Hf. Eimskipafélag Íslands - Company Announcement

Substantial arrangements at Eimskip

-Fewer vessels and a partial 10% pay reduction
-Estimated savings on a yearly basis ISK 2.4 billion

HF Eimskipafelag Islands has announced considerable arrangements in light of
the Icelandic economic situation, unfolded among other in a substantial
recession in imports. 

Already, fewer vessels are now servicing Icelandic import and export, with the
number decreasing from 11 to eight, as well as other rationalisations in the
sailing systems, local systems and several other factors of Eimskip's business. 

Eimskip's transport business in Iceland has around 1.500 employees, with 900
based in Iceland. To avoid substantial lay-offs, it has been decided that
salaries of those earning more than ISK 300.000 will be decreased by 10%, as
well as limiting vaktavinna and overtime. In spite of these actions, lay-offs
of 25 employees in Iceland and 47 in Europe were unavoidable. 

The estimated savings on an annual basis is ISK 2.4 billion, with ISK 550
million directly related to salary costs. 

Gylfi Sigfusson, Eimskip President/CEO commented: “Just as any other company in
Iceland, Eimskip is going through a rough period, notably in the import sector.
On top of that, the situation in the international transport- and financial
markets is proving to be a difficult one. In the light of this, Eimskip had few
choices but these substantial arrangements. Of the two bad choices we had to
make, it was more feasible in our minds to lower the salaries of those
employees with an income of above ISK 300.000 than having to lay off even more
employees in these difficult times the Icelandic nation is now facing. 

For further information, contact:
Heidrun Jonsdottir
Executive Vice President of Corporate Communication and Legal Affairs 
Tel. (+354) 525-7370