 15. Financial instruments and fair value ......................................................................................................................... 14 16. Capital commitments ................................................................................................................................................ 14 17. Group entities ........................................................................................................................................................... 15 18. Investment and financing without cash flow effect .................................................................................................... 15 Appendix: Alternative performance measures (APMs) ............................................................................................................................ 16
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Interim Financial Statements of Icelandair Group hf. 30 September 2026 2 Endorsement and Statement by the Board of Directors and the CEO The Condensed Consolidated Interim Financial Statements of Icelandair Group hf. for the period from 1 January to 30 September 2026 have been prepared in accordance with IAS 34, Interim Financial Reporting. The Interim Financial Statements comprise the Consolidated Interim Financial Statements of Icelandair Group hf. (the "Company") and its subsidiaries, together referred to as the "Group". All amounts are stated in thousands of USD. According to the Consolidated Income Statement, the profit for the third quarter of 2026 amounted to USD 96.7 million and total comprehensive income amounted to USD 131.0 million. For the nine-month period from 1 January to 30 September 2026, the profit amounted to USD 19.1 million and total comprehensive income amounted to USD 74.1 million. Equity as of 30 September 2026 amounted to USD 361.0 million, according to the Consolidated Statement of Financial Position, and share capital amounted to USD 311.0 million. Reference is made to the Consolidated Statement of Changes in Equity regarding information on changes in equity. Statement by the Board of Directors and the CEO The Condensed Consolidated Interim Financial Statements for the nine months ended 30 September 2026 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Icelandic disclosure requirements for Consolidated Financial Statements of listed companies. The Condensed Consolidated Interim Financial Statements have neither been audited nor reviewed by the Company's independent auditors. Icelandair delivered record revenue of USD 655.0 million in the third quarter, an increase of 12% year-on-year. EBIT amounted to USD 120.3 million, the strongest quarterly EBIT since the third quarter of 2017, improving by USD 45.9 million compared to the same period last year, with the EBIT margin rising to 18.4% from 12.7%. Revenue growth significantly outpaced the 5% increase in operating expenses. Passenger revenue increased by 11% and unit revenue (RASK) rose by 18% year-on-year. Fuel costs before hedging increased by USD 45.9 million, or 45%, year-on-year, but hedging gains of USD 28.1 million offset a large part of the increase, limiting the net increase in fuel expenses to USD 12.9 million, or 11%. Unit cost (CASK) increased by 10% and CASK excluding fuel by 8%. Industrial action by the Association of Aircraft Maintenance Technicians in September had a negative impact of USD 4.0 million on EBIT. For the first nine months of the year, revenue amounted to USD 1,497.7 million, up 12% year-on-year, and EBIT amounted to USD 37.3 million, compared to USD 12.9 million in the same period last year. Icelandair’s passenger network capacity, measured in available seat kilometers, decreased by 6% year-on-year, while passenger traffic measured in revenue passenger kilometers decreased by 5%. Total passenger numbers reached 1.6 million, down by 3% from the same period last year. During the quarter, 42% of passengers travelled to Iceland, 18% from Iceland, 35% via Iceland and 4% within Iceland. Passenger numbers to and from Iceland increased by 8% and 11%, respectively, while connecting passengers decreased by 20% year-on-year, shifting the passenger mix towards the markets to and from Iceland. Yields improved by 17% and the passenger load factor reached 86.5%, up by 0.6 percentage points. On-time performance was 81.2% for the quarter, compared to 83.1% in the same period last year. Cargo revenue increased by 11% year-on-year to USD 20.2 million, with freight volumes, measured in freight ton-kilometers, up by 17%. Leasing revenue increased by 30% to USD 28.7 million, while sold charter block hours decreased by 5%. CO₂ emissions per operational ton-kilometer decreased by 3% year-on-year. Icelandair's transformation journey continues to progress well. Since the launch of the ONE transformation program, more than 700 initiatives have been identified, of which 347 have been implemented to date. These initiatives are expected to deliver approximately USD 138.3 million in annualized impact when fully realized, of which USD 40.2 million was realized in the third quarter of 2026. Icelandair employed an average of 3,797 full-time employees in the third quarter of 2026, 36 fewer than in the same period last year. Equity amounted to USD 361.0 million, with an equity ratio of 17.5% at the end of September 2026. Cash and marketable securities amounted to USD 458.3 million, and the Company had undrawn committed credit lines of USD 92.0 million, bringing total liquidity to USD 550.3 million at quarter-end. Interest-bearing loans and borrowings amounted to USD 150.2 million, down from USD 177.4 million at year-end 2025. Icelandair continues the renewal of its fleet. Six of the nine new Airbus A321LR aircraft under lease agreements have entered service, with the remaining three scheduled for delivery in the fourth quarter of 2026 and the first half of 2027. In addition, lease agreements have been signed for ten Airbus A320neo aircraft scheduled to enter service in 2027 and 2028, and deliveries of the 13 Airbus A321XLR aircraft on firm order are scheduled to commence in 2029.
