• 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
- signs a letter of intent for acquisition of the largest privately owned airline in the Czech Republic
| Source: Icelandair Group hf.