Icelandair Group has agreed to buy Czech leisure airline Travel Service, a move that marks its second foray into Eastern Europe.

The fast-growing group has agreed a deal that would see it purchase half of Travel Service by the end of June, and the remaining 50% in 2008. Travel Service had been a long-time target of SkyTeam carrier CSA Czech Airlines, which wanted to turn the carrier into its low-cost arm, but struggled to get competition authorities to agree to the move. Travel Service launched its own low-cost brand, Smart Wings, in 2004.

Travel Service operates a fleet of 12 Boeing 737-800s and one 737-500, with two 737-900s and a 787-8 on order. It carried 1.8 million passengers last year, generating a turnover of €190 million ($257 million). "The airline has a good and increasing position in the charter and low-cost market in Eastern Europe," says Icelandair Group chief executive Jon Karl Olafsson.

Icelandair purchased Latvian leisure carrier Latcharter last year. "This has been a success story, and now we are taking an even bigger step in this direction," says Olafsson.

Source: Airline Business