Good morning, and thank you for joining us for the presentation of our Q1 results. I'm Bogi Nils Bogason, and here with me is Ivar Kristinsson, our Chief Financial Officer. As usual, we will go through a presentation, and following that, we will have a Q&A session. Please send us questions to the email address ir@icelandair.is. In the first quarter, we saw operational improvements in all business segments: the passenger route network, cargo, and our leasing business at Loftleiðir. Unit costs continued to decrease, driven by our focus on increased efficiency, where we are just turning every stone as part of our transformation journey. EBIT improved by just less than EUR 7 million between years, and net loss was just over EUR 15 million lower than in the previous year.
Cash flow from operations was very strong, EUR 57 million higher than last year, or $204 million, and total liquidity has never been stronger at the end of the first quarter and stood at EUR 510 million. We finished the quarter with a record load factor, even though Easter was in April this year. Our partnership with Southwest Airlines came into effect in February and has already resulted in bookings to and from over 70 airports in the U.S. We are seeing slower bookings in the fall and into the winter than at the same time last year, and there is uncertainty regarding how travel demand will develop into Q4 this year. Near-term bookings for the summer in the markets to and from Iceland are stronger now than at the same time last year, and we expect profitability to be stronger in Q2 and Q3 this year than last year.
Ivar, please take us through the financials.
Thank you, Bogi, and good to see you all. Let's start with some key metrics for the operations in the first quarter. The number of passengers rose 9%, while the capacity, as measured in available seat kilometers, rose 7%, resulting in an improved load factor that was at record level in the quarter. The from market, or passengers there, grew by 7%. To market, grew by 3% at the same time. As in recent quarters, we have seen highest growth on the via market, while passengers within Iceland, they declined slightly, 5%, mainly due to more weather-related cancellations in the quarter than in the same period last year.
As Bogi mentioned, we continue to make important steps in our sustainability journey, and our relative CO2 emission decreased by 6%, which was driven by an increase in flights operated by new aircraft, the fuel-efficient 737 MAX and now the 321LR aircraft. We achieved a higher load factor, and our fuel efficiency program yielded good results. Freight carried reduced slightly year on year due to less dedicated freighter capacity, and sold block hours in our leasing business rose more than 50% year on year. Looking at the financial results, where we reported positive development in profitability, with EBIT being negative EUR 62 million, but improving EUR 7 million year on year. All segments improved compared to last year, and the net loss improved even higher, or even more, or by EUR 15 million on higher financial income and lower calculated taxes.
Total operating income was EUR 287 million, up 11%, where passenger revenue was EUR 214 million, which is a record for the first quarter as well. Cargo revenue, EUR 21 million, on similar levels as last year, while leasing revenue grew 47% to EUR 29 million in the quarter. Other operating revenue, EUR 23 million, up 13% year on year. That was driven by positive development in our kind of tourism revenue segment. On the cost side, operating expenses excluding depreciation was EUR 309 million, up 5% year on year. This increased less than the capacity or the production, which then had a positive impact on the unit cost. We did, in fact, see positive development in most of our cost categories in the quarter. Salary development was positive, total cost EUR 92 million, down EUR 2 million year on year. We had average the workforce FTEs were average 3,175, around 8% lower than last year.
Other aviation expenses and other operating expenses are growing with more production in both the route network as in the leasing business, and we can see that, or you can see that there are some shifts in cost between a few categories due to the outsourcing of the catering services we did last year. That happened at the end of Q1. Depreciation was EUR 40 million, up by 6%, increase explained by higher depreciation of both owned assets and leased aircraft assets, and net finance income positive EUR 3 million and improved EUR 6 million year on year, where we had foreign exchange gain of EUR 5 million in the quarter this year compared to a slight loss last year, all resulting in net loss before tax of EUR 59 million for the quarter. Looking at the fuel cost development, then fuel expenses were EUR 62 million, down 3% between years on the 7% capacity increase.
The decrease results again from more fuel-efficient fleet and lower fuel prices. All in all, fuel price was on average EUR 862 per tonne. That includes HECS and all other costs, and down by 10% year on year. Carbon emission credits were a bit more expensive this year, the cost per unit increasing 10% year on year. Forward-looking on the hedging, then we have 38% of the use in the network covered for the next 12 months at the average price of $749, with all hedges that are now in place for 2026 at an average price below EUR 700. The unit revenue picture, the RASK was EUR 0.73, increasing by 1% on a record load factor in the quarter, despite the absence of Easter this year compared to last year.
