I have completed this scen using the following tactics:
Warning! SPOILERS AHEAD
First and foremost. Do NOT get detected. If your forces are detected you WILL get destroyed by the superior forces on Iceland.
To prevent getting detected you have to shut down all active sensors from your surface units including active sonar.
It is the sonar that gets you detected initially by the enemy subs.
Then send your forces south and loop them around the biggest concentration of enemy subs.
You have plenty of time to take this detour, so it won´t be a problem.
While you are heading south, setup an AEW patrol to keep an eye on things, especially on the MPA comming from the north.
It will detect you initially, but being unable to classify the contacts, the enemy will not attack.
Take this plane out with fighters with tanker support.
Also, setup ASW patrols in front of your forces as well as towards Iceland.
While this is going on, start sending fighter sweeps over Iceland to deal with the CAP.
You are out gunned so you have to outnumber the enemy CAP, so only take on one patrol at a time and use lots of planes.
You have plenty of time, so don´t try to take all patrols out at once.
When the CAP is gone, start hitting Keflavik.
Forget about ammo and fuel, and concentrate on hangars and open parking spots.
When the enemy airforce is destroyed, you can concentrate on the other ground targets.
There are some other surprises that I don´t wan´t to spoil, but if you follow this approach you should do alright.
It worked for me
Good luck, and let me know how it goes.