P/F Atlantic Airways Annual General Meeting 8 March 2013

Atlantic Airways at a glance

• Atlantic Airways was established to develop the Faroese airline industry and airline services – National airline carrier of the Faroe Islands – International company based in Sørvágur, Faroe Islands – Operational base in Faroes and satelite base in Copenhagen – 172 FTE – Celebrating 25 year anniversary on 28MAR13

• Operating in three main segments: – Scheduled flights with Faroe Islands as cornerstone – Charter operations mainly in Europe – Helicopter operations in Faroese and North Sea waters

• In average operating 4 aircraft and 3 helicopters in 2012 – Excluding aircraft leased out

• Transported in total 267,000 (260,000) passengers in 2012 • Of them 208,000 (193,000) passengers on scheduled flights

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2012 in brief

• Succesfull and controlled introduction of Airbus 319 •

Established a new fixed wing operational platform

• Significant increase in helicopter operations
Total revenue MDKK 501.3 (435.6)
EBITDA MDKK 83.4 (74.4)
The result before tax MDKK 17.1 (27.5)
The result after tax MDKK 14.0 (22.5) • Increased activity, higher turnover, but lower result • Contribution from helicopter operation increased significantly, while contribution from fixed-wing activity decreased in 2012 • One off costs to implementation of new type • Lower loadfactor and lower yield • Lower contribution from ACMI/charter operations • Total cost to fuel and CO2 allowances increased by MDKK 17.2 • Two major interruptions in June and December incurred costs of MDKK 8.5 • Depreciations increased by MDKK 15

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Fourth quarter of 2012 in brief

• Increased passenger numbers on scheduled services and increased helicopter activity • Revenue was MDKK 115.8 (98.4) in Q4 • EBITDA were MDKK 14.9 (12.4) • Result before tax was MDKK -2.7 million (0.1) • The result after tax was MDKK -2.2 million (0.1) • Total depreciation and impairment was MDKK 15.8 (12.0) in Q4 • Main reason for decline in Q4: Cost of rescheduling services up to Christmas together with two unscheduled engine removals • All customers where served properly and reached their destination prior to Christmas

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Segment overview - Income distribution

• In 2012 the income was distributed between Scheduled services 73% (82%), Charter operations 14% (12%) and Helicopter operations 13% (6%) • Export income is defined as income originating from customers based outside Faroe Islands

Diversified income in 2012

Export income in 2012

13%

14%

Domestic income

49% 51%

Export income

73%

Scheduled services

ACMI/Charter operations

Helicopter

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Segment overview - Block hour distribution

Q4 2012

2012

1.400

7.000

1.200

6.000

1.000

5.000

800

4.000 Q4 2012

600

2012

3.000

2011

Q4 2011

400

2.000

200

1.000

0

0 Scheduled services

ACMI/Charter operations

Helicopter

Scheduled services

ACMI/Charter operations

Helicopter

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Scheduled services - Traffic information Weekly Departures expected

High season

Scheduled services Block Hours

Low season 8.000 7.000

Copenhagen

21

13

Reykjavík

3

2

Billund

7

2

Aalborg

3

6.000 5.000 4.000 3.000 2.000 1.000 0

Bergen

2

London

2

Barcelona

1

Milano

1

Total

40

2008

1

2009

2010

2011

2012

Scheduled services – Number of passengers 250.000

18

200.000 150.000 100.000 50.000 0 2008

2009

2010

2011

2012

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Scheduled services - Comments

• Passenger numbers increased 8% on scheduled services in 2012 from 193,000 to 208,000 • Available seats increased by 12% • Loadfactor decreased 3% from 77% to 74% • Turnover increased by MDKK 15 • Higher growth in the tourist segment • Market demand originating in Faroes has increased as well • Lower entry fares, improved distribution and market initiatives • Expansion of the company’s route network to include Barcelona was well recieved • Airbus savings on fuel was offset by increased fuel price.

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Charter operations

• Charter/ACMI decreased by 250 hours and counts for 22% (24%)of fixed wing operations • Turnover increased by MDKK 18 • But contribution decreased in 2012 • Significant difference in turnover level in different segments. • Customer carries a great portion of costs directly in ACMI segment

Charter operations (fixed-wing) Turnover MDKK 160 140 120 100 80 60 40 20 0 2008

• Significantly lower demand in ACMI

2011

2012

10.000

• Established a wet–lease in Chile

8.000

• Widening our scope for 2013 with increased A 319 capacity

6.000

• Charter activity will grow in 2013 and reach a level of 4,500 to 5,000 hours in 2014

2010

Charter operations Block hours

• Growth in full charter from Denmark • Growth in charters to/from Faroes – especially oil related

