Icelandair is the flag carrier airline of Iceland, based in Reykjavík. It is part of the Icelandair Group and operates services to 22 cities in 12 countries on both sides of the Atlantic. Its main base is Keflavík International Airport..
In 1945 Flugfélag Íslands (Iceland Airways Ltd.) made its first international flights to Scotland and Denmark. Scheduled international services were commenced in 1946 with converted B-24 Liberator aircraft leased from Scottish Airways. Loftleiðir began international operations in 1947 , and its pioneering low-fare services across the North-Atlantic commenced in 1953 . At the time IATA determined the fares for airlines flying between Europe and North-America and all airlines charged the same amount. Loftleiðir was not a part of IATA and could therefore determine its own fares, undercutting all competing airlines. This made them a popular hub for travel between Europe and North-America.
Flugfélag Íslands and Loftleiðir were merged in 1973 and the name Flugleiðir was adopted. The company's English name became Icelandair. A large portion of the air traffic between the United States to Europe flies over Iceland making the island a transfer point for people travelling between the U.S. to Europe and vice versa. This accounts for much of the company's passenger traffic. Icelandair's stopover plan dates back to when Loftleiðir started the plan in 1963 on its transatlantic flights at no extra cost. At the time Loftleiðir was the only airline that did this and therefore pioneered sixth freedom rights. Early sixth freedom flights operated to Findel airport in Luxembourg. That airport was eventually dropped in 1999 in favor of service to more populous cities in Europe. In 1996, Icelandair entered into an interline and marketing agreement with low fare airline, Southwest Airlines. This allowed Southwest to carry American passengers destined for Europe. The agreements are no longer in effect.
After the merger, Icelandair was the holding company for the two airlines, but assumed all operating responsibilities in October 1979 . In 1997 it established a subsidiary, Air Iceland, to operate domestic and selected short-haul routes. In January 2002 , Flugleiðir-Icelandair Group became a holding company with 11 subsidiaries, of which Icelandair is the largest. In March 2005 the groups name was changed to FL Group. In October 2005, FL Group sold its airline and travel operations and a new company was formed, Icelandair Group. Icelandair has 2,565 employees (at March 2007).
Icelandair transported over one and a half million passengers in 2005 (1,526,241), the largest number of passengers that the airline has transported in one year. The number of passengers increased 14.5% from the previous year and since 1993 this amount has tripled. On average Icelandair operated 28 flights a day in 2005..
On 28 February 2005 Icelandair signed a contract for two Boeing 787s for delivery in 2010 and purchase rights for 5 more. On 5 April 2006 Icelandair signed a contract to exercise two of their five Boeing 787 purchase rights for delivery in 2012.
Icelandair shares many of these aircraft with its sister company Loftleiðir Icelandic. Loftleiðir Icelandic is now operating 6 Boeing 757-200s and 3 Boeing 767-300s. Icelease, another sister company of Icelandair, owns 15 Boeing 737-800's. These aircraft are leased to other companies including Air China and Hong Kong Airlines until the 2008 Olympics end.
Two of Icelandair's aircraft are currently being leased out to Air Niugini from Papua New Guinea. One is a 767-300ER and the other being one of their 757-200's.
Russian Media has reported that Icelandair was behind a currently unidentified European order for the Russian Sukhoi Superjet 100, and now has 20 of the type on order and purchase rights for 5 more.