Icelandair History: Flugfélag, Loftleiðir and the Atlantic – Airline Employee Shop

Icelandair History

Icelandair grew from a one-plane seaplane company in northern Iceland in 1937 and a rival founded by three young pilots in 1944, and the two came together to link Europe and North America through Reykjavík. Here's a short history of Icelandair and Loftleiðir, plus the Icelandair collection that celebrates them.

Flugfélag Akureyrar to Flugfélag Íslands (1937–1945)

Iceland's first airline, Flugfélag Akureyrar, was founded at Akureyri on the north coast on June 3, 1937. Its only aircraft was a Waco YKS floatplane. In 1940 the company moved to Reykjavík and became Flugfélag Íslands, which later used the trade name Icelandair abroad. Its first international flights, to Scotland and Denmark, began in the mid-1940s.

Loftleiðir, the low-fare pioneer (1944–1973)

Alfreð Elíasson, Kristinn Olsen and Sigurður Ólafsson, three pilots who had trained in Canada, founded Loftleiðir on March 10, 1944. It began international flights in 1947, and from 1953 offered low fares across the North Atlantic via Reykjavík. Because it stayed outside IATA, it could undercut the big carriers. Young Americans flocked to it, and it became known as the "Hippie Airline." From 1955 Luxembourg was its main European gateway. Loftleiðir flew Canadair CL-44 turboprops from 1964, added Douglas DC-8 jets in 1970, and helped found the cargo airline Cargolux that same year.

The merger (1973–1990s)

On July 20, 1973, Flugfélag Íslands and Loftleiðir came together under a new holding company, Flugleiðir. In 1979 the two airlines were fully combined, using Icelandair as the international name. Boeing 727s flew to Europe and DC-8s crossed the Atlantic. In the 1990s the Boeing 757 became the backbone of the transatlantic fleet.

Icelandair today

Icelandair now flies from Keflavík International Airport, connecting cities across North America and Europe. Its fleet includes Boeing 737 MAX jets, and in December 2024 it took delivery of its first Airbus, an A321LR. The Loftleiðir name lives on as Icelandair Group's lease and charter company.

A few things collectors love

  • Loftleiðir's "Hippie Airline" nickname from the cheap-fare days of the 1960s.
  • Loftleiðir marketed its stretched CL-44Js as the "Rolls-Royce 400 PropJet."
  • Icelandair has long let transatlantic passengers stop over in Iceland at no extra airfare.

Shop Icelandair

Browse Icelandair logo T-shirts, coffee mugs, coasters, tote bags and vintage designs in the Icelandair collection. Add an airline bag tag or key tag for anyone who has made the stop in Reykjavík.

AirlineEmployeeShop.com is an independent retailer of airline memorabilia. This page is for historical interest and is not affiliated with or endorsed by Icelandair.