FILE PHOTO: The International Airport & # 39; Keflavik & # 39; will be shown on August 5, 2017 near Reykjavik, Iceland. REUTERS / Michaela Rehle / File Photo

(Reuters) – Icelandair Group (ICEAIR.IC) said on Monday that it had agreed to acquire the competing Icelandic carrier WOW air for about $ 18 million as part of an all-share deal aimed at creating a stronger competitor in the international aviation market.

Icelandair warned of profit earlier this year, saying that an increase in capacity across the Atlantic in some of its key markets influenced the trend of high season prices.

Both airlines use Keflavik Airport in Iceland as a hub between Europe and North America.

Wow-Air founder Skuli Mogensen, who will receive 272 million Icelandair shares as part of the deal, said the deal will strengthen his international competitiveness.

Icelandair said that both companies would continue to operate under separate brands and would together have a market share of 3.8% in the transatlantic market.

In the coming days, the Icelandair shareholders will vote on the deal.

Reporting by Tommy Lund; Arrangement by Jon Boyle and Louise Heavens

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