As you can see in the picture here, we have now achieved improved unit revenues two quarters in a row. Saga Premium unit revenues were strong, increased 9% year on year. Overall, the yield was EUR 0.08 and decreased 5% compared to last year. Kind of same picture on the unit cost and the development there, then the unit cost was EUR 0.96, decreased 3%, and the ex-fuel cost was down 1%. Like I mentioned before, most cost items showed positive trends supported or due to our continued focus on efficiency, and we can see in the chart here that now we have seen overall unit cost decrease in five quarters in a row, which of course just reflects on the continued focus we have on leaner operation and discipline in spending.
As expected in the winter months, we had this winter a few days with our adverse weather impact here in Iceland. It was a bit more than last year, and if we compare the unit cost year on year, then kind of irregularity cost kind of had a 1% kind of impact on the unit cost in the quarter. Liquidity, very strong, as Bogi mentioned, cash and marketable securities for EUR 418 million at the end of the quarter and increasing by EUR 163 million from the start of the year. Cash from operations, EUR 205 million, improving by EUR 58 million compared to last year. Investing or cash used in investing, EUR 32 million. Thereof CapEx was EUR 19 million, and financing activities or net financing activities were EUR 26 million due to the repayment of interest-bearing loans and repayments of operational lease liabilities.
Credit lines and drawn at the end of the quarter of EUR 92 million, bringing total liquid funds to EUR 510 million, which is the highest liquidity we have ever had at this time of year and around $100 million higher than in the same period last year. Total assets, EUR 1.9 billion, increasing by EUR 257 million from the beginning of the year, primarily driven by the seasonal increase in passenger bookings for the high season, which boosts both the cash position as well as increases the deferred income line on the liability side. Non-current assets up by EUR 39 million due to the addition of one 321LR aircraft, which also explains the kind of development or the movement in financial liabilities. Equity, EUR 241 million, and the equity ratio was at 13% at the end of the quarter. Over to you, Bogi.
Thank you, Ivar. To the business update and outlook, first of all, regarding our flight schedule for this year, looking at the full year, we are planning around 8% growth in our passenger network. The growth is focused on the off-peak seasons and on off-peak hours within the day. That will both improve our resource utilization and offer our customers more travel options than ever before. During the summer, we will operate 42 passenger aircraft in the route network, the same number as last year, thereof 21 Boeing 737 MAX and four new Airbus A321LRs. Including cargo and Loftleiðir, we will be operating 55 aircraft in the coming months.
We are adding four new destinations to the network: Nashville, Tennessee, which we started earlier this month; Gothenburg, a summer destination starting in June; Istanbul starts in the fall, which in addition to being a great destination itself, we will leverage our partnership with Turkish Airlines and strengthen our routes into Asia and the Middle East. Finally, Miami with the first flight in October. We are strategically growing our network outside of the peak period where increased utilization is driving down unit cost, and furthermore, it strengthens our position as the leading hub carrier in Keflavik, our home and hub. This growth is achieved by increasing frequencies to existing destinations, developing counter-seasonal destinations like Miami and Istanbul, and extending the operating period of the second connecting bank starting before Easter and operating further into the fall.
This creates more choices for our customers, but it is also a very important part of developing the network for high utilization of our new generation long-range aircraft, such as the Airbus A321LR and later the XLR. As always, we are of course monitoring demand and capacity developments in our markets very closely, and we will make full use of the flexibility of our network and operations to adjust capacity to demand at any given time as we see required. In addition to our network flexibility, our extensive commercial infrastructure puts us in a very strong position to adjust to any changes in our markets, both in addressing challenges and also to seize opportunities.
