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Chairman Address

finnur_ingolfss

Towards expansion

ICE_35689_Arsskyrsla_loka_low_finnurIcelandair Group has an extremely brief history, having been established only last year. nevertheless, the Company has a background of 70 years. It is rooted in the soil ploughed by its predecessors, the airline companies loftleišir, Flugfélag Ķslands and Flugleišir. These predecessors were active participants in the Icelandic community and business life from the time that Iceland became a republic. The 70-year history of the Company is a history of an enterprise operating in times of profound changes. It is the history of men and women who had the courage and vision to take on the colossal and ambitious task of building for the people and businesses of an isolated island state a bridge to the continents on both sides of the Atlantic. It is also a history of turmoil, struggle, revolutions, sorrow, happiness, victories and defeats.

Icelandair Group was founded last year as a holding company with 12 independent subsidiaries and 2,700 employees. The Company was originally owned by Fl Group. In october, three core investors joined forces in acquiring the Company from Fl Group with the support and advice of Glitnir bank. The investment was founded on four principal assumptions: in the first place, it was the assessment of the investors that the Company was profitable, with numerous opportunities for growth in Iceland and elsewhere; in the second place, the decision was seen as a long-term investment in a growing and profitable sector; in the third place, the investors had faith in the management and employees of the Company; and in the fourth place, it was seen as a challenge to take on the operation of a new and unshaped company, which at the same time was about to celebrate its 70th anniversary. This paradox is in itself an opportunity.

The new owners, through their investment, will have an opportunity to involve themselves in the reinvention of the Company and in shaping its organisation, future vision and focus in co-operation with the Company management, which has great ambitions for the Company’s growth and prosperity. Icelandair Group is intended to be a well-known international travel and air service company, with Iceland as its cornerstone, a service-oriented public company capable of reacting quickly and confidently to changes in circumstances. In order to meet these requirements, the Company will always need to have in its service a tightly knit group of employees possessing knowledge and experience of the complex world of international air transport and tourist services. There are few things that could take the highly educated and extensively trained staff of the Company by surprise. Icelandair’s specialised knowledge and firmly established international reputation, which is based on decades of business relationships throughout the world, provide a strong foundation for the future.

Growth has always characterised Icelandair Group and will continue to do so. substantial growth is foreseen in passenger air transport, cargo air transport and tourism in the world in the coming years and decades. Tourism is set to be among the fastest growing sectors of the world in the coming years. It is therefore a challenge for the staff and management to take advantage of the opportunities presented by this prospective growth.

This will take place in two ways:
on the one hand through profitable growth in the Company’s core activities, that is to say Icelandair’s international flights transporting passengers and goods to and from Iceland. The keywords in these operations are precision, efficiency, flexibility, drive and innovation. In these activities, the Company is working in the consumer markets around the world, customers number in the millions and the turnover is huge. external influences can have a significant impact on the operations in an extremely short time, which makes it important to be able to react quickly and confidently to changed conditions.

The other route is rapid growth in charter services, international air cargo services and aircraft trade. here, the opportunities for growth are based both on organic and external growth and on large-scale individual business deals, whether they involve acquisitions or take-overs of companies or large business contracts. The Company will expand this year, both through internal and external growth. In these fields, as in its other business, the Company possesses financial strength, experience and business contacts which will be utilised to their fullest extent.

Immediately following the change in ownership of the Company in october, the largest owners expressed their will to involve further investors and list the Company on the Iceland stock exchange. In connection with the sale of the Company and its listing on the Iceland stock exchange, a detailed presentation was given of the Company. The infrastructure of the Company, its organisation, financial position and vision were presented at numerous meetings with investors, the press, employees and market players, in addition to the detailed prospectus itself that was prepared for the listing. The Company was subsequently listed, and trading in the Company’s shares began on 14 December 2006. For the investors who were first involved in the acquisition of the Company, the substantial number new of investors that decided to join the Company on its listing on the Iceland stock exchange is a matter of great satisfaction.

Looking at the 70-year history of Icelandair Group’s predecessors and the transformations that have occurred reveals that the transformations reflect important milestones in Iceland’s economic history and its progress toward active participation in the international community. They also reflect the energy and unstinting work of the managers and employees of the Company, who have shown their Company extraordinary loyalty. At the present milestone, this history serves as an incentive to the Company’s new owners to raise its standards still higher and to do even better than in the last 70 years.

I would like to thank the entire staff for their important contribution and for a job well done in the past year; at the same time, we are grateful for the trust that our customers have shown the Company. In addition, I would like to thank our shareholders for the confidence that they have shown in the board of Directors of the Company over the year.


Finnur Ingólfsson

Chairman of the board



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