Icelandair Group has announced an agreement to acquire fellow Icelandic carrier Wow Air.

The deal is subject to approval by shareholders and the Icelandic competition authorities, and will see the combined group control around 3.8 per cent of the transatlantic market.

Bogi Nils Bogason, Interim President and CEO, Icelandair Group, said that “There are many opportunities for synergies with the two companies but they will continue to operate under their own brands and operating approvals”, stating that Wow Air had built a strong brand “and enjoyed great success in the company‘s markets to and from Iceland and across the Atlantic”.

Commenting on the news Skúli Mogensen, CEO and founder of Wow Air, said:

“I am very proud of the success and development that we at Wow Air have enjoyed in the past few years and I am thankful for the response we have received since our very first flight. We have created a strong team that has reached remarkable success and has been a pioneer in low cost flights across the North-Atlantic.

“A new chapter now starts where Wow air gets an opportunity to grow and prosper with a strong backer like Icelandair Group that will strengthen the foundations of the company and strengthen its international competitiveness even further.”

In recent weeks Wow Air had been forced to cut several US routes including St Louis, Cleveland and Cincinatti, leading to speculation that the carrier had over-expanded.

The airline is set to launch a new route to Delhi in December.

Lea Gestsdottir Gayet, Icelandair’s Communications Manager for Europe, told Business Traveller at this week’s World Travel Market in London:

“Iceland is quite a small market. Icelandair has 80 years of history and Wow Air has six years of history, it’s two different business models. There have always been discussions but now because of the economic landscape in Iceland it made sense [to acquire].

“Icelandair is a more traditional carrier. We have a solid ground and experience. Wow Air is more modern and low-cost. They have the new business model. I think it’s good for Iceland in general that we’re doing this collaboration.

“We have the same network, the same hub. So it’s a relatively smooth process. It’s the idea of stopping in Iceland.”

She said it was “most likely” Wow Air would continue its low-cost model and that passengers would not see any changes in the near future, but said they would be assessing all routes.

Icelandair opened five new gateways to the US this year. The airline is also focusing on fleet renewal, receiving the first of 16 new Boeing 737 MAXs this year.,