This press release is issued pursuant to National Instrument 62-104 - Take-Over Bids and Issuer Bids and National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues.

Vancouver, British Columbia--(Newsfile Corp. - July 31, 2019) - Further to an Early Warning Report and press release of SmartLynx dated December 27, 2018 whereby SmartLynx announced the acquisition of 22,727,272 subscription receipts (the "Subscription Receipts") of Jetlines, at a price of C$0.33 per Subscription Receipt, for total consideration of C$7,499,999.76 (the "Subscription Amount"), pursuant to a private placement (the "Private Placement"), SmartLynx and Jetlines have agreed to cancel the Subscription Receipts and release each other from all liabilities and obligations under the Subscription Agreement (the "Subscription Agreement") between Jetlines and SmartLynx and the Subscription Receipt Agreement (the "Subscription Receipt Agreement") among Jetlines, SmartLynx and Computershare Trust Company of Canada (the "Escrow Agent") pursuant to which the Subscription Receipts were issued.

Each Subscription Receipt entitled SmartLynx to receive, without payment of additional consideration or further action on the part of SmartLynx, one unit of Jetlines (each unit consisting of one variable voting share of Jetlines and one common share purchase warrant) upon receipt by the Escrow Agent, prior to August 31, 2019 of a release notice from Jetlines and SmartLynx confirming that: (a) Jetlines has raised additional gross proceeds of $40 million from a subsequent financing by May 31, 2019 (such completion date subject to waiver by SmartLynx); (b) the receipt by Jetlines' subsidiary, Canada Jetlines Operations Ltd., of its air operator certificate from Transport Canada; and (c) no termination event has occurred (the "Escrow Release Conditions").

Per the terms of the Subscription Receipt Agreement, in the event that the Escrow Release Conditions were not satisfied within the prescribed time frame, the Subscription Amount would be returned to SmartLynx and the Subscription Receipts would terminate.

On July 7, 2019 SmartLynx and Jetlines entered into a letter of intent (the "Letter of Intent") which provided, among other things, that SmartLynx would receive the Subscription Amount together with a payment of US$250,000 and upon receipt of such funds the parties would be released of their liabilities and obligations under the Subscription Agreement and the Subscription Receipt Agreement and the Subscription Receipts would be cancelled (collectively, the "Cancellation"). On July 19, 2019 SmartLynx received the Subscription Amount together with a payment of US$250,000.

Immediately prior to the Cancellation, SmartLynx held 22,727,272 Subscription Receipts which, upon satisfaction of the Escrow Release Conditions and automatic conversion of the Subscription Receipts into units, would have resulted in SmartLynx holding:

• 22,727,272 variable voting shares of Jetlines representing approximately 21.2% of Jetlines' total common shares and variable voting shares issued and outstanding (assuming conversion of all Subscription Receipts); and

• Warrants to purchase a further 22,727,272 variable voting shares which, if exercised in full by SmartLynx, would have resulted in SmartLynx having acquired a total of 45,454,544 variable voting shares of Jetlines in connection with the Private Placement, representing approximately 34.99% of Jetlines' total common shares and variable voting shares issued and outstanding (assuming conversion of all Subscription Receipts).

Following the Cancellation, SmartLynx held no securities of Jetlines.

SmartLynx also has the option exercisable for a period of twelve months following the closing of the Private Placement to complete a financing for variable voting shares for additional gross proceeds of up to $7.5 million at the discounted market price at the time it exercises its option.

The Letter of Intent further sets out terms of an offering to be negotiated and finalized between SmartLynx and Jetlines consisting of 7,500 units with each unit comprised of one $1,000 principal amount 10.00% senior secured convertible debenture of Jetlines and 2,439.02439 variable voting share purchase warrants, with each debenture being convertible into one variable voting share of Jetlines at a price of $0.41 per share and each warrant entitling the holder thereof to acquire one variable voting share of Jetlines at a price of $0.41 per share for a period of 36 months from the date of closing. Jetlines would issue a total of 18,292,682 warrants to SmartLynx as part of the units to be subscribed for by SmartLynx, as described in the Letter of Intent.

The Subscription Receipts purchased by SmartLynx were purchased and were held only for investment purposes and the Cancellation was completed for the same purposes. SmartLynx may from time to time in the future increase or decrease its ownership, control or direction over the securities of Jetlines, through market transactions, private agreements or otherwise, including in connection with the offering contemplated by the Letter of Intent as described above.

The details of the Private Placement are disclosed in press releases of Jetlines dated November 27, 2018, December 27, 2018 and April 30, 2019, and details of the Letter of Intent are disclosed in a press release of Jetlines dated July 8, 2019, copies of all of such press releases have been electronically filed by Jetlines with applicable Canadian securities regulators and are available for viewing on the SEDAR profile of Jetlines at

An Early Warning Report to which this press release relates will be filed with the applicable securities commissions using SEDAR and can be obtained from SmartLynx at or or on the SEDAR profile of Jetlines at

For further information, please contact:

Skirmantas Sutkus
VP Finance
SmartLynx Airlines SIA
Mazrudas, Marupe Municipality
LV-2167, Latvia
Tel:
Email:

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has reviewed or accepts responsibility for the adequacy or accuracy of this release.

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