Icelandair Group hf. - Company Announcement

Substantial excess demand in a share offering of Icelandair Group hf.

The Board of Directors of Icelandair Group hf. has decided to accept offers for
1,059,000,000 new shares in a public share offering which was concluded on 23
December 2010. In total the Company received 852 subscriptions for
2,855,633,620 shares. The new share issue will be allocated in three tranches;
to shareholders, employees and the general public as described in the Company's
Securities Note dated 7 December 2010. 

Shareholders subscribed for 1,555,811,956 shares, employees subscribed for
79,924,664 shares, and participants in the offer to the general public
subscribed for 1,219,897,000 shares. Employees had the right to purchase
160,000,000 new shares in the offering. As demand for shares was less than the
number of reserved shares the outstanding shares will be disbursed directly to
the general public tranche. Therefore the aggregate number of shares which will
be allocated to the general public will be 180,075,336. 

The new shares will be allocated to shareholders in accordance with Act No.
2/1995 on Public Limited Companies. 

The Board of Directors of the Company has decided that all subscriptions in the
offer to employees will be accepted. 

The Board of Directors of the Company has decided that in the offer to the
general public all subscriptions for up to 200,000 shares will be accepted.
Subscriptions exceeding 200,000 will be allocated proportionally to relevant
participants. 

An invoice will be sent to subscribers on 30 December 2010 with the due date
being 6 January 2011. The new shares are all of the same class and bear the
same rights and are identical to the existing shares in the Company. The
earliest date the Company expects to issue the new shares is 10 January 2011.
Furthermore, the Company expects the new shares to be admitted to trading on
NASDAQ OMX Main Market on 11 January 2011 the earliest. 

Björgólfur Jóhannsson, President and CEO of Icelandair Group, on the offering:

“The Board of Directors and the management of Icelandair Group are very pleased
with the trust that investors have shown in the company by subscribing to
almost three times the offered amount. It is also positive for the Icelandic
stock market that interest in a public share offering is as much as we are
seeing in this offering.” 

For further information, please contact:

Björgólfur Jóhannsson, President and CEO Icelandair Group, Tel (+354) 896-1455
Bogi Nils Bogason, CFO Icelandair Group, Tel (+354) 665-8801