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Endorsement and Statement by the Board of Directors and the CEO, contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 3 Statement by the Board of Directors and the CEO, contd. The Company expects full-year EBIT to be negative, in the range of USD 20-30 million, as the outlook for the fourth quarter is challenging, with profitability expected to be impacted by continued cost pressures, particularly high fuel prices. In the fourth quarter, capacity is expected to decrease by 3% year-on-year, while unit revenue is expected to increase by 6-9% and unit cost excluding fuel by 7-9%. Revenue performance for the winter season remains ahead of last year, although booking patterns are later than in previous years and competitive pressure has increased in selected European markets. The guidance assumes an average jet fuel price of USD 1,500 per metric ton in the fourth quarter and an ISK/USD exchange rate of 122, and remains subject to risks and uncertainties in the operating environment. To the best of our knowledge, it is our opinion that the Condensed Consolidated Interim Financial Statements give a true and fair view of the financial performance of the Group for the nine-month period ended 30 September 2026, its assets and liabilities, its consolidated financial position as at 30 September 2026 and its consolidated cash flows for the period then ended. Further, in our opinion, the Condensed Consolidated Interim Financial Statements and the Endorsement of the Board of Directors and the CEO give a fair view of the development and performance of the Group's operations and its position and describe the principal risks and uncertainties faced by the Group. The Board of Directors and the CEO have today discussed the Condensed Consolidated Interim Financial Statements of Icelandair Group hf. for the period 1 January to 30 September 2026 and confirm them with their signatures. Reykjavík, 22 October 2026 Board of Directors: Guðmundur Hafsteinsson, Chairman of the Board Nina Jonsson John F. Thomas Matthew Evans Svafa Grönfeldt CEO: Bogi Nils Bogason
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Interim Financial Statements of Icelandair Group hf. 30 September 2026 4 Amounts are in USD thousands Consolidated Income Statement and Other Comprehensive Income for the period from 1 January to 30 September 2026 Notes 2026 2025 2026 2025 Q3 Q3 YTD YTD Operating income 8 578,986 522,103 1,258,612 1,129,177 20,161 18,201 63,325 58,378 28,745 22,120 89,115 80,967 8 27,067 22,836 86,601 65,886 654,959 585,260 1,497,653 1,334,408 Operating expenses 120,651 114,728 362,078 331,080 131,497 118,624 340,150 276,193 111,168 107,159 291,772 262,007 125,965 124,089 334,193 323,079 9 489,281 464,600 1,328,193 1,192,359 165,678 120,660 169,460 142,049 10 45,396)( 46,306)( 132,161)( 129,191)( 120,282 74,354 37,299 12,858 6,784 8,498 20,209 37,508 11,413)( 11,067)( 38,667)( 32,208)( 11 4,629)( 2,569)( 18,458)( 5,300 723 300 694 1,659 116,376 72,085 19,535 19,817 19,647)( 14,803)( 475)( 6,301 96,729 57,282 19,060 26,118 Other comprehensive income (loss) 8,266 810)( 7,179 23,600 2,611 245)( 2,291 7,238 6,020)( 8,176)( 19,119)( 3,655 29,461 6,891 64,649 7,918 34,318 2,340)( 55,000 42,411 131,047 54,942 74,060 68,529 Profit attributable to: 96,746 57,503 18,904 26,420 17)( 221)( 156 302)( 96,729 57,282 19,060 26,118 Total comprehensive profit attributable to: 131,079 55,163 73,981 68,831 32)( 221)( 79 302)( 131,047 54,942 74,060 68,529 Earnings per share 0.24 0.14 0.05 0.06 0.22 0.14 0.04 0.06 The notes on pages 8 to 15 are an integral part of these Interim Consolidated Financial Statements. and amortization (EBITDA) .................................................................................................. Profit for the period ........................................................................................................................... in fair value, net of tax ........................................................ Other comprehensive income (loss) for the period ......................................................................... Currency translation differences .............................................. Cash flow hedges - effective portion of changes Cash flow hedges - reclassified to profit or loss, net of tax ..... Profit for the period ........................................................................................................................... Total comprehensive profit for the period ........................................................................................................................... Net profit on hedge of investment, net of tax ........................... Total comprehensive profit for the period ........................................................................... Non-controlling interest ............................................................ Income tax ............................................................................... Finance income ....................................................................... Other aviation expenses .......................................................... Finance cost ............................................................................ Net finance (cost) income............................................................................................................................... Profit before tax (EBT) ...................................................................................................................................... Operating profit (EBIT) ...................................................................................................................................................... Share of profit of associates .................................................... Other operating expenses ....................................................... Passenger revenue ................................................................. Leasing revenue ...................................................................... Other operating revenue .......................................................... Salaries and salary-related expenses ..................................... Cargo revenue ......................................................................... Aircraft fuel .............................................................................. Depreciation and amortization ................................................. Operating profit before depreciation Basic earnings per share in US cents ..................................... Diluted earnings per share in US cents ................................... Owners of the Company .......................................................... Non-controlling interest ............................................................ Owners of the Company ..........................................................
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Interim Financial Statements of Icelandair Group hf. 30 September 2026 5 Amounts are in USD thousands Consolidated Statement of Financial Position as at 30 September 2026 Notes 30.09.2026 31.12.2025 Assets 539,351 563,544 528,296 483,140 58,364 57,811 38,991 36,995 80,850 71,959 61,430 73,510 Non-current assets 1,307,282 1,286,959 31,993 28,138 57,351 3,967 202,770 178,835 88,482 170,369 369,801 195,466 Current assets 750,397 576,775 Total assets 2,057,679 1,863,734 Equity 310,973 310,973 143,405 68,785 95,782)( 95,707)( Equity attributable to equity holders of the Company 358,596 284,051 2,450 2,371 Total equity 361,046 286,422 Liabilities 12 123,699 138,243 13 498,145 461,570 151,272 146,809 Non-current liabilities 773,116 746,622 12 26,464 39,123 13 86,355 77,987 0 3,570 404,815 318,712 14 405,883 391,298 0 0Current liabilities 923,517 830,690 Total liabilities 1,696,633 1,577,312 Total equity and liabilities 2,057,679 1,863,734 The notes on pages 8 to 15 are an integral part of these Interim Consolidated Financial Statements. Cash and cash equivalents ................................................................................. Receivables and deposits .................................................................................... Inventories ........................................................................................................... Operating assets ................................................................................................. Intangible assets and goodwill ............................................................................. Investments in associates ................................................................................... Derivatives used for hedging ............................................................................... Right-of-use assets .............................................................................................. Deferred tax assets ............................................................................................. Trade and other receivables ................................................................................ Marketable securities ........................................................................................... Derivatives used for hedging ............................................................................... Loans and borrowings ......................................................................................... Trade and other payables .................................................................................... Deferred income ................................................................................................. Lease liabilities .................................................................................................... Share capital ........................................................................................................ Reserves ............................................................................................................. Accumulated deficit ............................................................................................. Provisions and other liabilities ............................................................................ Non-controlling interest ........................................................................................ Loans and borrowings ......................................................................................... Lease liabilities ....................................................................................................
