[3] During the initial years, only domestic routes out of Reykjavík Airport were operated using airplanes of the types Douglas DC-3, Consolidated PBY Catalina,[4] Stinson Reliant, Grumman Goose,[3] Noorduyn Norseman, Avro Anson and Vultee L-1 Vigilant.

[3] In 1948, Loftleiðir was granted governmental approval to operate passenger services to the United States of America, which were launched in August of that year when a second DC-4 joined the fleet, with New York's Idlewild Airport as first destination.

[3] Since Loftleiðir had launched domestic flights in the 1940s, there had been a fierce competition with Flugfélag Íslands, which had prompted the Icelandic government to divide the network between the two airlines, when the originally proposed merger had been rejected.

The management of Loftleiðir claimed to have been disfavoured in this measure,[citation needed] and decided to cease all domestic services in 1952, fully concentrating on transatlantic flights henceforth.

[17] The growing competition from Flugfélag Íslands and the economical pressure during the 1970s energy crisis led to the merger of the two airlines in 1973 into one holding company, which was called Flugleiðir.

[19] The geographical position of Iceland in the Atlantic Ocean between Europe and America allowed Loftleiðir to offer passenger flights between the two continents with an intermediate stop at its home airport at Reykjavík, thus operating at lower costs because of easier aircraft and crew logistics than its outer European or American competitors.

[8] Because Loftleiðir had not joined the International Air Transport Association (IATA), which at that time defined the fares for its member airlines on transatlantic routes, it could offer considerably lower ticket prices.

"[15] Between 1952 and 1962, Loftleiðir co-operated with the Norwegian airline Braathens SAFE on the transatlantic routes on a codeshare-like basis, as well as maintenance, inspection, overhaul and repairs.