Fly Play hf.: PLAY Airlines Business Model Adjusted and Earnings Below Expectations
PLAY is making a fundamental change to its business model by further increasing the emphasis on the strong leisure markets out of Iceland, and, at the same time, it is de-emphasizing its business of connecting passengers between North America and Europe.
The point-to-point part of PLAY’s schedule, primarily flights between Iceland and Southern Europe, has been popular and profitable from the beginning. However, as previously reported, the airline’s yields on its hub-and-spoke part of the business across the Atlantic has been disappointing, particularly in 2024. The North American market has changed substantially recently with general increase in supply with a negative effect on PLAY’s financial results.
In response, PLAY has decided to significantly cut back its capacity on its North Atlantic routes. This adjustment is already underway and will continue into 2025. The number of PLAY’s destinations in North America and Northern Europe will decrease by mid-year 2025, with a bigger emphasis being placed on the airline’s leisure markets in Southern Europe. These changes will have no or minimal effects on passengers that have already booked flights with PLAY.
PLAY Applies for an Air Operating License (AOC) in Malta
In line with these changes, PLAY will utilize a part of its fleet outside of Iceland. PLAY’s first project of this nature will be for the U.S. carrier GlobalX in Miami, running from November 1 to March 15. To support this strategy, PLAY has applied for an air operating license in Malta. This process is expected to be completed by spring 2025. PLAY plans to move its first aircraft under the new Maltese AOC to Tenerife, from where it will be operated to Keflavík and Akureyri in Iceland and to other destinations. Following these changes, PLAY expects to operate 6-7 of its aircraft on its Icelandic AOC and 3-4 on the Maltese AOC.
The airline’s financial position remains secure, and there are no current plans to raise capital. However, PLAY’s EBIT for the full year 2024 is now expected to fall below last year's results, which is a change from previous statements. The increase in capacity across the Atlantic in spring and summer 2024 had a greater negative impact than initially anticipated.
PLAY will provide further details on these changes during its Q3 presentation, which will take place at Sykursalur in Gróska at 4 p.m. on Thursday, October 24.
"Since PLAY's inception, we've observed shifts in the market, and it is our view that the via-route network is no longer as profitable as it once was. As a result, we have decided to adjust our business model, which will take effect around mid-2025. PLAY remains the airline of choice for Icelanders, and we aim to increase our share in the local market. In short, we will focus on the aspects of our business that have proven both successful and profitable—namely, transporting passengers between Southern Europe and Iceland. PLAY currently operates a fleet of 10 aircraft, but with these changes, about six to seven will remain under the Icelandic AOC, while three to four will be allocated to other projects. One aircraft will be temporarily leased to Miami, and we are exploring a year-round project that we hope to announce soon. I am confident that these adjustments to our business model will allow us to grow, ensuring PLAY remains a top choice for travellers,” says Einar Örn Ólafsson, PLAY’s CEO.