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Interim Financial Statements of Icelandair Group hf. 30 September 2026 6 Amounts are in USD thousands Consolidated Statement of Changes in Equity for the period from 1 January to 30 September 2026 Non- Share Hedging Translation Other Accumulated controlling Total capital reserve reserves deficit Total interest equity 1 January to 30 September 2025 310,973 1,582)( 4,668)( 43,456 80,780)( 267,399 1,668 269,067 26,420 26,420 302) ( 26,118 23,600 23,600 23,600 7,238 7,238 7,238 3,655 3,655 3,655 7,918 7,918 7,918 978 978 978 23,367 23,367)( 0 0 310,973 9,991 26,170 66,823 76,749)( 337,208 1,366 338,574 1 January to 30 September 2026 310,973 317 18,467 50,001 95,707) ( 284,051 2,371 286,422 18,904 18,904 156 19,060 7,179 7,179 77)( 7,102 2,291 2,291 2,291 19,119)( 19,119)( 19,119)( 64,649 64,649 64,649 641 641 641 19,620 19,620)( 0 0 310,973 45,847 27,937 69,621 95,782) ( 358,596 2,450 361,046 The notes on pages 8 to 15 are an integral part of these Interim Consolidated Financial Statements. Cash flow hedges, reclassified to profit or loss .............. Effective portion of changes in fair value Currency translation differences .................................... of cash flow hedges, net of tax ................................... Equity 30 September 2026 ............................................. and associates ............................................................ Effects of profit or loss of subsidiaries of cash flow hedges, net of tax ................................... Stock options ................................................................. Net profit on hedge of investment, net of tax ................. Effects of profit or loss of subsidiaries Stock options ................................................................. Cash flow hedges, reclassified to profit or loss .............. and associates ............................................................ Profit for the period ........................................................ Equity 1 January 2026 ................................................... Equity 30 September 2025 ............................................. Effective portion of changes in fair value Reserves Attributable to equity holders of the Company Currency translation differences .................................... Net profit on hedge of investment, net of tax ................. Profit for the period ........................................................ Equity 1 January 2025 ...................................................
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Interim Financial Statements of Icelandair Group hf. 30 September 2026 7 Amounts are in USD thousands Consolidated Statement of Cash Flows for the nine months ended 30 September 2026 Notes 2026 2025 2026 2025 Q3 Q3 YTD YTD Cash flows to operating activities 96,729 57,282 19,060 26,118 Adjustments for: Depreciation and amortization ............................................. 10 45,396 46,306 132,161 129,191 Expensed deferred cost ....................................................... 17,476 17,676 46,003 46,784 Net finance cost (income) .................................................... 11 4,629 2,569 18,458 5,300)( Gain on sale of operating assets .......................................... 3,762)( 370)( 11,975)( 477)( Share of profit of associates ................................................. 723)( 300)( 694)( 1,659)( Income tax ............................................................................ 19,647 14,803 475 6,301) ( 179,392 137,966 203,488 188,356 Changes in: Inventories ............................................................................ 901)( 45)( 3,854)( 1,035)( Trade and other receivables ................................................ 15,705 19,508 59,780) ( 3,801 Trade and other payables .................................................... 19,897)( 25,121)( 85,658 91,509 Deferred income ................................................................... 186,422)( 154,155)( 14,612 27,298 191,515)( 159,813)( 36,636 121,573 Interest received ................................................................... 2,127 6,369 11,158 17,346 Interest paid ......................................................................... 10,831)( 10,677)( 32,453)( 30,695)( 20,827)( 26,155)( 218,829 296,580 Cash flows from (to) investing activities 11,692)( 15,118)( 49,932)( 50,016)( 5,156 2,255 20,864 4,068 541)( 2,570)( 2,557)( 5,562)( 698)( 258)( 2,008)( 2,367)( 0 0 111 985 5,150)( 1,456 10,756)( 5,304)( 25,192 12,108)( 81,888 70,589)( 12,267 26,343)( 37,610 128,785)( Cash flows used in financing activities 5,110)( 9,733)( 26,810) ( 30,837)( 22,201)( 18,896)( 63,411)( 53,150)( 27,311)( 28,629)( 90,221)( 83,987)( Change in cash and cash equivalents ............................................................................................... 35,871)( 81,127)( 166,218 83,808 Effect of exchange rate fluctuations on cash held ...................................................................... 7,733 421) ( 8,117 1,581 Cash and cash equivalents at beginning of the period ................................................................................... 397,939 317,172 195,466 150,235 Cash and cash equivalents at period end ............................................................................................. 369,801 235,624 369,801 235,624 88,482 175,152 88,482 175,152 Cash, cash equivalents and marketable securities at period end .. 458,283 410,776 458,283 410,776 Investment and financing without cash flow effect, see note 18. The notes on pages 8 to 15 are an integral part of these Interim Consolidated Financial Statements. Marketable securities ................................................................. Profit for the period ................................................................... Repayment of loans and borrowings ......................................... Marketable securities, change ................................................... Acquisition of operating assets .................................................. Proceeds from sale of operating assets .................................... Acquisition of intangible assets ................................................. Deferred cost, change ............................................................... Repayment of lease liabilities .................................................... Non-current receivables, change ............................................... Investment in associates ...........................................................
