Realises ISK 26 billion profit

* FL Group has secured the sale of its entire shareholding in Icelandair Group. The estimated profit from the sale will be around 26 billion ISK (EUR 305 million) based on the book value of Icelandair Group at the end of June 2006. * Estimated proceeds from the sale amount to around ISK 35 billion (EUR 410 million) * Icelandair Group due diligence has been finalised * Three groups of investors have acquired a majority of Icelandair Group shares. * Glitnir banki hf. will underwrite the remaining shares in Icelandair Group owned by FL Group. Glitnir banki hf. has already allocated 16% of that shareholding to other investors, employees and key management of Icelandair Group. * Key management of Icelandair Group intends to acquire up to 4% of the company shares. * All Icelandair Group employees will have the opportunity to buy shares in the company and 4% of total shareholding has been reserved for this purpose. * Up to a third of Icelandair Group shares, will be offered to investors and the general public in a public offering (IPO), managed by Glitnir banki hf.

Three groups of investors have acquired 50.5% of the shares in Icelandair Group. The groups are:

1. Langflug ehf. (mostly owned by Samvinnutryggingar hf.) with a 32% share. 2. Naust ehf. (mostly owned by BNT hf.) with 11.1% share. 3. Blue-Sky Transport Holding (mostly owned by Ómar Benediktsson) with 7.4% share.

Glitnir banki hf. has furthermore allocated up to 16% of shares to other investors and employees of Icelandair Group. This means that around 67% of shares are already allocated.

A public offering of shares in Icelandair Group will take place prior to the company's listing. In the offering institutional investors and the general public will be able to subscribe for shares in Icelandair Group. A total of up to a third of Icelandair Group shareholding will be offered. Further details of the process will be revealed at a later stage.

Hannes Smarason, CEO of FL Group: "The great interest of the investor community in Icelandair, made FL Group able to sell all its shares. This is in accordance with Icelandair Groups strong position and solid operations. FL Group is realising a substantial profit from the sale of Icelandair Group and this transaction creates significant flexibility for further investments for FL Group. We have emphasized the importance that Icelandair Group, the country's most important aviation and tourism company, and a leading international player in the airline industry, will come into public hands."

Jon Didrik Jonsson, Managing Director of Investment Banking in Glitnir: "We expected strong interest from investors for Icelandair Group, and are very pleased that this has indeed been the case. Glitnir has already allocated the 51% shareholding the Bank underwrote two weeks ago and has secured another 16% to be allocated to other investors and employees of Icelandair Group. Hence, a total of 67% of all shares in the company has been allocated already. This interest is a strong indicator for a successful IPO process."

Jon Karl Olafsson, CEO of Icelandair Group: "The management of Icelandair Group supports the plan to list the company on the Icelandic Stock Exchange and is looking forward to the opportunity such a listing offers. The fact that management intends to acquire up to 4% of the shares in Icelandair Group is a clear indicator of our faith in the company . The goal of a listing is to bring a broad group of institutional and private investors to the company and to strengthen the special bond the company has with the general public. I am also very pleased that all Icelandair Group employees will have the opportunity to purchase shares in the company, as a part of the agreement between Glitnir and FL Group."

FURTHER INFORMATION

Hannes Smarason, Bjarni Ármannsson, CEO of FL Group CEO of Glitnir Tel.: +354 591 4400 Tel.: +354 440 4005

Jon Karl Ólafsson, Jon Didrik Jonsson, CEO of Icelandair Group Managing Director, Tel.: +354 5050-371 Investment Banking in Glitnir Tel.: +354 440-4747

Kristján Kristjánsson, Björn Richard Johansen Director of Corporate Communication, FL Managing Director, Group Corporate Communication Tel.: +354 899 9352 in Glitnir [email protected] Tel.: +47-47800100

ABOUT FL GROUP FL Group is an investment company, focusing on strategic and private equity investments as well as proprietary trading, with a particular emphasis on active participation in markets with listed securities. The Company focuses on influential investments in companies in Northern Europe on a broad basis. At end of June 2006 FL Group's total assets amounted to ISK 202.6 billion. FL Group is listed on the Icelandic Stock Exchange (ICEX: FL). The largest shareholders of FL Group are Eignarhaldsfélagið Oddaflug ehf. (19.8%), owned by Hannes Smárason, CEO; Baugur Group (18.1%), Magnús Kristinsson (14.7%); Kristinn Björnsson (8.4%); Icon (5.6%) and Materia Invest (5.1%). The shareholding can in some cases be in the name of Icelandic financial institutions because of forward contracts. www.flgroup.is

ABOUT ICELANDAIR GROUP Icelandair Group is a holding company with 12 service and trade companies in the airline, transportation and tourism industries. The Group has a staff of 2,700, a turnover of 54 billion ISK (06 EST.) and focuses on 3 main areas: International Scheduled Airline Operations, Global Capacity Solutions and Aircraft Trading, and Tourism Infrastructure. The international airline, Icelandair, forms the foundation of the Group and links Europe and the US through its hub in Iceland, with scheduled flights to 22 destinations. Last year Icelandair carried 1.5 million passengers.