Iceland’s newest discount airline, PLAY, reported a loss of ISK 1.5 billion [$11.5 million; €10.78 million] in the first quarter of 2022. Per the Interim Report (January – March 2022) issued by the company this week, this comes as no real surprise, and can largely be credited to global factors, namely, “[t]he Omicron variant impacted revenue during the quarter, and the war in Ukraine resulted in higher fuel price towards the end of the quarter.”
The negative EBIT (Earnings Before Interest and Taxes) was “expected,” writes CEO Birgir Jónsson, who remains optimistic about the airline’s prospects. Travellers are showing an increasing willingness to fly, and the airline’s “financial position…continues to be strong, with a strong balance sheet and healthy cash position.” PLAY’s equity ratio stands at 22% ($56.5 million; €52.7 million; ISK 7.3 billion) and it is maintaining a cash position of ISK 5.4 billion [$43 million; €39.2]. Currency risk is a factor in the airline’s operations, “…since a large part of its cash position is in the ISK, while PLAY’s operating currency is in USD. PLAY is therefore exposed to the fluctuation of the two currencies against each other.”
Rapid network expansion
Between January and March 2022, PLAY carried 57,500 passengers, with a 20% jump in passenger numbers from February to March. The airline hired 45 pilots and over 100 new cabin crew members in Q1.
PLAY is steadily expanding its network and plans to continue to do so in Q2. Service to Baltimore/Washington, D.C. began in April; service to Prague, Boston, Lisbon, Gothenburg, and Brussels began in May, with destinations Stavanger, Malaga, and Trondheim on the horizon before the end of the month. In early June, service to Palma de Mallorca and Bologna will commence, as will daily flights to New York in the US. Indeed, PLAY will be the first airline to operate international flights from New York Stewart International Airport (located about 75 mi; 120 km outside of New York City) post-pandemic.
‘Strong booking momentum’
As part of its strategy to counter rising fuel prices that have resulted from the war in Ukraine, however, PLAY is adjusting its summer fleet plan and will not be offering three weekly flights to and from Orlando, Florida this fall as planned. Additional measures to counter rising fuel prices include a fuel hedging strategy, a fuel surcharge, and ongoing schedule adjustments “to eliminate unprofitable flying.”
Passenger hesitation in the wake of the Omicron variant and global unrest appears to be waning, and bookings are on the upswing. “In February, [there were] 59% more sold seats compared to January, despite the war in Ukraine. This improvement in booking inflow has continued into the second quarter of 2022, with more than fourfold increase in sold seats in April compared to January. Because of this strong booking momentum,” concludes the report, “PLAY expects to report improved utilization in the coming months.”