ICELANDAIR GROUP hf. Presentation of Q4 and Annual Results

Importance of air cargo in a connected world
Gunnar Már Sigurfinnsson | Managing Director Icelandair Cargo
An independent subsidiary of Icelandair Group since 2000
 The corporate history of Icelandair Cargo is intertwined with Icelandair‘s history
 With offices in Reykjavík, Keflavík, New York and Liege Belgium the company employs 53
professionals with touch points from check-in to home-delivery.
 Icelandair Cargo has operated a warehouse in Keflavik International Airport since 2001 and has
invested significantly in new processes to safeguard freshness of produce over the last decade.
 All cargo operations – both domestic and international – were consolidated within Icelandair Cargo
in 2015, when the company took over the cargo operations of Air Iceland.
An efficient protein delivery route around the world catering to
growing demand for fresh produce
It is estimated that air
freight represents 1%
of total freight
transport – but it
accounts for around
35% of its overall
value – and the
number is rising
Fresh fish is the
predominant export
produce on board
outward bound
Icelandair Cargo
aircraft.
On the way back to
Iceland, the cargo
hold is dominated by
perishable fruit and
vegetable,
pharmaceutical
products, computers
and cell phones in
addition to a variety of
high value produce.
The third element of
transport is a the
transit freight that we
bring from US to
Europe or vice versa
where life lobster has
the biggest volume
Our fleet mix of belly space on board Air Iceland and Icelandair in
addition to our dedicated cargo aircraft provide ample opportunities
38
| Operating 2 Boeing 757-200 Freighter Aircraft
| Capacity up to 38 tons per trip
tons
9
| Belly Holds in Icelandair Passenger Aircraft
4
| Belly Holds in Air Iceland Aircraft
| Capacity up to 9 tons per trip
tons
tons
| Capacity up to 4 tons per trip
Icelandair Cargo supports the growth of Icelandair by utlising
belly space and lowering fixed costs with topline growth
2.000.000
Freighters
1.500.000
Passenger Flights
1.000.000
500.000
0
2010
2011
2012
2013
2014
The cargo strategy stipulates focus on growing the belly space in
freight transport to release synergies across the Group
2014
2008
16%
59%
41%
84%
Passenger aircraft
Freighter aircraft
Demand fluctuations for air freight cargo calls for systematic
supply engineering to maximize utilisation
High demand mid week and weekends
but low demand on Mondays and Fridays
+113%
5.000.000
More demand over the winter months
with downtrend over the summer
2.200.000
4.500.000
2.000.000
4.000.000
1.800.000
3.500.000
1.600.000
3.000.000
1.400.000
Export
1.200.000
2.500.000
1.000.000
2.000.000
800.000
Import
1.500.000
600.000
1.000.000
400.000
500.000
200.000
0
Mon
Transit
Export
Tue
Import
Wed
Thu
Fri
Sat
Sun
Transit
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Fresh fish to North America is the largest segment and Boston is
the single largest export market within the Network
Revenues
in ISK millions
Belly volumes
2014, KG
1.700
1.600
Transit
Export
Import
1.500
1.400
1.300
1.200
1.100
1.000
900
800
700
600
500
400
300
200
100
0
Continental
Europe
Scandinavia
Great Britain
North America
BOS
LHR
JFK
AMS
YYZ
IAD
EWR
FRA
OSL
CPH
ARN
LGW
CDG
GLA
SFB
HEL
SEA
DEN
MAN
Other 17
2.797.734
1.857.766
1.546.697
766.941
698.106
625.565
579.749
563.551
530.528
512.221
499.742
444.779
327.346
234.127
173.706
163.982
152.420
142.558
126.859
433.622
The value of belly cargo on B757 to Boston can be up to
USD 20.000 for each one way trip from KEF to BOS
| Ability to carry up to 9,000 kg of fresh fish in one trip to BOS
| The value of this shipment is 20,000 USD for Icelandair Group
| Suppose that every passenger in the same trip will pay an average of 3-400 USD per one-way
KEF-BOS
50-60 seats
| The value of the shipment is the equivalent up to 50-60 passenger seats per flight to BOS
The value of belly cargo on B767 to Boston can be up to
USD 31.000 for each one way trip from KEF to BOS
| Ability to carry at least 14,000 kg of fresh fish in one trip to BOS with B767
| The value of this shipment is 31,000 USD for Icelandair Group
| Suppose that every passenger in the same trip will pay an average of 3-400 USD per one-way
KEF-BOS
70-80 seats
| This shipment is equivalent up to 70-80 passenger seats per flight to BOS
Our competitors have increased their focus on cargo and belly
utilisation and are nurturing their cargo operations
Airline companies that
put significant emphasis
on their cargo operations
Airlines that don‘t
have cargo
is declining
Value of air freight exported fish amounts to ISK 38 billion*
annually and will continue to grow with increased demand
16%
Fish export from Iceland - air freight
Fish export from Iceland - other
84%
* Source Marco Partners
With new markets new opportunities arise
+2,091%
742,478
679,677
| New markets continue to open up
400,121
| Exponential growth in fresh fish
exports to Canada since
introduction of new destination in
the Network
31,022
5,347
2011
2012
Export to Canada in KG
2013
2014
2015 F
| Around 750 tonnes onboard
Icelandair Cargo to Canada in
2015, up from 5 tonnes in 2011