PLAY Airlines Restructures Operations Amid Financial Concerns
Icelandic low-cost carrier PLAY has announced significant changes to its operational model and route network as it anticipates that earnings for 2024 will fall short of market expectations. The airline is shifting its focus from primarily connecting passengers between Europe and North America to offering point-to-point leisure routes between Iceland and Southern Europe, where it has experienced substantial growth in 2024.
PLAY’s yield on hub-and-spoke operations for transatlantic routes has been disappointing, as increased capacity from other airlines has affected profitability. The airline aims to avoid the pitfalls faced by its Icelandic predecessor, WOW Air, by proactively addressing these financial concerns.
Recent data indicates that, as of August 2024, 25.9% of PLAY’s passengers were departing from Iceland, while 35.6% were traveling to Iceland as their final destination. Additionally, 38.5% were connecting passengers using Keflavik Airport (KEF) as their transit point between Europe and North America.
In light of these challenges, PLAY will significantly reduce capacity on its North Atlantic routes, starting immediately and continuing into 2025. Currently, the airline serves five destinations in North America: Boston (BOS), Baltimore/Washington (BWI), Washington Dulles (IAD), New York-Stewart (SWF), and Toronto/Hamilton (YHM). An airline statement suggests that Miami-based GlobalX will take over operations on these routes from November 1, 2024, until March 31, 2025, with future plans yet to be determined.
PLAY has expanded rapidly into Europe throughout 2024, announcing new flights to destinations such as Madeira, Pula, Split, Valencia, Faro, Aalborg, Cardiff, Marrakech, and Vilnius. The airline will also introduce flights to Turkey in April 2025, marking its first service to Antalya.
To support its evolving network, PLAY plans to apply for an Air Operating Certificate (AOC) in Malta, allowing it to deploy part of its fleet outside of Iceland for the first time. This strategic move is expected to be completed by spring 2025, with the first aircraft operating under the Maltese AOC being used for routes to Keflavík, Akureyri, and other destinations.
Despite the anticipated dip in earnings before interest and tax (EBIT) for 2024 compared to 2023, PLAY assures its financial position remains secure, with no immediate plans for capital raising. The airline will provide more details on these changes during its Q3 presentation on October 24, 2024.
CEO Einar Örn Ólafsson stated, “The via-route network is no longer as profitable as it once was. We will focus on the aspects of our business that have proven both successful and profitable, namely transporting passengers between Southern Europe and Iceland.” With these adjustments, PLAY aims to solidify its position as a preferred choice for travelers.
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