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Interim Financial Statements of Icelandair Group hf. 30 September 2026 8 Amounts are in USD thousands Notes 1. Reporting entity Icelandair Group hf. (the "Company") is a public limited liability company incorporated and domiciled in Iceland. The address of the Company's registered office is Flugvellir 1 in Hafnarfjörður, Iceland. The Condensed Consolidated Interim Financial Statements of the Company as at and for the nine months ended 30 September 2026 comprise the Company and its subsidiaries, together referred to as the "Group" and individually as "Group entities" and the Group's interests in associates. The Group primarily operates in the airline industry. The Company is listed on the Nasdaq Main Market Iceland. The Group's audited Consolidated Financial Statements as at and for the year ended 31 December 2025 are available on the Group’s website, www.icelandairgroup.com, and on the Nasdaq Main Market Iceland website, www.nasdaqomxnordic.com. 2. Basis of accounting Statement of compliance The Group's Condensed Consolidated Interim Financial Statements for the nine months ended 30 September 2026 have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual Consolidated Financial Statements as at and for the year ended 31 December 2025. These Condensed Consolidated Interim Financial Statements were approved for issue by the Board of Directors on 22 October 2026. Basis of measurement The Condensed Consolidated Interim Financial Statements are prepared on the historical cost basis except that derivative financial instruments, part of deferred income and certain short-term investments are measured at fair value. Going concern The Condensed Consolidated Interim Financial Statements are prepared on a going concern basis. 3. Functional and presentation currency The Company's functional currency is U.S. dollars (USD). These Condensed Consolidated Interim Financial Statements are presented in USD. All financial information presented in USD has been rounded to the nearest thousand, unless otherwise indicated. 4. Use of estimates and judgments In preparing these Condensed Consolidated Interim Financial Statements, management has made judgments, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited Consolidated Financial Statements as at and for the year ended 31 December 2025. 5. Changes in accounting policies The Group has applied the same accounting policies and methods of computation as in its 2025 Consolidated Financial Statements. New and amended IFRS Accounting Standards effective from 1 January 2026 did not have a material impact on these Condensed Consolidated Interim Financial Statements. IFRS 18 Presentation and Disclosure in Financial Statements, effective from 1 January 2027, has not been early adopted. The Group is currently assessing its impact.
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Notes, contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 9 Amounts are in USD thousands 6. Seasonality The Group’s operations are subject to seasonal variations in demand. The extent and timing of these variations may differ across the Route Network, Cargo and Leasing operations, affecting the Group’s financial performance between interim reporting periods. Accordingly, results for individual quarters and interim periods are not necessarily indicative of results for the full year. 7. Operating segments Segment information is presented in the Condensed Consolidated Interim Financial Statements in respect of the Group's business segments, which form the primary basis of segment reporting. The business segment reporting format reflects the Group's management and internal reporting structure and is divided into three segments: Route Network, Cargo operation and Leasing operation. The management of Icelandair Group assesses performance based on segment revenue and profit or loss and makes resource allocation decisions for the segments based on various performance metrics. The objective in making resource allocation decisions is to optimize consolidated financial results. Inter-segment pricing is determined on an arm's length basis. Route network The Route Network business unit is the main reporting segment, providing passenger air travel to, from, via, and within Iceland through the entities Icelandair ehf. and Flugfélag Íslands ehf. The segment also consists of the parent company, Icelandair Group hf., which serves as the holding company, as well as other entities such as Iceeignir ehf., a real estate entity; IceCap, a captive insurance entity; CAE Icelandair Flight Training ehf., which operates flight simulators; and FERIA ehf., a travel agency. These entities function as platform services that primarily support the Group's operations within this segment and are therefore classified accordingly. Cargo operation The Cargo operation, provided by the entity Icelandair Cargo ehf., offers air-freight services to, from, via and within Iceland by utilizing the capacity within the aircraft of the Icelandair passenger network as well as one freighter. Leasing operation The Leasing operation, provided by the entity Loftleiðir-Icelandic ehf., offers aircraft leasing and consulting services to international passenger airlines and tour operators. Reporting segments for the nine months Route Cargo Leasingnetwork operation operation Adjustments Total1,356,503 59,689 81,461 0 1,497,653 50,132 2,027 303 52,462)( 0 1,406,635 61,716 81,764 52,462)( 1,497,653 1,258,673)( 38,965)( 30,555)( 0 1,328,193)( 2,330)( 24,584)( 25,548)( 52,462 0 1,261,003)( 63,549)( 56,103)( 52,462 1,328,193)( 115,739)( 2,985)( 13,437)( 0 132,161)( 29,893 4,818)( 12,224 0 37,299 17,363)( 1,870)( 775 0 18,458)( 694 0 0 0 694 3,263 300)( 3,438)( 0 475)( 16,487 6,988)( 9,561 0 19,060 50,335 88 5,630 1,556)( 54,497 Income tax ..........................................................External revenue .................................................Inter-segment revenue .......................................Total segment revenue .......................................External operating cost .......................................Internal operating cost ........................................Total operating cost ............................................Depreciation and amortization ............................Segment EBIT ....................................................Net finance income (cost) ...................................Share of profit of associates ...............................Capital expenditures ...........................................Profit ...................................................................
