Play Airlines’ stock has plummeted following an announcement about significant business model changes, including reducing connecting flights and focusing on leisure markets in Southern Europe, Vísir reports. This drop in share prices comes ahead of a scheduled Q3 presentation on October 24.
Shifting focus towards leisure markets
The stock price of Play Airlines is in free fall following an announcement earlier this week regarding a change in the company’s business model, Vísir reports. One of the airline’s four largest shareholders sold 71 million shares this morning at a price of one krona per share. The closing price on Wednesday was 1.92 krona.
As noted by Vísir, Play announced two days ago that it would undertake significant operational changes, including substantially reducing connecting flights between Europe and North America. The airline further announced that it would shift its focus towards leisure markets. The number of aircraft and staff in Iceland is set to decrease, and the company plans to apply for an airline operating licence abroad.
As noted by GlobeNewsWire on Wednesday, the airline’s returns from its hub-and-spoke operations across the Atlantic have been underwhelming, especially in 2024. “The North American market has changed substantially recently with a general increase in supply with a negative effect on PLAY’s financial results.”
More funding needed
Speaking to Vísir yesterday, Jón Karl Ólafsson, former CEO of Icelandair, stated that Play’s announcement struck him as an attempt to save the company’s operations.
“It’s quite obvious that the company has been losing money, and the owners have had to inject capital,” Jón Karl observed. “If I understand the information correctly, the performance this year is worse than they had expected, so it stands to reason that more funding will likely be needed.”
Jón Karl conjectured that Play was setting up a business model that would allow the company to ask the owners for more capital, noting that it was difficult to predict whether these changes would save the company’s operations.
Whatever the case, Wednesday’s announcement, as noted by Vísir, appears to have been poorly received by investors; yesterday, the company’s stock dropped by 28.13%, and the decline has continued today. At the time that Vísir’s article was published, the stock had fallen by 26.09%, hitting a low of one krona.
“That was the price in by far the largest trade of the day, as 71,651,440 shares were sold and bought at 11:00 A.M. for one krona per share. In a public offering last April, each Play share cost 4.5 krona,” Vísir notes.
Q3 meeting next week
As noted by Mbl.is this morning, Play’s management is scheduled to hold a presentation on its financial results on October 24. Based on the movement of the company’s shares, it is clear that the management needs to clarify the company’s situation more thoroughly. “Market participants, in any case, appear to have lost confidence,” the article from Mbl.is reads.
