Icelandair Group and Virgin subsidiaries sign a 7, 3 billion ISK agreement

Icelandair Group Press Release                                                  
Reykjavik, February 28, 2007                                                    


Icelandair Group and Virgin subsidiaries sign a 7,3 billion ISK agreement      

LatCharter, the Latvian airline owned by Loftleidir Icelandic, a subsidiary of  
Icelandair Group has signed an agreement with Virgin Nigeria Airlines, a        
subsidiary of Virgin Atlantic Airways. From April this year LatCharter will     
operate two Boeing 767-300ER aircraft on the daily flight route between London, 
England and Johannesburg, South-Africa, through Lagos, Nigeria                  

Sigþór Einarsson, Icelandair Group Chief Operating Officer and Chairman of      
LatCharter says the agreement is the largest in the history of Loftleidir       
Icelandic and LatCharter, worth 7, 3 billion ISK in the next 4 years. The       
contract will generate revenue of 2,1 billion ISK per year in year one and two  
and 1,5 billion per year for the rest of the contract.   “This agreement is in  
line with Icelandair Group policy of fast growth in the international charter   
operations and aircraft trading. We look at this a knowledge based expansion, as
we are exporting the vast experience and business contacts within Icelandair    
Group. This contract is an important milestone on that route; it increases      
turnover fast, it opens new markets and opportunities for further growth”.      

“We are pleased with our marketing success in the growing travel and tourism    
sector in Africa. In addition to this new assignment Loftleidir Icelandic has   
since last November operated a Boeing 767-300ER aircraft for Ghana International
Airlines on the route between London and Johannesburg, through Accra”, says     
Sigþór Einarsson.                                                               

Loftleidir Icelandic acquired the charter airline LatCharter Airlines last year.
At that time, Latcharter operated two Airbus A320 aircraft. Two more A320's have
since been added, and when the two Boeing aircraft that will be flown for Virgin
are added the fleet will have tripled since the company was purchased. Further  
growth is expected in the near future for both LatCharter and Loftleidir        
Icelandic.                                                                      

Virgin Nigeria Airlines was founded in September 2004 and is a part of the      
Virgin Group headed by Richard Branson. The company is a subsidiary of Virgin   
Atlantic Airways. The Virgin Nigeria fleet is now 11 aircraft, serving 10       
destinations.                                                                   

For further information, please contact Sigþór Einarsson tel: +354 5050371