REYKJAVIK — What do you do when an upstart ultra low-cost airline proves to be a tough competitor? If you’re Icelandair, you buy it.

Icelandair Group says it has entered into a share purchase agreement to purchase all shares in WOW air.

The companies will continue to operate under separate brands. Currently the combined market share on the transatlantic market for the two airlines is 3.8%. Icelandair Group says the acquisition creates opportunity for both companies to become even better prepared to provide international carriers with strong competition in the international airline market.

Bogi Nils Bogason, Interim President & CEO, Icelandair Group, says 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.” He adds: “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.”

WOW was founded in 2011, with flights starting in 2012 through its base in Reykjavik. The low-cost carrier’s CEO and founder, Skúli Mogensen, says he’s proud of WOW Air’s success and development. “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’s shareholders will cast their vote on the acquisition in the near future, says Bogason.

In 2017 WOW air said it had carried close to 180,000 passengers on 964 flights between Canada and Europe. The ULCC began service from Montreal and Toronto in 2016.

Recent announcements by WOW Air for the Canadian market included the addition of Vancouver as a gateway. The carrier’s network from the Canadian market, always with flights connecting via Reykjavik, extended beyond Europe in recent years to Israel and India.