PLAY Reports ISK 1.5 Billion Loss in Q1, Maintains ‘Strong Balance Sheet and Healthy Cash Position’

iceland budget airline play

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.”

WOW Air to Fly Again in October

Ballarin introduces WOW asset purchase.

USAerospace Associates plans to start flying between Iceland and Dulles, Washington under the WOW air brand, as early as next month. This was revealed at a press meeting held at Hótel Saga today by Michelle Roosevelt Edwards, or Michelle Ballarin as she is often known, chairman of the company.

Ballarin introduced the purchase of certain assets from the WOW estate, including uniforms, computers and marketing material, but will not disclose the price paid for the assets. She says the airline will operate under the WOW brand. According to Ballarin, WOW is a good brand despite the company’s bankruptcy in March this year. The new WOW airline intends to offer commercial passenger flights but also freight flights and Ballarin sees possibilities in transporting seafood from Iceland to the US.

The airline will operate two planes to start with but will increase the fleet to four soon and intends to have 10-12 planes next summer, with no further increases planned. The airline will operate on a US air operating license and have offices on both sides of the Atlantic. Both Airbus and Boeing planes will be used.

According to Ballarin, Iceland will be the main operation centre in Europe but Washington DC in North America. Destinations are currently being discussed but they will have a similar program to the late WOW.

85 million USD will be spent to get the airline up and running but Ballarin adds that the new airline is debt-free and will remain that way.

The Airline will hire Icelandic staff, as Ballarin considers Iceland’s people as one of the country’s greatest resources.

Ballarin made headlines in Iceland over the summer when she first introduced her plans to resurrect WOW air. At the time, her purchase of WOW’s assets was rescinded due to delayed payments.


Indigo Partners Call Off WOW air Negotiations – Icelandair Renews Interest

WOW - Icelandair - Keflavík Airport

Indigo Partners has cancelled negotiations to invest in WOW air. Subsequently, the board of Icelandair Group has agreed to reenter negotiations with WOW, according to a statement released by WOW air last night. In an announcement to the stock exchange, Icelandair Group stated that the negotiations will be in consultation with the government and that they should be concluded this Monday, March 25.

Government hopes for successful resolution

This is the second time Icelandair Group enters negotiations to buy WOW air but talks had previously been suspended November of last year, shortly before Skúli Mogensen, owner and CEO of WOW announced that he had begun negotiations with Indigo Partners. In their statement to the stock exchange, Icelandair notes that “If [Icelandair Group] will be involved in the operation of WOW, it will be based on how competition laws regard failing firms.” This would allow the companies to merge without intervention from the government, despite their competitive status.

In their statement, Icelandair Group has claimed the talks are conducted in consultation with the government. The government also released a statement, stating that they have been following difficulties in international airline operations and the competitive position of Icelandic airlines. They will continue to monitor the progress of the negotiations closely and hopes that they will be successfully resolved.

Altered circumstances

The projected three-day negotiations will be short, especially in light of the fact that the Indigo Partners negotiations have taken three and a half months. The secretive talks with Indigo were supposed to be resolved before Feb 28 but once it was clear that would not be sufficient time, the deadline was extended to March 29. In early March, it was reported that Indigo was prepared to invest up to 90 million USD in WOW.

In an interview on the Channel Two morning radio, Steinn Logi Björnsson, former Icelandair CEO claimed the negotiations are a last-ditch effort to rescue WOW. According to him, the situation of both parties has changed since the last negotiations were inconclusive. He claims Wow is in a worse position than they were before Christmas but Icelandair’s position has also changed due to the Boeing 737 MAX planes they grounded. Icelandair had three of the 737 MAX planes but was expecting six more to join their operations.

In Focus: Up in the Air

WOW - Icelandair - Keflavík Airport

The world of Icelandic aviation has been showing signs of tremors recently. Even though the number of travellers in Iceland is at a high point, the two companies responsible for transporting them to the North Atlantic are floundering. Airlines Icelandair and WOW air, albeit vastly different, face similar threats to their business. Icelandair is the […]

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