COLUMBIA, Md., March 6 /PRNewswire/ -- Icelandair and its subsidiaries produced a profit before tax of US $32.5 million (ISK 2,367 million) on their operations in 1999. After allowance for a calculated income tax liability of US $ 10.9 million (ISK 797 million) and US $739,726 (ISK 54 million) in tax on net worth, the operating profit for the year is US $20.8 million (ISK 1,515 million). Icelandair's profitability has improved by US $18.7 million (ISK 1,364 million) since the previous year. Profit on regular operations (excluding financial items) before tax amounted to US $4.3 million (ISK 312 million), compared with a loss of US $1.9 million (ISK 144 million) the year before, an improvement of US $6.3 million (ISK 456 million). Cash generated by operating activities during the year was US $28.8 million (ISK 2,103 million), an increase of US $6.1 million (ISK 446 million) from 1998. Icelandair expanded its activities in passenger and cargo transport, travel agency operations and other areas, and total revenues increased by 8.7% in 1999. Operating revenues at Icelandair and its subsidiaries amounted to US $416.7 million (ISK 30,418 million), compared with US $383.3 million (ISK 27,984 million) in 1998. Operating expense increased by 9.2%. A substantial turnaround took place in net financial expenses, which were US $1.1 million (ISK 83 million) in 1999 compared with US $8.6 million (ISK 625 million) the previous year. This US $7.4 million (ISK 542 million) reduction in finance expense is primarily due to higher financial income, dynamic risk management and financial restructuring among subsidiaries. Considerable fluctuations characterized company operations in the course of the year. During the first six months, profit on regular operations improved significantly from the corresponding period in 1998, which had proved exceptionally difficult. This first-half improvement can be attributed above all to successful international marketing of Iceland travel and growth in sales of business class fares. In August 1999 Icelandair announced an outlook for deteriorating performance during the second half of the year with rising fuel prices and lower fares as a result of oversupply of seats on scheduled North Atlantic services. The company was to a large extent hedged against fuel price rises by forward contracts and options, but some negative impact was felt and oversupply in the North Atlantic hit its operations in the closing months of the year, like other international airlines. Sales of assets in 1999 realized a net gain of US $28.1 million (ISK 2,055 million) before calculated income tax of US $9.3 million (ISK 678 million) on that profit. In 1998 the company's profit on sale of assets amounted to US $4.7 million (ISK 340 million), but was not liable for income tax. The main reasons for the profit on sales of assets in 1999 was the sale of Icelandair's hotel buildings in Reykjavik at the beginning of the year, one aircraft in March and one-third of Icelandair's shares in the global telecom company Equant at the end of the year. Traffic figures In 1999 Icelandair carried just over 1.3 million passengers on international services, 0.4% more than during the previous year. Passenger traffic on Air Iceland domestic flights rose by 6.3% from 1998 to reach 310 thousand. Seat load on international flights slipped by 2.5 percentage points during the year to 71.4%. Cargo volume totaled just over 24 thousand tons, a 26.4% increase from 1998. US dollar amounts are based on an exchange rate of 73 Icelandic Kronur to the dollar average for 1999.