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.”

Seaman’s Association: Government’s Stalled Negotiations with Coast Guard Pilots “Unacceptable and Disgraceful”

TF-GRÓ Icelandic Coast Guard Helicopter

The Icelandic Seaman’s Association has issued a strongly worded statement in support of Iceland’s Coast Guard pilots, calling the government’s delay in negotiations “unacceptable and disgraceful,” Mbl.is reports. The Coast Guard pilots have been without a contract since December 31, 2019.

‘A hopeless position’

As Iceland’s Coast Guard pilots have police powers, they are legally prohibited from going on strike, which puts them in “a hopeless position” when it comes to contract bargaining, says Sonja Bjarnadóttir Backman, a lawyer with the Icelandic Airline Pilots’ Association (FÍA). Per a statement issued by FÍA in April, Coast Guard pilots’ “labour agreements have historically been linked to CLAs of comparable professions, for the longest time through a statutory link, or until 2006.”

That arrangement is now under “vigorou[s] attack” by the Ministry of Finance, however, which FÍA says is pushing “a clear demand for a new, original wage agreement without links to comparable professions. This will not only affect pilot benefits but will also greatly increase staff turnover among the Coast Guard’s pilots.”

With “hundreds of millions of ISK” spent on training each pilot, high turnover amongst the Coast Guard’s pilots is clearly costly to the state monetarily, but also has the associated cost of lost experience and knowledge among the highly trained professionals who oversee rescue operations at sea. “Increased staff turnover is therefore quick to more than offset the disconnection of wages from comparable professions,” continues the FÍA statement.

The FÍA also takes issue with the Ministry of Finance’s desire to abolish the pilot’s seniority list, which it says is “one of the cornerstones of safety culture in aviation around the world.”

“This arrangement has proved successful, as such lists ensure transparency, professionalism, and that pilots can report incidents without fear of punishment. The Ministry has presented no objective arguments to support its position, and in fact the pilots’ negotiation committee has perceived a lack of professional knowledge and understanding of the unique position of the aviation industry in the negotiations.”

(Read the FÍA’s full “Resolution from the Pilots of the Icelandic Coast Guard here, in English.)

See Also: Coast Guard Helicopter Unmanned Due to Pilot Shortage

“It’s happened that there’s no helicopter available when needed,” continues to the statement issued by the Seaman’s Association. Indeed, due to staff illness, there was no helicopter available when a serious traffic accident occurred in South Iceland this week. Since it was not possible to man the helicopter crew, the injured person had to be transported by ambulance – making the trip one and a half hours longer than it would have been by helicopter.

According to Ásgeir Erlendsson, communications officer of the Icelandic Coast Guard, for two thirds of the year, the Coast Guard has two crews on call, but for one third of the year, there is just a single crew on duty. In the past, illness or other staffing challenges have been solved by calling in staff who were off duty. That was, however, not possible on the day of the accident in question.

This staffing shortage was denounced by the Minister of Justice, who wants to increase the number of helicopter pilots. But despite the Seaman’s Association’s later claims, this incident was said to be unrelated to the pilots’ ongoing wage dispute.

‘Ambulances of the sea’

The Seaman’s Association statement, which was cosigned by the Association of Ship Captains, the Association of Engineers and Metalworkers, and the Grindavík Seaman and Engineer Association, also drew particular attention to the fact that with only one helicopter on duty, it is not possible to rescue distressed sailors who are more than 20 nautical miles from land.

“If ships are outside the 20 nautical mile-mark,” reads the statement, “they have to sail to meet a helicopter with their injured or ill. Minutes matter in these cases—let alone hours.”

The Seaman’s Association presses the government to ensure that there are always two helicopters, or “ambulances of the sea” available, and concluded by saying that having only one helicopter on duty could have grave consequences for Icelandic and foreign fishermen alike.

Icelandair Signs Five-Year Contract with Pilots Association

Icelandair has signed a contract with the Icelandic Pilots Association (FÍA), RÚV reports. The contract will be in effect until September 30, 2025.

Representatives from both parties issued statements about the contract, with Icelandair CEO Bogi Nils Bogason saying that it would ensure more working hours for pilots and “give the company more flexibility to develop Icelandair’s route system.” Chair of FÍA Jón Þór Þorvaldsson stated that the “pilots are proud of having achieved the goals that were set out, which will further increase Icelandair’s competitiveness. The agreement ensures that the company is well-positioned to expand into any market long into the future and take advantage of the opportunities that will undoubtedly arise.”

Icelandair has yet to reach an agreement with cabin crew workers who unanimously rejected Icelandair’s offer earlier this week. The Icelandic Cabin Crew Association’s board said all members were “completely opposed to outright overturning the current wage agreement and sacrificing the terms and rights that have taken decades to build up.” The group’s chairperson, Guðlaug Líney Jóhannsdóttir, noted that cabin crew last received a wage increase in 2018, and the proposed contract did not account for one until 2023 – effectively a five-year wage freeze. The wage hike in 2023 would also be dependent on whether Icelandair makes a profit. Cabin crew would receive a one-time payment of ISK 202,000 ($1,380/€1,270), but this would also depend on the success of Icelandair’s planned public stock offering.

Bogi Nils has come under fire from labour unions VR and ASÍ regarding the current wage dispute. The CEO has baulked at this criticism, saying “We need to be able to control labour costs and this can’t be higher for us than it is for our competitors.”