Reporting Entity

Icelandair Group hf. (the "Company") is a limited liability company incorporated and domiciled in Iceland. The address of the Company┤s registered office is at ReykjavÝkurflugv÷llur in ReykjavÝk, Iceland. The consolidated financial statements of the Company as at and for the year ended 31 December 2007 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as "Group entities") and the Group┤s interests in associates. The Group┤s operations are in the airline transportation and tourism industry. The Company is listed on the Iceland Stock Exchange.

Icelandair Group hf. was a subsidiary of FL GROUP hf. until October 2006, when it was acquired by Icelandair Group Holding hf., a company incorporated in Iceland in October 2006. The acquisition of Icelandair Group hf. was accounted for by applying the purchase method, where Icelandair Group hf. is the acquiree and Icelandair Group Holding hf. is the acquirer. After the acquisition, Icelandair Group hf. legally merged with Icelandair Group Holding hf. on 1 November 2006, with Icelandair Group hf. as the continuing company.

To provide users of the Group┤s consolidated financial statements with more appropriate information of the Group's operations and cash flows, audited pro forma figures based on audited financial statements of all subsidiaries of Icelandair Group hf. for the whole year 2006 are presented in the consolidated income statement and consolidated statement of cash flows with relevant disclosures in the notes. The basis for preparation of the pro forma figures is described further in note 2e.


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