Icelandair Group has entered into a share purchase agreement to buy fellow Icelandic carrier WOW air.

The airlines, which say their combined market share in the transatlantic market is 3.8%, will continue to operate under separate brands.

In a statement, Icelandair said the acquisition creates opportunity for both airlines to become “even better prepared to provide international carriers with strong competition in the international airline market”.

The acquisition is subject to approval by Icelandair Group‘s shareholders and the Icelandic competition authorities.

Bogi Nils Bogason, interim president and chief executive of Icelandair Group, said: “WOW air has in recent years built a strong brand and enjoyed great success in the company‘s markets to and from Iceland and across the Atlantic. There are many opportunities for synergies with the two companies but they will continue to operate under their own brands and operating approvals.

“The tourism industry is one of the cornerstones of the Icelandic economy and it is important that flights to and from Iceland will remain frequent.”

Skúli Mogensen, chief executive and founder of WOW air, added: “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.”

Icelandair Group said it will have a shareholders‘ meeting to vote on the acquisition. Shareholders will be given at least three weeks’ notice.