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Notes, contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 10 Amounts are in USD thousands 7. Operating segments, contd. Reporting segments for the nine months, contd. Geographic information The geographic analysis presents the Group’s revenue by geographic market. The majority of the Group’s customers are located outside Iceland, while the vast majority of the Group’s non-current assets are located in Iceland. Revenue has been attributed to geographic markets based on the point of sale. Geographic segments for the nine months are as follows: Route Cargo Leasingnetwork operation operation Adjustments Total1,192,939 60,074 81,395 0 1,334,408 49,502 1,642 369 51,513)( 0 1,242,441 61,716 81,764 51,513)( 1,334,408 1,134,058)( 31,249)( 27,052)( 0 1,192,359)( 2,011)( 24,113)( 25,389)( 51,513 0 1,136,069)( 55,362)( 52,441)( 51,513 1,192,359)( 112,769)( 2,985)( 13,437)( 0 129,191)( 6,397)( 3,369 15,886 0 12,858 6,395 1,870)( 775 0 5,300 1,659 0 0 0 1,659 10,039 300)( 3,438)( 0 6,301 11,696 1,199 13,223 0 26,118 47,493 1,550 18,754 9,852)( 57,945 Income tax ..........................................................Profit (loss) .........................................................Capital expenditures ...........................................Share of profit of associates ...............................External revenue .................................................Inter-segment revenue .......................................Total segment revenue .......................................External operating cost .......................................Internal operating cost ........................................Total operating cost ............................................Depreciation and amortization ............................Net finance income (cost) ...................................Segment EBIT ....................................................North America Europe Iceland Other Total 2026661,178 303,670 263,708 30,056 1,258,612 3,468 26,783 33,074 0 63,325 16,932 8,912 5,347 57,924 89,115 2,759 4,385 78,754 703 86,601 684,337 343,750 380,883 88,683 1,497,653 46%23%25%6%100%Cargo revenue ....................................................Passenger revenue ............................................Leasing revenue .................................................Other operating revenue .....................................Total revenue ......................................................Total revenue % ..................................................2025639,346 272,912 190,229 26,690 1,129,177 3,342 22,952 31,120 964 58,378 21,051 2,429 4,858 52,629 80,967 2,099 3,336 59,916 535 65,886 665,838 301,629 286,123 80,818 1,334,408 50%23%21%6%100%Passenger revenue ............................................Leasing revenue .................................................Other operating revenue .....................................Total revenue ......................................................Cargo revenue ....................................................Total revenue % ..................................................
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Notes, contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 11 Amounts are in USD thousands 8. Operating income 9. Operating expenses 10. Depreciation and amortization 2026 2025 2026 2025 Passenger revenue is specified as follows:Q3 Q3 YTD YTD 569,621 513,589 1,232,224 1,107,577 9,365 8,514 26,388 21,600 578,986 522,103 1,258,612 1,129,177 Other operating revenue is specified as follows: 10,069 9,628 40,143 35,222 1,383 1,509 4,453 3,860 3,788 3,915 9,195 8,160 3,790 370 11,975 477 8,037 7,414 20,835 18,167 27,067 22,836 86,601 65,886 Passenger revenue ...................................................................Ancillary revenue .......................................................................Total passenger revenue ...........................................................Revenue from tourism ...............................................................Sales at airports ........................................................................Aircraft handling ........................................................................Gain on sale of operating assets ...............................................Other operating revenue ...........................................................Total other operating revenue ...................................................Salaries and salary-related expenses are specified as follows:101,313 93,665 290,958 260,883 15,914 15,799 48,191 43,863 3,424 5,264 22,929 26,334 120,651 114,728 362,078 331,080 3,797 3,833 3,589 3,576 Aircraft fuel is specified as follows:148,766 102,869 366,281 240,253 9,919 11,559 27,241 23,181 937 2,438 2,287 3,156 75)( 1,437 2,142 3,338 28,050)( 321 57,801)( 6,265 131,497 118,624 340,150 276,193 Other aviation expenses are specified as follows:1,853 4,363 3,615 5,032 62,656 60,975 153,759 143,814 46,659 41,821 134,398 113,161 111,168 107,159 291,772 262,007 Other operating expenses are specified as follows:22,619 23,327 61,957 63,769 7,817 7,791 32,735 27,100 11,925 11,525 32,202 28,883 5,709 4,981 16,442 19,743 31,337 26,492 67,272 58,295 33,094 32,950 85,060 78,943 2,236 1,441 6,726 6,236 370 127 627 500 10,858 15,455 31,172 39,610 125,965 124,089 334,193 323,079 Total salaries and salary-related expenses ...............................Contributions to pension funds ..................................................Other salary-related expenses ..................................................Average number of full-time equivalents ...................................Salaries .....................................................................................Fuel hedges ..............................................................................Total aircraft fuel cost ................................................................Aircraft and engine leases .........................................................IT expenses ...............................................................................Aircraft maintenance expenses .................................................Total other aviation expenses ...................................................Aircraft handling, landing and navigation ..................................Travel and other employee expenses .......................................Tourism expenses .....................................................................Aircraft fuel ................................................................................Emissions Trading System (ETS) .............................................Sustainable Aviation Fuel charges (SAF) ..................................CORSIA Carbon Credits ...........................................................Advertising ................................................................................Booking fees and commission expenses ..................................Customer services ....................................................................Operating cost of real estate and fixtures ..................................Allowance for bad debt ..............................................................Other operating expenses .........................................................Total other operating expenses .................................................The depreciation and amortization charge in profit or loss is specified as follows:23,067 27,146 68,316 75,778 21,739 18,847 62,389 52,450 590 313 1,456 963 45,396 46,306 132,161 129,191 Amortization of intangible assets ..............................................Depreciation and amortization recognized in profit or loss .......Depreciation of operating assets ...............................................Depreciation of right-of-use assets ...........................................
