PLAY to axe most routes to the US and move some planes to Malta...

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The Icelandic carrier PLAY is making some key fundamental changes as earnings fall way below expectations and cause concern. The alterations to its business model will see the airline further increase an emphasis on the strong leisure markets out of Iceland.  At the same time, PLAY will concentrate less on the model of connecting passengers between North America and Europe. 

The carrier confirmed its yields on the hub-and-spoke part of the business across the Atlantic has been disappointing, particularly in 2024. Increased competition in the North American market has also had a negative effect on PLAY’s financial results. Whereas the point-to-point part of PLAY’s schedule, primarily flights between Iceland and Southern Europe, has been popular and profitable from the beginning. 

Therefore, the airline says it will significantly cut back its capacity on its North Atlantic routes, starting immediately and will continue into 2025. PLAY will also axe some destinations in North America and Northern Europe by the middle of next year as it refocuses attention on Southern Europe.  

Another way to cut costs PLAY believes is to base part of its fleet in Malta and has applied for an Air Operating License (AOC) in Malta. This process is expected to be completed by the spring of next year. If all goes to plan, the carrier will 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. PLAY says it will then operate 6-7 of its aircraft on its Icelandic AOC and 3-4 on the Maltese AOC.  These moves will also make it easier for the carrier to keep flying in some form even if its financial position doesn't improve and it has to liquidate part of the airline to free up funds. 

The airline promises its financial position currently remains secure, with no present 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 the spring and summer of 2024 had a greater negative impact than initially anticipated.

"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.

PLAY's Q3 presentation will take place at Sykursalur in Gróska at 16:00 local on Thursday, 24th October.