When Icelandair walked away from a deal to take over local rival WOW Air at the end of November, the stage appeared to be set: It would be only a matter of time before WOW, a fast-growing low-cost long-haul carrier in dire financial straits, collapsed and disappeared from the transatlantic market. Icelandair could then return to its unique market position of operating a hub in the mid-North Atlantic between the massive economies of the European Union and the U.S. And it would gain back its ...

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