Flugfélag Íslands in the early decades , dubbed
Gullfaxi, arriving at
London Heathrow Airport in June 1953 Icelandair traces its roots back to 1937, when
Flugfélag Akureyrar was founded in
Akureyri on the north coast of Iceland. Flight operations started in 1938 with a single
Waco YKS-7 configured as a
floatplane. In 1939 the airline was grounded when this aircraft was destroyed in a capsizing accident. In March 1940, Flugfélag Akureyrar moved its hub to Reykjavík and moved its operations to fixed-wing
seaplane scheduled flights from the Vatnsmýri area, and changed its name to Flugfélag Íslands, where it acquired another Waco aircraft and was relaunched in 1940 as
Flugfélag Íslands, which translates as
Flight Company of Iceland. Seaplane flights were operated in the vicinity of Vatnsmýri in
Skerjafjörður and Vatnagarðar. Previously, the two unrelated airlines of the same name (Flugfélag Íslands) had existed in the country (from 1919 to 1920, and between 1928 and 1931). For international purposes, the name
Iceland Airways was adopted. In 1940, Iceland was
invaded by the British and
Reykjavík Airport was established south of the capital during the war. In 1946, the airport was handed over to Icelandic civilian authorities, now called
Isavia. Iceland Airways (Icelandair) inherited a small building constructed by the British Army on the west side of the airport. Since 1947, the building has been gradually expanded but is still in use by Icelandair as a domestic terminal in 2024. By the 1950s, Iceland Airways operated flights to Britain and Northern Europe from the airport, as well as domestic flights. and a
Consolidated PBY Catalina in 1944, the latter being the first ever aircraft registered in Iceland to be flown to Iceland by an Icelandic crew from North America. On 11 July 1945, this aircraft operated the first commercial flight over the Atlantic Ocean for the airline, which led from Reykjavík to
Largs in Scotland, with four passengers and four crew members on board. Regular flights to
Prestwick Airport in Scotland and Copenhagen in Denmark, using
Consolidated B-24 Liberator aircraft leased from
Scottish Airlines were launched in 1946. Until the late 1960s, Flugfélag concentrated mostly on domestic service, but it also continued operating internationally; in 1948, the
Douglas DC-4 was introduced on international routes, and in 1957, two new
Vickers 759 Viscounts were acquired, the first
turboprop airliners to be operated by an Icelandic airline. In the 1950s, Flugfélag began to use
Icelandair branding for flights beyond Iceland. Another 727 was acquired in 1971, and the aircraft type was operated until 1990. In 2008, the cockpit section of
Gullfaxi was put on display at the
Akureyri Aviation Museum.
Loftleiðir Another company, Loftleiðir, called Icelandic Airlines internationally, was formed in 1944 by three young pilots returning from their flight training in Canada. The company, whose name roughly means "Skyways", initially concentrated on Icelandic domestic routes using two
Stinson Reliants and then a
Grumman G-21 Goose amphibious aircraft. aircraft at
Luxembourg Airport in 1978 Loftleiðir began scheduled international operations in 1947 from a small shed on the east apron of
Reykjavík Airport. Loftleiðir soon began challenging Flugfélag's dominance within Iceland; by 1952, the Icelandic authorities became concerned that the fierce domestic rivalry would cripple both companies, and attempted to force them to merge. Unable to consummate a merger, the authorities instead divided domestic routes between the two airlines, prompting Loftleiðir to exit the domestic market and concentrate instead on international flights. Its pioneering low-fare service across the North Atlantic commenced in 1953. Loftleiðir is considered a precursor to the
low-cost carriers, that emerged worldwide in the 1970s, as it was not part of or subject to
IATA fares or rules. Loftleiðir, anticipating increased demand, began construction of a large passenger terminal at
Reykjavík Airport. The late 1960s were an exciting time for Loftleiðir. In 1964, the airline acquired
Canadair CL-44 aircraft, which were the largest
transatlantic aircraft operating at the time. As a result of the large size of the new aircraft, Loftleiðir moved its entire operation to
Keflavík Airport in the same year, abandoning
Reykjavík Airport completely. The planned passenger terminal at Reykjavik Airport later became a hotel and headquarters for Loftleiðir. It continued to house the headquarters of Icelandair until 2024. The Loftleiðir hotel was operated under the Icelandair brand until 2022. In 1969, the company acquired International Air Bahama, a small Bahamian airline that operated transatlantic nonstop service between
Nassau and Luxembourg using
Douglas DC-8 jetliners, and a year later, Loftleiðir became one of the founders of
Cargolux, a cargo airline. Also in 1970, Loftleiðir entered the jet age with its first two DC-8 aircraft. During those years, many people including the company's own staff called Loftleiðir "the
Hippie Airline" or "the Hippie Express". The airline was not known for speed or punctuality, but flying with the company became a sort of rite of passage for young "hippies" from America travelling to Europe, one of whom was future U.S. president
Bill Clinton.
