PLAY (Iceland) (OG, Reykjavik Keflavik) has announced "a fundamental change to its business model" to address the underwhelming financial performance of its current model which focuses on connecting traffic across the North Atlantic. The reorganisation will entail a new AOC in Malta, focus on leisure point-to-point services from Iceland, and more ACMI contracts.
"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. 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," Chief Executive Einar Örn Ólafsson said.
The airline expects to complete certification in Malta by spring 2025. The new unit will remain smaller in terms of fleet size, housing three to four aircraft with six to seven remaining on the Icelandic AOC going forward. The ch-aviation fleets module shows that PLAY's current fleet comprises six A320-200Ns, three A321-200Ns, and one A321-200NX.
The first Malta-registered aircraft will be based out of Tenerife Sur, operating flights to Reykjavik Keflavik and Akureyri, as well as other destinations outside Iceland.
The Maltese certificate will allow the airline to "utilise part of its fleet outside Iceland". The carrier confirmed that its first third-party deployment will be the upcoming ACMI contract with the US's GlobalX (G6, Miami International), which will wet-lease a PLAY aircraft between November 1, 2024, and March 15, 2025, to operate leisure charters out of Florida.
"We are exploring a year-round project that we hope to announce soon," Ólafsson said.
As PLAY reorients to focus on the point-to-point, leisure-driven market, it will "de-emphasise its business of connecting passengers between North America and Europe". The LCC conceded that in contrast to leisure operations out of Iceland, the North Atlantic "via" traffic has seen disappointing yields, this year in particular. PLAY partially attributed it to growing capacity from carriers operating direct transatlantic flights. The Icelandic carrier has already begun trimming down its North American and North European capacity and will continue these adjustments into 2025.
The ch-aviation capacities module shows the airline currently serves four destinations in the United States (Boston, Newburgh, Baltimore International, and Washington Dulles) and Hamilton, ON in Canada.
Although the airline admitted that its full-year EBIT result will likely be worse than in 2024, it stressed that its "financial position remains secure, and there are no current plans to raise capital". PLAY last raised new capital in April 2024.
PLAY posted a net loss of USD35 million for 2023, an improvement compared to the USD47.8 million net loss recorded in 2022. In the first half of 2024, the airline incurred a USD29.2 million net loss.