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Notes, contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 12 Amounts are in USD thousands 11. Finance income and (finance cost) 12. Loans and borrowings This note provides information on contractual terms of the Group's interest-bearing loans and borrowings, which are measured at amortized cost, and changes during the year. The Company has three committed credit lines in place with local banks in total amount of USD 92 million. The lines were undrawn at 30 September 2026. The Group was not in breach of any financial covenants at 30 September 2026. 2026 2025 2026 2025 Finance income and (finance cost) are specified as follows: Q3 Q3 YTD YTD Interest income on cash and cash equivalents5,018 6,917 15,508 20,305 317 444 1,054 1,375 1,449 548 3,647 2,382 0 589 0 13,446 6,784 8,498 20,209 37,508 1,911)( 2,686)( 6,068)( 8,385)( 8,930)( 8,138)( 26,197)( 22,297)( 2,212)( 243)( 6,028)( 1,526)( 1,640 0 374)( 0 11,413)( 11,067)( 38,667)( 32,208)( 4,629)( 2,569)( 18,458)( 5,300 and fair value on marketable securities ...................................Other interest expenses ............................................................Net currency exchange gain (loss) ............................................Finance cost total ......................................................................Net finance cost ........................................................................Interest on lease liabilities .........................................................Interest income on lease receivables ........................................Other interest income ................................................................Net currency exchange gain ......................................................Finance income total .................................................................Interest expenses on loans and borrowings ..............................Loans and borrowings are specified as follows: 30.9.2026 31.12.2025 Non-current loans and borrowings:148,487 172,930 1,676 4,436 150,163 177,366 26,464)( 39,123)( 123,699 138,243 Current loans and borrowings:26,464 39,123 26,464 39,123 150,163 177,366 Total non-current loans and borrowings .................................................................................Unsecured loans .....................................................................................................................Total loans and borrowings .....................................................................................................Total loans and borrowings .....................................................................................................Current maturities ...................................................................................................................Current maturities ...................................................................................................................Secured bank loans ................................................................................................................Total current loans and borrowings .........................................................................................Terms and debt repayment schedule:NominalinterestYear of Currency rates maturity30.9.2026 31.12.2025 USD 4.6% 2026-2034 115,357 131,727 EUR4.2% 2028-203033,130 41,203 ISK3.7% 20301,676 4,436 150,163 177,366 TotalSecured bank loans .............................................remaining balanceSecured bank loans .............................................Unsecured loans .................................................Total interest-bearing liabilities ...............................................................................................Repayments of loans and borrowings are specified as follows:30.9.2026 31.12.2025 13,240 39,123 17,606 17,875 55,025 55,155 11,666 11,714 20,242 21,193 32,384 32,306 150,163 177,366 Repayments in 2028 ...............................................................................................................Repayments in 2029 ...............................................................................................................Repayments in 2026 (3 months)(2025:12 months) .................................................................Total loans and borrowings .....................................................................................................Subsequent repayments .........................................................................................................Repayments in 2030 ...............................................................................................................Repayments in 2027 ...............................................................................................................
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Notes, contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 13 Amounts are in USD thousands 13. Lease liabilities This note provides information on the Group's lease liabilities, which are measured at amortized cost, and changes during the year. Further lease commitments are in place for thirteen aircraft to the Route Network, scheduled to be delivered as shown in the table below. The total lease liability for these aircraft is estimated at approximately USD 319 million. 14. Deferred income Sold unused tickets, fair value of unredeemed frequent flyer points and other prepayments are presented as deferred income in the Consolidated Statement of Financial Position. The amount allocated to sold unused tickets and vouchers is the book value of fares and fuel surcharges that the Group has collected and is liable to provide to passengers. Of this amount, sold tickets with future travel dates amounted to USD 311.8 million (2025: USD 304.3 million) and vouchers amounted to USD 14.1 million (2025: USD 18.8 million). When issued, the vouchers are generally valid for five years. The amount allocated to frequent flyer points is estimated by reference to the fair value of the discounted services for which they could be redeemed, since the fair value of the points themselves is not directly observable. The fair value of the discounted services for which the points, granted through a customer loyalty program, can be redeemed takes into account the expected redemption rate and the timing of such expected redemptions. That amount is recognized as deferred income. Other prepayments consist mainly of prepayments for packages and charter flights. Interest Year of Currency rates maturity30.9.2026 31.12.2025 USD6.1% 2026-2037579,085 534,342 ISK 7.0% 2026-2038 4,340 3,728 other5.4% 2026-20301,075 1,487 86,355)( 77,987)( 498,145 461,570 Lease liabilities ...................................................remaining balanceCurrent maturity ......................................................................................................................Total lease liabilities ................................................................................................................Lease liabilities ....................................................TotalLease liabilities indexed ......................................Repayments of lease liabilities are specified as follows:21,834 77,987 79,923 76,532 78,508 70,851 75,658 70,384 55,081 68,464 273,496 175,339 584,500 539,557 Subsequent repayments .........................................................................................................Repayments in 2030 ...............................................................................................................Repayments in 2027 ...............................................................................................................Total lease liabilities ................................................................................................................Repayments in 2026 (3 months)(2025:12 months) .................................................................Repayments in 2028 ...............................................................................................................Repayments in 2029 ...............................................................................................................Q4 2026H1 2027H2 2027Q1 2028Total1 2 0 0 3 0 4 4 2 10 1 6 4 2 13 A321LR ...............................................................A320neo .............................................................Total ....................................................................Deferred income is specified as follows:30.9.2026 31.12.2025 325,911 323,136 45,327 37,686 34,645 30,476 405,883 391,298 Other prepayments .................................................................................................................Frequent flyer points ...............................................................................................................Total deferred income .............................................................................................................Sold unused tickets and vouchers ..........................................................................................