Merger with Loftleiðir During the
1970s energy crisis, the economic situation for both Flugfélag Íslands and Loftleiðir worsened. The government of Iceland initiated a new attempt to merge the two airlines, and this was successful in 1973 following lengthy and difficult negotiations, A holding company called
Flugleiðir was created, which combined the two companies and began to streamline staff and operations. In 1975, the Icelandic government provided a $13.5 million loan to Flugleiðir. The staff of Loftleiðir complained that Flugfélag Íslands, although smaller, had gained the upper hand in the united company. At the time of the merger, international transatlantic crossings made up two-thirds of the passenger traffic of the airline, and the fleet of Douglas DC-3s and Boeing 727s of Flugfélag Íslands was joined by the
Douglas DC-8s of Loftleiðir. In 1979, the two airlines Flugfélag Íslands and Loftleiðir merged into one airline,
Flugleiðir ("Flight Routes"), and the airline was renamed as Icelandair.
Post-merger Icelandair s at
Luxembourg-Findel Airport in 1983 of Icelandair approaches
London Heathrow Airport in 1983. In 1980, the Icelandic government provided a loan to Icelandair due to the company's bad financial situation. as the company's business grew on a reputation as a "backpacker airline", similar to Loftleiðir, which had been referred to as "Hippie Airline" since the late 1960s. In the same year, it was begun to dismantle the Luxembourg hub in favour of today's decentralized European network, linking the largest cities non-stop to Reykjavík, closing it down altogether by 1999. In 1997, the domestic operations of Icelandair, part of which had previously been operated under the 'Flugfélag Nordurlands' branding, were combined with a small airline Nordurflug to form the
Air Iceland (Icelandic: Flugfélag Íslands) subsidiary, allowing mainline Icelandair to fully concentrate on international flights since then. On 20 November 1999, a new aircraft livery was introduced, as part of an image campaign designed to retire Icelandair's "backpacker" label in favour of an emphasis on business travel.
Development in the early 2000s In 2001, the Icelandair hub was moved to
Keflavík International Airport. As Icelandair particularly focuses on flights to North America, the company was significantly affected by the
airspace closure following the
September 11 attacks in the same year. The Flugleiðir holding was reorganized as
Icelandair Group (for aviation business) and
FL Group (for non-aviation finance and investment business) between 2002 and 2005, with Icelandair becoming the largest and most important of eleven subsidiaries. The
wet-lease and charter department, which was founded in 2003, was named
Loftleiðir Icelandic, thus re-introducing a familiar name. Icelandair was hit by the
2008 financial crisis in the country and was further impacted by a volcanic eruption in 2010. Air traffic restrictions following the
2010 eruptions of Eyjafjallajökull resulted in large parts of the European airspace
being closed down. The air travel disruption coincided with the start of the important summer season for the company. The in-house crisis management organisation began assessing the situation once the scale of the problem had become known. Thrice-daily crisis meetings were held at the airline's headquarters. Icelandair tried to operate as many passenger flights as possible, keeping its hub at
Keflavík open and diverting European flights to airports that were still open. The eventual closure of Keflavík due to the
volcanic ash cloud coincided with an improvement in the situation towards Europe, which allowed Icelandair to move its headquarters with 200 staff to Glasgow and operate flights from there for ten days, with shuttle flights to Iceland's
Akureyri Airport and round-the-clock bus shuttles onwards to Reykjavík. In the
aftermath of the eruption, the government of Iceland launched the successful "Inspired by Iceland" campaign to regain confidence in travelling to Iceland for tourists and business people, of which Icelandair was a leading participant and initiator. Weekly newspaper
The Economist claimed that Icelandair could even take advantage when catering for
disaster tourists. In February 2011, Icelandair was chosen "The Knowledge Company" of the year, and Icelandair CEO
Birkir Hólm Guðnason was picked as "Man of the Year" in the Icelandic business community. In both categories, the panel of judges of the Association of Economists and Business Graduates in Iceland said that "the fine results of the company in the previous year showed both a high degree of skill and specialist knowledge within the company as well as excellent leadership."
