Icelandair Group hf. - Company Announcement

Icelandair to expand its operations next year

  -- Number of flights will increase by 13% between years
  -- Up to 400 flights per week -10 thousand passengers per day
  -- 2 million passengers in 2012
  -- Focus on increased capacity outside summer months
  -- 52% growth from 2008  - 700 thousand more passengers than in 2009
  -- New destination: Denver, Colorado

Icelandair, a subsidiary of Icelandair Group, has set up a route schedule for
2012 which will be the largest in the company's history and 13% more extensive
than this year's schedule. A new year-round destination, Denver, Colorado, will
be added, and the frequency of flights to various cities in the United States
and Europe will be increased. The number of the company's passengers in 2012 is
projected at 2 million in 2012, as compared to an estimated 1.8 million in
2011. A total of 16 Boeing 757 aircraft will be used to serve the company's
route network next summer, two more than in the current year. The company's
aircraft will take off up to 400 times each week over the summer, and
passengers will number about 10,000 per day at peak periods. 

Icelandair's plans for the current year are materialising, and market research
indicates opportunities for profitable growth next year. The company's strategy
is to increase the flow of tourists to Iceland outside the high season; this
was an influential factor in the decision to introduce year-round flights to
and from Denver because of its strong winter market, including the market for
ski tours. 

Icelandair's operations have seen substantial growth in recent years, in line
with Icelandair Group's strategy established in early 2009 following a downturn
resulting from the economic crisis. From 2009 to 2012, the growth in
Icelandair's scheduled flights amounts to 52%, with the number of passengers
growing from 1.3 million to about 2 million next year. This year has seen an
increase of approximately 17% from last year, and the growth is projected at
about 13% next year, with a greater proportional growth in winter than in
summer. In fact, the winter schedule for 2012-2013 will be larger than
Icelandair's summer schedule two years ago. 

In addition to four weekly flights to the new Denver destination, Icelandair
will increase its number of flights to Washington and Seattle in the U.S., to
all the Nordic capitals and Trondheim, Stavanger and Bergen in Norway, to
Billund in Denmark, to Munich, Amsterdam, Brussels and Paris on continental
Europe and to Manchester and Glasgow in the United Kingdom. In total,
Icelandair will fly to 31 destinations next year. 

Icelandair bases its route network on the central location of Iceland between
northern Europe and North America. The route network enables Icelandair to
serve three markets: the domestic market in Iceland, the tourist market with
Iceland as a destination, and the international market between Europe and North
America. The tourist market to Iceland is showing a growth of about 20% this
year. Travels abroad by Icelanders have increased steadily since 2008, and this
trend is expected to continue. Also, Icelandair has achieved excellent results
this year, as in last year, in the third market, i.e. the Trans Atlantic
market, which presents opportunities to strengthen Icelandair's market position
still further next year with its new destination and increased flight
frequency. 

Owing to Icelandair's extensive co-operation with other Icelandic Group
subsidiaries, the expansion seen by Icelandair will also be reflected as an
increase in their turnover.  The expansion will result in greater frequency for
customers of Icelandair Cargo and the increased activity at Keflavik
International Airport will result in higher turnover for Icelandair Ground
Services. Also, business will increase for other companies within the Group.
The enlargement of Icelandair's route network is consistent with the strategy
established by Icelandair Group of organic growth. 



For further information, please contact:

Björgólfur Jóhannsson, CEO and president of Icelandair Group Tel.: +354-896-1455
Bogi Nils Bogason, CFO, Icelandair Group Tel.: +354-665-8801