Iceland’s Play delays plan to transition to ACMI

Iceland’s low-cost airline PLAY is navigating turbulent skies as it seeks fresh capital and a strategic overhaul, with a planned transition to a wet lease-focused business model by the end of October 2025.

The carrier, once heralded for its ambitious transatlantic hub-and-spoke operations, is grappling with damaging financial losses and a challenging market environment, prompting a drastic shift in its operational strategy. According to industry reports, PLAY has been haemorrhaging money for some time, posting a €61m loss for 2024, nearly double the previous year’s deficit, despite a 4pc revenue increase. The airline’s chief executive, Einar Örn Ólafsson, has acknowledged the need for a new direction, citing weak demand in the transatlantic market, increased competition, and unfavourable exchange rates as key pressures.

PLAY’s pivot involves scaling back its hub-and-spoke model, which connected North America and Europe via its Keflavík hub, and instead focusing on profitable point-to-point leisure routes from Iceland to Southern Europe, Western Africa, and Western Asia.

The airline has already cancelled several transatlantic routes, with all U.S. flights set to cease by October 2025, including services to New York Stewart, Boston, and Baltimore. Canadian operations, notably from Hamilton, ended in April 2025.

PLAY has been expanding its European footprint, with new routes to Antalya in Turkey and Faro in Portugal launched in April 2025, capitalising on Iceland’s booming tourism market. Dublin services are due to come to an end at the end of the season.

Central to PLAY’s restructuring is its move into the wet lease market, where it provides aircraft, crew, maintenance, and insurance (ACMI) services to other carriers. The airline has secured a Maltese Air Operator’s Certificate for its subsidiary, PLAY Europe, and plans to wet lease six of its ten Airbus A320neo-family aircraft by 2027. Three aircraft are already committed to a European operator until 2027, and one A321neo is leased to GlobalX in Miami. Another deal with SkyUp Airlines involves four aircraft, with discussions ongoing for the remaining two. This shift aims to stabilise revenue, as wet leasing offers predictable income compared to the volatile transatlantic market. Ólafsson has highlighted the high demand for PLAY’s modern, fuel-efficient aircraft, which are fitted with CFM International Leap-1A engines, making them attractive for leasing.

Financially, PLAY is seeking a €18.5m capital injection to support its transition. A proposed takeover by Ólafsson and deputy chairman Elías Skuli Skulason, through their special-purpose vehicle BBL 212, aims to delist PLAY from public markets and restructure it as a private entity. The offer, valued at a mere €0.007 per share, has secured €6.5m, with the remaining €12m still needed.

A plan to surrender PLAY’s Icelandic AOC and operate solely under the Maltese AOC has sparked concerns about job losses, particularly among Icelandic crew, as PLAY Europe will hire locally in the countries of its lessees. The airline is also exploring new ventures, including plans to establish a Kosovo-based virtual airline, leveraging its wet lease expertise to tap into emerging markets.

Despite the financial strain, PLAY remains optimistic, pointing to improved fourth-quarter results in 2024 as evidence that its revised model is gaining traction. The airline’s focus on leisure routes and wet leasing is seen as a pragmatic move to navigate a saturated transatlantic market, where competitors like Icelandair and new entrants with long-range aircraft, such as the A321XLR, have eroded PLAY’s edge.

PLAY’s strategy mirrors that of other carriers, like airBaltic, which have successfully balanced scheduled services with ACMI operations. However, the success of this pivot hinges on efficient fleet utilisation and the ability to secure stable leasing contracts. As PLAY prepares to exit North America and reposition itself, the coming months will be critical in determining whether it can soar to profitability or remain grounded by its past ambitions.