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The year 2019 was a particularly eventful year for Isavia. The period 2009–18 saw steady growth in the number of international passengers – around 20% on average year-on-year. Last year saw an abrupt reversal, with passenger numbers falling some 26%. This is attributable mainly to the collapse of WOW air at the end of March 2019 and the grounding of Icelandair’s Boeing 737 MAX aircraft around the same time.

A new CEO began at Isavia in the course of 2019, bringing with him a refocusing of priorities. Business operations were sharpened by distinguishing between the various operational activities engaged in within the Group and hiring several new executives. At the same time, changes were made to the organisation of Keflavík International Airport, with a view to bringing development closer into line with the needs of customers and giving greater priority to service experience in the airport’s operations, both for passengers and the airlines using the airport. Keflavík Airport is in tough competition with airports abroad and must make the most of all its assets, even more so now in tougher times and with disruptions in international tourism. The changes being made at the airport and in the company are aimed at making our operations more resilient.

The collapse of WOW air a year ago was followed by a general debate on the legal basis for grounding aircraft for unpaid user fees. The aircraft in question was operated by WOW air but not owned by them. The Reykjanes District Court ruled against Isavia in this case, with no recourse to suspending the legal effect of the ruling until the case could be brought before a higher court. Isavia was therefore no longer able to hold the aircraft and lost its rights over the aircraft in the legal proceedings. The previous ruling of the Court of Appeal – which was in favour of Isavia – was therefore rendered void. Isavia deems the ruling of the Reykjanes District Court to be wrong and is suing the state Treasury and the aircraft owner for damages in respect of the irrevocable execution in this case.

Keflavík Airport is in tough competition with airports abroad and must make the most of all its assets, even more so now in tougher times and with disruptions in international tourism

On top of the fall in passenger numbers, in early 2020, the company was subject to new financial obligations from its owner, the Icelandic state. This means that the financial liability for investments and operational losses at Egilsstaðir Airport fall temporarily to Isavia. Egilsstaðir Airport is an important airport and offers good possibilities for development. This does not, however, alter the fact that the airport is financially unsustainable and part of Iceland’s public-transport system. It is therefore fundamentally different from Keflavík International Airport – which is financially independent, requires major development and faces tough competition from airports abroad. This arrangement will weaken Isavia’s financial position and impair its capacity for further development at Keflavík Airport.

Recent weeks have brought considerable uncertainty, with the COVID-19 virus taking its toll on passenger air travel. As things stand, it is unclear what the permanent effect will be, but it is certain they will be significant.

Despite all these challenges, the company is on a sure footing. Isavia is well prepared to tackle these deteriorating external factors. It is even more important now than often in the past to not let the company’s financial strength be sapped by foisting upon it – with no compensation – the task of resolving costly issues that are under the control of public authorities.

I should like to thank our CEO and the Executive Board for the fine work they have done in these challenging times. It is important for Isavia to continue to deliver everything that is expected of this key company for Icelandic tourism and the Icelandic economy.

Orri Hauksson, chairman of the board of directors