Icelandair Group hf. - Company Announcement

New Aircraft Types to be added to the Fleet of Icelandair Group Subsidiaries

The Board of Directors of Icelandair Group has decided to update the fleet
policies of the subsidiaries Icelandair and Air Iceland. 

All five Fokker 50 aircraft that Air Iceland operates will be sold and three
Bombardier Dash 8 Q400 will replace it. After that Air Iceland will operate
five aircraft, three Bombardier Q400 and two Q200. The Q400 aircraft can seat
74 passengers while the Fokker 50 takes 50 passengers. The airline's operations
will be simplified and optimised as number of aircraft decrease and synergies
will increase as all aircraft will be from the same manufacturer. As the Q400
is faster and has a longer range, Air Iceland sees opportunities in new
markets. The company will be better equipped to service the domestic market as
the aircraft are larger and travel time will be shorter. The airline aims to
increase the number of foreign tourists on board its aircraft going forward. 

In 2015 Icelandair will operate 23 Boeing 757-200 that take 183 passengers and
one 757-300 that takes 220 passengers. The company owns 22 of those aircraft
and leases two that will be redelivered this autumn. It has been decided that
they will be replaced with two Boeing 767-300 aircraft that take 260 passengers
that will be added to the route network as of the spring of 2016. Larger
aircraft are more feasible due to high load factors on many routes all year
round and limited number of landing slots on certain airports. The increase of
the fleet in the last few years has made it more economical to have more than
one size of aircraft in the fleet.  The Boeing 767 aircraft is similar to the
757 in terms of maintenance and crew training and the airline has experience in
operating that type. Icelandair Group's subsidiary, Loftleidir-Icelandic, has
operated 767 aircraft in leasing projects that have been maintained by
Icelandair. The aircraft has longer range than the 757 which will create new
opportunities for the route network. 

It has not been decided whether the new aircraft will be purchased or leased.

Bjorgolfur Johannsson, President and CEO of Icelandair Group: “Operating one
type of aircraft has been very economical for Icelandair but when the route
network and the fleet reaches a certain size it becomes more feasible to have a
broader range of aircraft in the fleet. High load factors all year round and
limited number of landing slots on certain airports also support this decision.
In terms of Air Iceland a simpler and more economical fleet will make the
operations better as crew training will be simpler. 

We foresee further growth opportunities in the coming years with these changes
to the fleet policy for passenger aircraft. Both the Boeing 767 and Q400
aircraft can service markets that the current fleet cannot, which will enable
us to go into new markets and connect them to the current route network.” 



For further information please contact:

Bjorgólfur Jóhannsson, President and CEO
bubbi@icelandairgroup.is
+354 896 1455

Bogi Nils Bogason, CFO
bogi@icelandairgroup.is
+ 354 665 8801