- signs a letter of intent for acquisition of the largest privately owned airline in the Czech Republic

•	Annual turnover increases around 30% from 2006
•	Synergic effects in international charter and ACMI operations 
•	Valuable Boeing 737-900 and Dreamliner orders

Icelandair Group has signed a letter of intent for acquisition of the Czech
airline Travel Service, the largest private airline in the Czech Republic. 
Travel Service operates charter flights to and from Prague and Budapest and
also owns and operates the low cost airline Smart Wings.  The turnover of
Travel Service in 2006 was ISK 18 billion (EUR 190 Million).  The company
operates a total of 12 Boeing 737-800 and 787-500 passenger aircraft, carried
over 1, 8 million passengers last year and flies to multiple destinations on
four continents. 

The signature marks the start of the due diligence process, which is expected
to take few weeks. The signing of a final purchase agreement is planned around
mid June. Under the agreement Icelandair will purchase 50% of the shares before
the end of June and the remaining 50% during 2008.  The purchase will be
financed partially with loan capital. 

After the acquisition the estimated turnover of Icelandair Group for the year
2007 will be around ISK 72 billion, an increase of 30% from the year 2006.  It
is foreseen that the annual turnover of Icelandair Group will be over ISK 80
billion when the acquisition of Travel Service will be finalized. 

Jón Karl Ólafsson, the CEO of Icelandair Group comments “This letter of intent
is in accordance with Icelandair Group's intention of growing in the
international charter flights sector.  We have been looking towards Eastern
Europe where we think that we have good business opportunities with our
knowledge and experience.  Last year we acquired the Latvian Airline
Latcharter, which has been a success story, and now we take a big step even
further in this direction.  It is obvious that if Icelandair Group acquires
Travel Service, it will grow fast this year. This airline is, regarding number
of passengers and fleet, close to Icelandair's scheduled operations in size. 

We consider this a good investment for Icelandair Group.  Travel Service is a
solidly operated airline and its management and current owners will continue to
work with us, which is invaluable in a transaction like this. The airline has a
good and increasing position in the charter and low cost market in Eastern
Europe, which is an interesting and fast growing market.  On the other hand we
see considerable synergy effects with our current charter and ACMI operations. 
The company operates in various fields, in charter and ACMI flights, in
scheduled airline operation under a strong brand, Smart Wings, and is launching
private jet operations, which is a rapidly growing market. The company has
ambitious future plans, as can be seen by its orders of Boeing 737-900 and
Boeing 787 Dreamliner Aircraft” comments Jón Karl Ólafsson. 
 
For further information please contact Jón Karl Ólafsson CEO tel: 5050371,
Guðjón Arngrímsson VP Corporate Communications, tel. 5050393 or Sigþór
Einarsson COO tel: 897-8363. 


Travel Service Fact Sheet:

Travel Service:
A Charter Airline with headquarters in Prague.  Handles charter services for
many parties, and operates the low cost airline Smart Wings. 

Fleet: 
10 Boeing 737-800
2 Boeing 737-500
Cessna 680Citation Sovereign -private jet)

CEO: 
Roman Vik

Website and Photos:www.travelservice.aero
http://www.travelservice.aero/en/fleetgallery.php

Staff: 
550

Passengers 2006:
1,8 Million

Destinations:
Operates in 230 airports in 4 continents

Turnover 2006: EUR 190 Million