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Notes, contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 14 Amounts are in USD thousands 15. Financial instruments and fair value The fair values of financial assets and liabilities, together with the carrying amounts shown in the Consolidated Statement of Financial Position, are as follows. The table does not include fair value information for financial assets and liabilities measured at fair value if the carrying amount is a reasonable approximation of fair value: Fair value hierarchy The tables below analyze the fair value of assets and liabilities and their levels in the fair value hierarchy: 16. Capital commitments In 2023, the Group finalized a purchase agreement with Airbus for up to 25 A321XLR aircraft, comprising 13 firm orders and 12 purchase rights, together with related spare engine agreements with Pratt & Whitney. Deliveries of the firm aircraft are scheduled to commence in 2029. In addition, the Group entered into lease agreements for nine new A321LR aircraft. As of 30 September 2026, six of these aircraft have entered service and the remaining three aircraft are scheduled for delivery to the Route Network as described in Note 13. Furthermore, the Group signed lease agreements for ten A320neo aircraft which are scheduled to be delivered in 2027 and 2028 as detailed in note 13. Carrying Carrying amount Fair value amount Fair value 57,351 57,351 397 397 1,676)( 1,732)( 4,436)( 2,305)( 148,487)( 153,591)( 172,930)( 181,390)( 584,500)( 584,500)( 539,557)( 539,557)( 677,312)( 682,472)( 716,526)( 722,855)( Secured loans ...........................................................................Unsecured bond issue ..............................................................30.9.2026Total ..........................................................................................31.12.2025Derivatives used for hedging .....................................................Lease liabilities ..........................................................................Level 1 Level 2 Level 3 Total30 September 2026Financial assets:57,351 57,351 0 57,351 0 57,351 Financial liabilities:1,732 )( 1,732 )( 153,591 )( 153,591 )( 584,500 )( 584,500 )( 0 0 739,823 )( 739,823 )( 31 December 2025Financial assets:3,967 3,967 0 3,967 0 3,967 Financial liabilities:2,305 )( 2,305 )( 181,390 )( 181,390 )( 539,557 )( 539,557 )( 3,570 )( 3,570 )( 0 3,570 )( 645,265 )( 726,822 )( Derivatives used for hedging .....................................................Unsecured loans .......................................................................Secured loans ...........................................................................Lease liabilities ..........................................................................Unsecured loans .......................................................................Secured loans ...........................................................................Lease liabilities ..........................................................................Derivatives used for hedging .....................................................Derivatives used for hedging .....................................................
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Notes, contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 15 Amounts are in USD thousands 17. Group entities The Company held the following significant subsidiaries at the end of September 2026: The subsidiaries further own eight minor operating companies that are also included in the Interim Consolidated Financial Statements. 18. Investment and financing without cash flow effect Many investing and financing activities do not have a direct impact on current cash flows although they do affect the capital and asset structure of the Group and should be excluded from the Statement of Cash Flows. Non-cash transactions are excluded from the Statement of Cash Flows, as they do not involve cash flows in the current period. Q3 20262025100% 100%100% 100%100% 100%67% 67%100% 100%100% 100%100% 100%100% 100%IceCap Insurance PCC Ltd. .................................................................................................... CAE Icelandair Flight Training ehf. ...................................................................................Ownership interest Flugfélag Íslands ehf. ........................................................................................................ Icelandair Cargo ehf. .........................................................................................................Iceeignir ehf. ...........................................................................................................................Icelandair ehf. .........................................................................................................................FERIA ehf. ..............................................................................................................................Loftleiðir - Icelandic ehf. .........................................................................................................2026 2025 2026 2025 Investment and financing without cash flow effect: Q3 Q3 YTD YTD 743)( 10,061 108,288 147,407 743 10,061)( 107,600)( 147,407)( 0 0 688)( 0 15,334 4,574)( 3,243 5,673)( 15,334)( 4,574 3,243)( 5,673 31,033 19,884 33,249 20,656 31,033)( 19,884)( 33,249)( 20,656)( New or renewed leases .............................................................Acquisition of right-of-use assets ..............................................Non-current receivables ............................................................Trade and other receivables: Carbon forward contract .............Surrender of carbon allowances ................................................Trade and other payables: Carbon forward contract .................Settlement of carbon obligations ...............................................