Some of our strengths here are the robust Icelandair brand, which is very well known across our international markets, the Saga Premium product, our Saga Club, which is the largest loyalty program in Iceland, and our valuable airline partnerships. The demand for our Saga Premium cabin continues to grow as Ivar went through and is driving very important revenue. Our Saga Club loyalty program, which supports customer retention and further revenue generation, has been growing significantly and is approaching 2 million members. Regarding our airline partnership strategy, we have made significant progress in expanding our global partnership network. As already mentioned, we recently entered into a partnership with Southwest, which is already off to a very good start. Customers of both airlines can now seamlessly connect via Baltimore, Nashville, and Denver, and onward to Iceland and Europe, as well as across Southwest's extensive U.S. network.
A little bit more about our fleet and the development there. Currently, we are operating three Boeing 767 wide-body aircraft, and we recently finalized the review of our future wide-body aircraft strategy. Our conclusion there is to phase out these aircraft over the next years and place our focus on developing an efficient fleet of narrowbody aircraft. This decision aligns with our core strategy and key competitive advantage, which is the ability to operate a narrowbody aircraft further east and west than our competitors by connecting via Iceland, as well as it supports the streamlining of our cost base and operations in general. We foresee that 2029 will be the last year Icelandair will be operating Boeing 767 passenger aircraft. The transformation journey we launched last year is progressing very well.
Its main purpose is to improve financial performance by driving operational efficiencies, reducing costs, and further increasing revenue generation. Over 400 initiatives are scheduled for implementation, with 90 already implemented at the end of the first quarter. These initiatives have already started to have a positive financial impact, as we can see in decreased unit cost, and we expect annual gain of over $40 million at the end of the last quarter and $70 million by the end of this year. To the financial outlook for the full year of 2025, the results for the first quarter were in line with our expectations, and the current booking status for the coming months in the markets to and from Iceland are stronger than at the same time last year. Based on that, we expect profitability for the second and third quarters to improve between years.
The performance of our cargo operations is improving, building on a strong turnaround in the cargo last year, and the outlook in the coming months is positive. Our leasing businesses, also business at Loftleiðir, is also expecting to maintain its strong performance. At the end of January this year, we published a full-year guidance, and since the issuance of the guidance, economic volatility has increased and caused uncertainty regarding long-term travel planning and bookings, which is reflected in a slower booking flow for the fall and the winter. At the same time, the Icelandic krona has strengthened by 10% against the US dollar, which negatively impacts the competitiveness of Icelandic export industries and companies. Given the higher level of uncertainty regarding demand trends for the fall and the winter, forecasting fourth quarter results remains very challenging.
Due to that, we are not reaffirming our full-year guidance at this time. Finally, to summarize what we have been going through here, me and Ivar, in quarter one, Icelandair continued to deliver decreased unit cost in an inflationary environment. During the quarter, we saw operational improvements in all of Icelandair's business segments, resulting in improved EBIT and bottom-line results between years. Cash flow from operations was very strong in the quarter, with a record liquidity at the end of March of over $400 million US dollars. Based on current assumptions and bookings, we expect profitability in the second and third quarter to improve between years. Recent developments in the world's economy are creating some uncertainty in the demand for the fall and the winter, and we monitor these developments closely, and we are using our flexibility to adapt capacity to demand at any given time.
Our focus is first and foremost on business areas where we can control. We have already been making significant progress such as through our transformation program. Our strong commercial infrastructure and strengthened hub position is the key to adjust to the dynamic environment and address challenges and seize opportunities. That concludes the presentation, and hopefully we will have some questions from the audience.
Yes, we already have a couple of questions. The first one is, how is the future booking development into Q2 and Q3 from the US, Europe, and Iceland?
As we've been saying, the current booking status from, you can say, in all markets is strong, stronger than last year for quarter two and quarter three for the high season. It is the fall and the winter which is creating uncertainty. Slower bookings now than at the same time last year for the last months of the year, but the summer is looking good, better than last year.
Is there any difference in the development in premium versus leisure segments?
Would you like to take that?
I would say that we are seeing improvements in both of those segments, but as we went through in the presentation, kind of the development in the premium products has been better, and we continue to see that trend.
You have a strategy for commercial cooperation with other airlines, latest Southwest. Do you have any plan to tie up with airlines in Europe?
We have been strengthening our partnership portfolio, and we are working with airlines in Europe, and our strategy going forward is to add partners, strengthen the relationship with current partners, and our team is working hard on this, and we will have some news in the years to come.
That's it for the questions today.
Thank you very much.
Thank you.
Have a good day.