Play Airlines slows US expansion as new CEO focuses on profits

It would be inaccurate to describe Iceland’s Play Airlines as another startup. Launched in 2021 during the height of the coronavirus pandemic, the airline is entering its third summer under the leadership of a new CEO.

Einar Örn Ólafsson, who rose to the top spot in March after serving as chairman of Play’s board, has sent a clear message to investors in his first few weeks: He will puts the airline in the black for the first time — as long as it doesn’t The volcanic eruption or face a spike in global oil prices.

Oh, and Ólafsson is also Play’s largest shareholder.

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“The last few weeks have been mostly about learning the details of the business… getting down to the nitty-gritty, getting my hands dirty,” he said in an interview Monday.

Ólafsson expects no major changes to Play’s core strategy of providing low-cost seats — everything else comes at a premium — between North America and Europe through Keflavik Airport ( KEF) of Reykjavik.

“We are not going back,” he said, adding that he sees opportunities for change as “small things.”

While Ólafsson doesn’t know what those little things might be, reliable operations and profitability are his top priorities. Play, which has not posted an annual profit since its launch, aims to break even this year and become profitable next year, according to an investor presentation in April.

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That means growth, at least in North America, will cease in 2024. Instead, Play wants its North American network to mature — in other words, turn a regular profit — before adding more flights. North American destinations served by the airline include Baltimore/Washington Thurgood Marshall International Airport (BWI)Boston Logan International Airport (BOS), John C. Munro Hamilton International Airport (YHM) near Toronto, New York Stewart International Airport (SWF) And Dulles International Airport (IAD) near Washington, DC; The airline also flies to 24 other destinations in Europe, according to Cirium Diio schedules.

Cirium Diio data shows that from June to August, the peak summer months, Play will only add about 3% more seats systemwide compared to 2023. This compares to a 67% increase every year. year in the same period last year.

Icelandair, Play’s main competitor, plans to add more than 5% more seats than last year during the same period, according to Cirium Diio. It will add Halifax, Nova Scotia and Pittsburgh to its map this summer.

Play’s plans in the United States

“There are some cities still on the East Coast or eastern Canada that we would like to fly to,” Ólafsson said. Play will likely add three new destinations in the area between 2025 and 2027, he added.

While Ólafsson provided some details about the destinations Play is eyeing on the East Coast or Canada, he also said that a future expansion in the New York area would likely be at another airport outside of SWF. That could mean John F. Kennedy International Airport (JFK) and New York’s Newark Liberty International Airport (EWR) are on Play’s shortlist.

SWF is located nearly 70 miles north of downtown Manhattan, and the trip by bus or car would take more than an hour without traffic.

Other potential destinations in Play’s Airbus A320neo family include Hartford, Connecticut and Philadelphia in the United States, and Halifax and Montreal in Canada.

Play plans to double in size, to 20 planes from 10 this summer, in five years or until 2029. After that, Ólafsson said the airline will look to increase the number of flights to destinations to now available on new points on your map.

Speaking of aircraft, all of Play’s A320neos and A321neos have CFM International engines and are not affected by the problems that are grounding hundreds of planes with Pratt & Whitney engines, Ólafsson said .

The outlook for summer transatlantic travel demand appears “stable,” Ólafsson said. Play sees weaker bookings in the US compared to last year, but that is balanced by stronger bookings in Europe.

“There can be a feeling that Europe is a small continent and it’s all close,” Ólafsson said of the conflicts in Ukraine and Gaza when asked why he thinks demand in North America is weaker. He added that high interest rates could also affect tourists.

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Prepare for winter

While keeping an eye on future expansion is an interesting exercise, the focus of Ólafsson’s work these days is much more imminent: winter. That’s when demand for travel across the North Atlantic and to cold, northern climates like Iceland weakened and airlines had to scale back to accommodate the market.

“Winter is about 60% low [the demand] of the summer,” Ólafsson said. “We have to scale up and down quite a bit depending on the season.”

For North America, that could mean Play canceling flights on days when the fewest people are traveling — such as Tuesday and Wednesday — or pausing certain destinations altogether during the week. January and February to fit your schedule with your travel needs.

The airline also plans to add flights to markets that are countercyclical or where demand peaks in winter. Play will add Madeira Airport (FNC) in sunny Portugal and Ras Al Khaimah International Airport (RAK) in Marrakech, Morocco to its map, alongside increasing flights to Spain in winter upcoming.

What Play does this winter will be a test of the budget airline’s mettle. Low season is often a time of decline for startups as they struggle to raise the cash needed to cover expenses during slow travel months.

But the threat of winter doesn’t worry Ólafsson these days, at least not that he would say.

“I’m pretty confident that we’ll stick to our guidance for this year,” he said. “Barring any oil rush, I am very confident that we will have significant improvement between FY24 and FY25.”

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