ICELANDAIR AND FL GROUP ANNOUNCE FIRST QUARTER RESULTS

COLUMBIA, MD, June 18 – Icelandair’s parent company, FL Group, announced a first quarter profit of ISK 25 million (USD 385,000), which is an increase of ISK 880 million (USD 13.5 million) over the same period in 2004. The turnover was ISK 7.8 billion (USD 120 million), an increase of 7.4% over last year.

The Group’s operating costs were ISK 9.4 billion (USD 144.6 million), an increase of 10.6% over 2004, primarily due to increased wage and fuel costs. Fuel cost increased by 28%, instead of the world average of 40%, due to the strong performance of the Icelandic Krona against the weaker USD.

First quarter operations were characterized by large profits from investment activities, which were the basis for the Group’s earning improvement. Additionally, the company has ordered or purchased 23 aircraft since January 1, including two Boeing 787 Dreamliners, with a purchase option for five additional aircraft, which will be delivered in 2010-2012.

Icelandair, the Group’s largest subsidiary, increased its capacity measured in seat kilometers by 10%, and the number of passengers increased by 14%, with a 70% load factor. Bookings for international flights are beyond the supply increase of 20% in 2005, with the new San Fransisco route coming in at a very strong 90%.

The FL Group consists of flight and travel service companies, which form the foundation of the fast growing Icelandic tourist industry, and include Icelandair, Icelandair Cargo, Icelandair Hotels, Air Iceland, Iceland Travel, Reykjavik Excursions, Icelandair/Hertz, Icelandair Ground Services, Icelandair Technical Services, Loftleidir-Icelandic and Icelandair Shared Services.

Icelandair’s international route network utilizes Iceland as a hub between six US gateways (Boston, New York-JFK, Minneapolis/St. Paul, Baltimore/Washington-BWI, Orlando and San Francisco) and 16 European destinations (Amsterdam, Barcelona, Berlin, Copenhagen, Frankfurt, Glasgow, Hamburg, Helsinki, London, Madrid, Milan, Munich, Oslo, Paris, Stockholm and Zurich).

Icelandair is based in Reykjavik, Iceland, with headquarters for The Americas in Columbia, Maryland.