- The Enterprise Investment Fund invests ISK 3 billion in Icelandair Group

The Enterprise Investment Fund (Framtakssjodur Islands, FSI), an investment
company owned by 16 Icelandic pension funds, today entered into a binding
agreement with Icelandair Group hf. on an ISK 3 billion investment in the
Group. The agreement was concluded with normal reservations regarding the
results of due diligence, which the Fund will perform. 

FSI will subscribe to ISK 1.2 billion in new shares at the price of 2.5, for a
total of ISK 3 billion. Under the agreement, Icelandair Group undertakes to
increase the company's stock by ISK 1 billion in new shares, to be sold at the
same price before 31 July of this year; on the whole, the plan is to sell
shares for a total of ISK 5 billion. The agreement between the two parties
assumes the conversion by Icelandair Group's largest creditors of debt in the
amount of ISK 3.6 billion into shares based on a share price of 5 krónur per
share, which corresponds to a subscription to 720 million new shares. The total
increase in share capital will thus amount to ISK 8.6 billion based on the
selling price. 

The financial restructuring of the company will reduce the company's debt by
over ISK 10 billion through the transfer and sale of certain assets which
formerly formed a part of the company's core business, as announced in a notice
to the Stock Exchange last 25 March. None of the Company's debt will be written
off. 

The day-to-day operation of the Company has been successful in recent months,
but high financial expenses and large short-term debt have had a negative
impact on the Company's position. Since late 2008, Icelandair Group has been
working closely with Íslandsbanki and other creditors on financial
restructuring, and this agreement represents an important step forward in the
direction of securing the Company's financial position. Íslandsbanki's
Corporate Finance served as an advisor in the sale. 
There are plans to invite investors and the public to inject new share capital
into the Company in share offers to be held later this year. 

Björgólfur Jóhannsson, CEO of Icelandair Group
“The financial restructuring of Icelandair Group is now in its final stages.
Our agreement with FSI is an extremely important element, as the Fund will
serve as a strong backer for the company in the future. We will be taking
further steps to strengthen and broaden our investor base, and we are currently
preparing an offer of shares to other professional investors and the general
public later this year. The agreement with FSI will substantially strengthen
our liquidity position, and our agreements with the Company's banks will
reinforce our balance sheet still further. I am confident that our co-operation
with FSI will strengthen Icelandair Group and create new opportunities for
advances in the tourist sector.” 

For further information, please contact:
Björgólfur Jóhannsson CEO, Icelandair Group, tel. +354-896-1455