2009

4.000 2.000 0 2008

2009

2010

2011

2012

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Fuel costs – Fixed wing

Allocation of costs 2002

Allocation of costs 2012

Fuel 12%

Fuel 24%

Other costs 76% Other costs 88%

Fuel expenses per roundtrip with RJ FAE-CPH 60 TDKK (24TDKK in 2002)

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Helicopters - Recent developments Domestic services since 1994 • Scheduled service to remote islands • SAR since 2001 • Signed a four-year contract with Government in January 2012 Offshore and charter • Contract with Statoil on air logistic support • Leased in a AW 139 helicopter to support oil exploration in 2012 • Positive feed-back

Helicopter operations

• Significant contribution

1.400

• Basis for expansion of activity

1.200 1.000

Fleet and maintenance

800

• Posess neccesary competences to transform form B 412 platform to AW 139

600

• Evaluating options for sustainable growth

200

400

0 2008

2009

2010

2011

2012

11

Fleet development The fleet in brief: Four fixed-wing aircraft and two rotor-wing aircraft were in service at year-end 2012. Three fixed-wing and two rotor-wing aircraft in ownership at year-end 2012* – Book value 303 MDKK One AW 139 was leased in on a short-term arrangement to support oil exploration in 2012 Took delivery of one Airbus 319 on March 22nd 2012

Fleet in service at year-end 2012*

No.

Own

Manufact.

A319

1

1

2012

Avro RJ 100/85

3

2

1993-1999

Bell 412

2

2

1993-1997

Expected delivery 2 A319

2013

Expected disposal 2 Avro RJ85

Expect to phase-out in March and October 2013

*Excluding aircraft leased out

Expect to phase out two Avro RJ-85 aircraft Two Airbus 319 will enter the fleet in 2013

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Fleet development First Airbus 319 scheduled fligh on March 28th 2012 The phase in went smooth Configured to 144 seats compared to present 95 Higher comfort level onboard Efficient aircraft with significantly lower fuel burn and maintenance costpr. seat New opportunities to fly longer sectors and service destinations up to 5.000 kilometers away Customers appreciate the new aircraft product Aircraft has met operational perforamance expectation - First European airline to recieve autorisation for RNP – AR 0.1 procedures for approach and take off.

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RNP AR on Airbus 319 – in brief • 10 different GPS based departure and approach tracks • Conventional ground-based antennas offer only 2 tracks • Flexible choice of tracks near runway, depending on conditions • Easier to avoid turbulence areas • Flight path (track and altitude) fully managed by autopilot in all flight phases • Conventional usually only offers track control, and only manual control in ’missed approach’ • Provides crew with more capacity to monitor and correct • Approach and landing minimas are lowered • Able to land in poorer visibility than with conventional aids • Flight tracks are shortened • Shorter flight time and lower fuel burn

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RNP AR on Airbus 319 – The pilot’s perspective

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RNP AR on Airbus 319 – in brief RNP Approach VS Conventional approach • Increased safety • Reduced fuel burn • Reduced CO2 emissions

CONVENTIONAL APPROACH Flight Time: 16 min Track miles: 51,4 Nautical Miles RNP APPROACH Flight Time: 10 min Track miles: 35,7 NM

Flight time saving: 6 minutes Track miles saving: 15 NM 16

Financials (1)

INCOME STATEMENT (DKK 1,000)

2012

2011

501,303

435,638

-321,043

-270,660

Employee expenditures

-96,915

-90,618

Result before depr., amort. and impairm. (EBITDA)

83,345

74,359

Depreciations, amortisations and impairment

-58,200

-43,071

Result before financial items (EBIT)

25,145

-31,288

-8,012

-4,103

Share of p/l of ass. comp.

-17

-310

Result before tax (EBT)

17,116

27,495

-3,081

-4,949

14,035

22,546

Total revenue Flight expenses

Net financial items

Tax

Profit

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Financials (2) BALANCE SHEET (DKK 1,000)

31.12.2012

31.12.2011

6,379

6,177

362,478

233,284

1,617

1,634

370,474

241,095

2,397

3,201

Total receivables

30,159

39,313

Cash and cash equivalents

97,104

98,572

Total current assets

129,659

141,086

Total assets

500,133

382,181

Total equity

247,293

249,626

Total non-current liabilities

164,534

64,393

88,307

68,162

500,133

382,181

Assets Intangible assets Tangible assets Other non-current assets Total non-current assets Inventories

Equity and Liabilities

Total current liabilities Total equity and liabilities

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Financials (3)

Cash flows (DKK 1,000)

2012

2011

85,961

83,065

Investing activities*

-187,596

575

Financing activitites

100,167

-66,212

-1,469

17,428

-183,363

3,565

Net cash flow from:

Operating activities

Cash flows for the period

*Of this purchase of property, plant and equipment

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Liquidity and capital structure

As of 31 December 2012, Atlantic Airways had a equity ratio of 49% and net cash of DKK 97 mill.