Icelandair Info, the
inflight magazine of Icelandair, was printed four times a year in Icelandic and English from 2008 until 2020. It also contained the product catalogue for the airline's Saga Shop, now a separate magazine. Icelandair moved its headquarters to Hafnarfjörður in 2024, to consolidate its offices under one roof. Their previous headquarters at
Reykjavík Airport were in use for over 50 years, having been built by
Loftleiðir. After having launched scheduled flights to Washington, D.C., in 2011,
Denver was announced as a new U.S. destination for 2012, followed by Anchorage in 2013, bringing the total number of cities served in the country up to eight, along with Boston, Minneapolis, New York City, Orlando and Seattle. Also in 2012, Icelandair introduced flights linking
Akureyri to its Keflavík hub through subsidiary company
Air Iceland. From 2009 to 2014, operations doubled. Twice-weekly flights to Vancouver commenced on 13 May 2014 and continued until October of that year. Flights to Edmonton started on 4 March 2014, with a year-round service operating five times a week. The Geneva service started on 24 May 2014 and continued twice weekly until September. On 9 December 2014, Icelandair revealed a northern lights-themed Boeing 757-200 (registration TF-FIU) named
Hekla Aurora. The exterior features artwork depicting an Icelandic winter scene and LED mood lighting emulating the
Aurora Borealis. On 5 February 2015,
Birmingham became Icelandair's 5th gateway in the UK, and the 39th overall, with flights operating twice weekly, on Thursdays and Mondays. On 19 May 2015, Icelandair launched scheduled flights to and from Portland, Oregon in the US: its 14th destination in North America. Flights were set to operate twice weekly, on Tuesdays and Thursdays, until 20 October. Further expansion of Icelandair's global network was announced on 12 May 2015 with new, year-round services from Chicago O'Hare International Airport. Services commenced on 16 March 2016, with flights to Iceland operating four days a week. On 17 August 2015, Icelandair announced the augmentation of its global flight network with a new service between Keflavik and Aberdeen, the company's second Scottish destination. The new service, operated by
Air Iceland Connect (a subsidiary of Icelandair Group), commenced in March of the following year, with flights scheduled four times per week. Icelandair commenced scheduled flights to
Paris Orly Airport beginning on 29 March 2016. Services to
Montréal–Trudeau Airport began on 26 May 2016. In September 2016, Icelandair announced services to
Philadelphia, US, starting in May 2017 and
Tampa, US starting in Sep 2017. In May 2017, Icelandair unveiled a glacier-themed special livery on Boeing 757-200 (registration TF-FIR) named Vatnajökull, the name of Europe's largest glacier. The special livery was created to commemorate Icelandair's 80th anniversary. In August 2017, Icelandair announced service five days per week to
Cleveland, US, which began on 16 May 2018. The route was cut in early 2019. The airline offered Economy Comfort until April 2018. On 9 January 2018, Icelandair announced that it would provide three non-stop flights a week from Kansas City International Airport to Keflavík International Airport, which commenced on 25 May 2018. Icelandair commenced four weekly flights to and from Dallas Fort Worth on 30 May 2018. It ended on 6 March 2019. On 5 November 2018, Icelandair announced plans to take over its low-cost competitor,
Wow Air, with the two airlines to be operated as separate brands. On 29 November, Icelandair abandoned this endeavour as the shareholders' meeting pre-conditions were unlikely to be met.
Since 2020 On 18 September 2020, the company's share capital was increased with the issue of 23,000,000,000 new shares with a nominal value of 1
Icelandic króna following a public share offering. In addition, the Icelandic government decided to guarantee a line of credit for Icelandair. The guarantee amounts to $120 million. On 16 March 2021, domestic flights operated by
Air Iceland Connect (a wholly owned subsidiary of the
Icelandair Group) merged under Icelandair branding while retaining its existing
air operator's certificate. Icelandair announced the launch of a new route to
Istanbul, operating four times a week beginning 5 September 2025. In January 2025, Icelandair was reported to be launching a non-stop flight between
Reykjavik and Miami with three weekly flights starting in January 2026. The route will be serviced by its
Airbus A321LR aircraft. In October 2025, Icelandair announced it would accelerate the retirement of all their Boeing 757 and 767 aircraft to reduce costs. The aircraft will be phased out by 2026. == Inflight service ==