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Interim Financial Statements of Icelandair Group hf. 30 September 2026 16 Amounts are in USD thousands Alternative performance measures (APMs) 2026 2025 2026 2025 TrafficQ3 Q3 YTD YTD 5,765 6,120 14,312 14,347 11.25 9.63 10.04 9.07 86.5%85.9%84.1%83.3%9.75 8.28 8.46 7.56 10.21 8.69 9.00 8.07 8.32 7.57 8.91 8.13 6.15 5.68 6.68 6.30 4,986 5,254 12,040 11,954 1,641 1,698 3,984 3,906 81.2% 83.1% 82.0% 84.0%6,143 6,246 15,451 15,065 3,017 3,071 2,981 3,003 6,804 7,127 21,617 20,265 34,275 29,391 106,544 100,670 311 337 540 542 0.70 0.72 0.72 0.75 Passenger mix ('000)696 642 1,483 1,365 299 269 777 665 574 716 1,519 1,680 72 71 205 196 Capital structure30.9.202631.12.2025458,283 365,835 550,283 457,835 717,135 318,221 308,120)( 188,470)( 566,972 516,496 258,852 328,026 0.81 0.69 0.18 0.15 1.16 0.92 2026 2025 2026 2025 OtherQ3 Q3 YTD YTD 986 814 1,017 826 12,931 17,946 54,497 57,945 7,775 15,691 33,633 53,877 3,797 3,833 3,589 3,576 0.0081 0.0082 0.0081 0.0077 1.1599 1.1713 1.6696 1.1160 0.0083 0.0082 0.0083 0.0082 1.1355 1.1735 1.1355 1.1735 Sold Block Hours - Leasing ...............................................Net interest-bearing debt (USD '000) ...........................................................................Net lease liabilities (USD '000) ....................................................................................Net financial liabilities (USD '000) ...................................................................................Passenger total ('000) .......................................................Via ..................................................................................Within .............................................................................On-Time-Performance OTP ..............................................Passenger flights ...............................................................Stage length (KM) .............................................................To ...................................................................................From ...............................................................................Total cash and marketable securities (USD '000) ...........................................................Liquidity (USD '000) ........................................................................................................Freight ton kilometers (FTK '000) ......................................Total CO2 emissions tons ('000) .......................................Available seat-kilometers ASK (m.) ...................................RASK (US cents) ...............................................................CASK (US cents) ...............................................................Revenue Passenger Kilometers (RPK m.) ........................CASK less fuel (US cents) ................................................Yield (USD cents) ..............................................................TRASK (US cents) ............................................................Passenger load factor ....................................................... Period-end spot rate ISK ...................................................Period-end spot rate EUR ................................................. CO2 emissions per OTK ...................................................Current ratio ....................................................................................................................Equity ratio ......................................................................................................................Average rate ISK ...............................................................Average rate EUR .............................................................Effective fuel price (USD pr. metric ton) ............................CAPEX, gross (USD '000) .................................................Intrinsic value of share capital .........................................................................................CAPEX, net (USD '000) .....................................................Average FTE .....................................................................Interest-bearing financial liabilities (USD '000) ................................................................
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Alternative performance measures (APMs), contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 17 TrafficAvailable seat-kilometers (ASK) ...........Yield .....................................................Passenger load factor ..........................TRASK .................................................RASK ....................................................CASK ....................................................CASK less fuel .....................................Revenue Passenger Kilometers (RPK) ..............................Passengers total ..................................On-Time-Performance (OTP) ...............Passenger flights ..................................Stage length (KM) ................................Sold Block Hours - Leasing ..................Freight ton kilometers (FTK) .................Total CO2 emissions tons ....................CO2 emissions per OTK ......................Passenger mix:To ......................................................From ..................................................VIA ....................................................Within ................................................A flight flown by an airline for the purpose of carrying passengers, belly freight andmail according to a published timetable for which it receives commercialremuneration. Calculated by dividing RPK by ASK. Passengers traveling across the Atlantic connecting in IcelandPassengers traveling solely within Iceland The total number of seats available on scheduled flights multiplied by the number ofkilometers these seats were flown.Total revenues on a given flight divided by the ASK on that same flight.Total operating and depreciation cost per available seat kilometer is calculated bydividing total operating and depreciation cost on a given flight by available seatkilometers (ASK) on that flight.The average amount of total passenger revenue received per paying passengerflown one kilometer. Total Yield is calculated as total passenger revenue/RPK. Totalpassenger revenue used for this calculation includes airfare, excess baggage, cabinupgrade and seat selection revenue.Each passenger is counted by the number of flight coupons his journey requires. Apassenger flying KEF-CPH is counted as one passenger, a passenger flying NYC-KEF-CPH is counted as two passengers.Total operating and depreciation cost per available seat kilometer less fuel iscalculated by deducting cost of fuel, fuel hedges, carbon emissions trading expensesand de-icing from total operating and depreciation cost and dividing by total availableseat kilometers (ASK).A measure of flights arriving within 15 minutes of scheduled arrival time. OTP iscalculated by dividing the number of arrivals that arrive within 15 minutes ofscheduled arrival time by the total number of arrivals.Passenger visiting IcelandPassengers originating in Iceland visiting destinations outside of IcelandThe number of tons of freight carried, obtained by counting each ton of freight on aparticular flight (with one flight number).Carbon emissions from all flights, measured in tons.Sold Block Hours in the leasing operation. Block Hours is the time computed fromthe moment the blocks are removed from the wheels of the aircraft until they arereplaced at the next point of landing.CO2 emitted by moving one payload tonne one kilometer for all international flights.The distance flown from takeoff to landing in a single leg. Total uplift revenue including excess baggage, class up, and chargeable seating ona given flight divided by the ASK on that same flight.The number of revenue passengers carried on scheduled flights multiplied by the number of kilometers flown.
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Alternative performance measures (APMs), contd. Interim Financial Statements of Icelandair Group hf. 30 September 2026 18 Capital structureTotal cash and marketable securities .......................Liquidity ................................................Net interest-bearing debt ......................Net lease liabilities ...............................Net financial liabilities ...........................Current ratio ........................................Equity ratio ...........................................Intrinsic value of share capital ..............OtherEffective fuel price ................................CAPEX, gross ......................................CAPEX, net ..........................................Average FTE ........................................Average rate .........................................Lease liabilities (including assets held for sale, net of lease receivables).Capital expenditure of operating assets, intangible assets and deferred cost lessproceeds from sale of operating assets.Indicates the ratio of how leveraged the Company is and is calculated by dividingtotal equity by total assets.Total cash and cash equivalents (including cash from assets held for sale),marketable securities and undrawn revolving facilities.Loans and borrowings, net of total cash and marketable securities.The sum of net interest-bearing debt and net lease liabilities.Indicates how many times over current assets can cover current liabilities and iscalculated by dividing current assets by current liabilities.Capital expenditure of operating assets, intangible assets and deferred cost.Cash and cash equivalents (including cash from assets held for sale) and marketable securities. Average full-time employee equivalent.Average currency rate in the period.Cost of jet fuel and surcharges, including hedging results, but excluding de-icing andemissions trading cost (pr. ton).Indicates the book value of each share and is calculated by dividing total equity byshare capital.