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Listing and ownership • Floated on NASDAQ OMX in Iceland December 2007 and on NASDAQ OMX Copenhagen in November 2008

Listings

NASDAQ OMX Iceland

NASDAQ OMX Copenhagen

Symbol

FO-AIR

FO-AIR

MDKK 140

MDKK 140

Market Cap. (as of 4 March 2013)

• 33% of shares held by private investors • 67% by the Faroese Government Shareholders Faroese Government Sp/f.07.12.2007 Other registered shareholders

Ownership 67.0 % 5.6 % 25.5 %

Non-registered shareholders

0.8 %

Own shares

1.1 %

Total

100 %

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Share price

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Focus areas in 2013 • Lower unit cost and improve competitivity • Phasing out two Avro RJ 85 • Phasing in two Airbus 319 • Increase loadfactor on scheduled services and increase utilisation of aircraft and crew • Diversify commercial operations • Grow market and travel to and from Faroe Islands by:
increase available seats by 5% during 2013
further improve product and price flexibility
new service to Italy and extend Barcelona
more Airbus frequncies
join forces to market Faroes for tourists
focus on growth in low- and shoulder season • Plan and prepare for phase in of new helicopter type and increase involvment in offshore activity • Meet challenges and changes caused by construction of new terminal

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Focus areas in 2013 •

Expand and develop the charter activity

•

Neccesary to complement the limited home market opportunities beyond Faroe Islands

•

Carefully chosen destinations where we already have a well established service

•

Best basis for synergy between scheduled and charter segment and logistic support

•

Second Airbus based in Billund for charter and scheduled services

•

Third Airbus based in Copenhagen for charter and scheduled services

•

Significant contracts signed with esteemed operator

•

Expands the geographic area beyond Europa

•

Expect increased charter production to a level of 4500 – 5000 hours in 2014

•

Contract cover year around production

•

Aircraft leased short term

•

Risk reduced via fuel and currency hedging

•

Supports fleet modernisation and lower unit cost

•

Supports diversification and reduces dependency on single activity

•

Providing job opportunities in Faroes and Denmark

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Expectations for 2013 Market conditions •

The European aviation environment is unstable and competitive

•

Goverment taken significant initiative to promote tourism

•

Supply of seats on the scheduled services is expeced to increase 5%

•

Market for charter operations widened because of Airbus capacity – significant charter contracts signed

•

Level of helicopter operations dependant upon oil activity and access to suitable helicopter capacity

Financial •

The predicted economic growth in Faroes Islands in 2013 is moderate

•

The lower Faroese income tax and growing number of Faroese people, who are employed overseas may stimulate air traffic positively

•

Moderate reduction in Faroese passenger tax is a positive move, while increased airport charges in Copenhagen must be hard to justify

•

The company expects an improved result in 2013, compared with 2012

•

External uncertainties such as fuel price, adwerse weather conditions and possible competition as well other risk factors mentioned in the section ‘Risk management’ may affect the financial performance

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Airline of the year and 25 year anniversary

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Board of Directors & management Board of Directors Kaj Johannesen, Chairman

Management Magni Arge, CEO

Jens W. Willumsen, Deputy Chairman Tezz Tordsdotter Ohlsson, Member of the Board Bjarni A. Bjarnason, Member of the Board

Marius Davidsen, CFO Joen Remmer, COO

Ingi S. Joensen, Member of the Board (employee representative)

Olaf S. Poulsen, Member of the Board (employee representative)

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Company information

P/F Atlantic Airways Vágar Airport FO-380 Sørvágur Faroe Islands Tel + 298 34 10 00 Fax + 298 34 10 01 Established 1987 Reg. no. 1223 VAT Number 379778 Domicile municipality: Sørvágur Website: www.atlantic.fo Email: [email protected]

For further information contact: Magni Arge, CEO, tel +298 213700- [email protected] Marius Davidsen, CFO, tel +298 213703 - [email protected] Joen Remmer, COO, tel +298 213702 – [email protected]

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Disclaimer

This presentation includes statements regarding future results, which are subject to risks and uncertainties. Consequently, actual results may differ significantly from the results indicated or implied in these statements No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly, none of the Company, or any of its principal shareholders or subsidiary undertakings or any of such person’s officers or employees or advisors accept any liability whatsoever arising directly or indirectly from the use of this document

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Our mission and business Mission We transport people and cargo by air with Faroe Islands as our cornerstone Provide network services with Faroe Islands as a cornerstone Charter and capacity provision outside Faroe Islands employing spare and additional capacity Provide helicopter services in and around Faroe Islands Support and invest in development of tourism, cargo and logistics

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