Icelandair Group hf. - Company Announcement

Icelandair Group hf. sells the Latvian subsidiary SmartLynx

Since the completion of the financial restructuring of Icelandair Group hf.
(the Group), it has been the Group's intention to sell its subsidiary in
Latvia, SmartLynx (the Company). At year end 2011 the Group entered into an
agreement where the management of SmartLynx purchased the entire share capital
of the Company. Conditions set out in the agreement have now been met in full. 

The sale will be included in the annual accounts for 2011 and will have
positive impact on the bottom line in the amount of ISK 1.1 billion, of which
0.7 billion is due to income tax reductions. The changes in equity are
marginal. 

The Group will remain a guarantor in terms of the lease of two Airbus 320
aircraft until April 2012 and two Boeing 767 until the end of the year 2012.
These aircraft are operated under SmartLynx's air operator's certificate. 



Further information:

Bjorgolfur Johannsson, President and CEO, tel: + 354 896 1455

Bogi Nils Bogason, CFO, tel: + 354 665 8801