Icelandair Group hf. - Company Announcement

Icelandair announces direct service to Seattle

Icelandair, a subsidiary of Icelandair Group, introduces four direct scheduled
flights a week to Seattle, starting next 22 July. 

• A business opportunity resulting from changes in global markets 
• Fits in with Icelandair's route network based on Iceland's geographic
  location on the direct route between North America and Northern Europe. 
• Icelandair's efficient Boeing 757 jets are perfectly suited for the flights
• The flight will generate income in foreign currency, create up to a hundred
  jobs and strengthen the tourist industry 

Icelandair CEO Birkir Hólm Gudnason:

“Icelandair operates a strong route network, and the company's success is based
on constant alertness, development and cost savings. The departure of SAS from
the market between Scandinavia and Seattle this summer will create an
opportunity for Icelandair; owing to Iceland's geographic location, we can
utilise our Boeing 757's for the flights, which are much smaller and more
efficient than the wide-bodies currently flying between Seattle and Europe.
With the stopover in Iceland, passengers choose a number of European cities, as
in the case of Icelandair's other flight connections in Iceland. This puts
Icelandair in a favourable competitive position on the route between Seattle
and Europe, and we can offer 3-4 hours shorter flying times than others from
the Scandinavian capitals and other locations. Also, in cooperation with Alaska
Airlines, the largest airline in Seattle, we can offer same-day flight
connections to cities such as Las Vegas, Los Angeles, San Francisco and other
major airports. 

This new route illustrates Icelandair's strength and flexibility. With its
operations in numerous markets in Europe and North America, Icelandair is
maintaining strong transport connections between Iceland and the rest of the
world, even in the face of a temporary downturn in travel from Iceland. We are
in fact operating in three different markets: the domestic market in Iceland,
the tourist market to Iceland and the international market between Europe and
North America. In the current economic climate, our focus is on bringing
tourists to Iceland and participating in the international market. Passengers
on the Seattle flights will mostly be from the international market. We
anticipate that only about 7% of our passengers will be Icelanders; over 93%
will be non-Icelandic, partly tourists destined for Iceland and partly
passengers en route between the two continents. 

Times are currently difficult in the international air transport sector, but
Icelandair has gone against the current before. Following the terrorist attacks
on 1 September 2001, demand for air travel plunged, but Icelandair seized the
opportunities that came up, and in 2002 the company returned its best ever
operating results while other airlines struggled. Early last year, Icelandair
made extensive changes in its operations in light of the deteriorating economic
climate, and on the collapse of the Icelandic banks the company changed its
points of focus in its sales activities. Improved cost structure creates
opportunities and the operational results for the first few months of the year
are better than anticipated and Icelandair's position is now sound. 

It is a matter of special satisfaction that this decision will call for an
increase in the number of job opportunities relating to the flights, and we are
assuming that up to a hundred new jobs will be created in addition to the
important jobs created throughout the country as a result of the increased
number of tourists. Also, Seattle is an extremely attractive city and a sister
city of Reykjavik.” 


There will be four flights a week from Iceland, on Mondays, Wednesdays, Fridays
and Saturdays, departing from Iceland at 17:00 and arriving in Seattle at
16:45. Flights from Seattle will be on Tuesdays, Thursdays, Saturdays and
Sundays, departing at 15:30 and arriving in Iceland at 06:45. 

Icelandair has a history of 72 years, and few international airlines have a
comparable tradition of flight services between Europe and North America. At
this point in its history, Icelandair is offering its customers outstanding
services in three flight classes, Saga Class, Economy Comfort and Economy, with
all its aircraft featuring new seats and personal entertainment systems for all
passengers. Icelandair has been a participant in IATA since 1950, in AEA since
1957, and the Flight Safety Foundation since 1966.

Attachments:

seattle_ens.doc