Icelandair Group hf. - Company Announcement

Icelandair Group - Closing of Financial Restructuring Delayed

Icelandair Group hf. (the Group) announced on 15 December 2010 that the
finalization of formalities regarding the financial restructuring would be
completed by the end of January. All documents are now in an agreed form
between the Group and its lenders. The only matter which is now delaying the
closing is the approval of the Icelandic Competition Authority which is
necessary to sell assets to a company owned by the lenders. Such approval will
probably be given in the next few days. 

It has been agreed between the Group and the lenders that the Group will
continue to own SmartLynx and its shares in Travel Service as the lenders and
shareholders of the companies did not give the necessary approvals. The total
purchase price for all assets that were to be sold to the banks, ISK 7.6
billion, will not change. The Groups policy to sell SmartLynx and Travel
Service will not change which means that a sale process will be ongoing. 

The Group will pay ISK 500 million to take back the Travel Service shares. When
the shares will be sold the irst ISK 500 million of the purchase price will be
paid to the Group. The purchase price from ISK 500 million to ISK 1.600 million
will go to a company owned by the banks. Purchase price in excess of ISK 1.600
million will be paid to the Group. The original purchase price was ISK 1.600
million. 

The plan was that ISK 1 would be paid for all shares in SmartLynx and that all
guarantees that the Group has given in terms of the obligations of SmartLynx
would remain the same. It has therefore no financial impact on the Group that
SmartLynx will remain within the Group and it will make it easier for the Group
to get out of existing guarantees. 



Further information:

Björgólfur Jóhannsson, President and CEO, +354 896 1455

Bogi Nils Bogason, CFO, +354 665 8801