Icelandic low-cost airline PLAY will lease A320neo capacity over the Airbus A321neo Long Range (LR) during the summer period of 2022.
The airline’s initial summer plans involved leasing three Airbus A321neo aircraft, one Airbus A321neo Long Range (LR) and two Airbus A320neo. However, in the airline’s latest financial statement, PLAY identified the change was a cost measure to mitigate rising fuel costs.
“Due to the high price of fuel, PLAY has decided to change its fleet plan for summer 2022, and instead of leasing an Airbus A321neo LR, PLAY will lease an Airbus A320neo at more favorable terms, thus securing an even lower cost base in the long term,” the airline said in the statement.
“As a result, the planned three times weekly Orlando service that was supposed to start on 30 September 2022 will not commence,” the airline added.
PLAY’s summer 2022 fleet will now consist of three Airbus A321neos and three Airbus A320neos.
Rising booking inflows and a financial position
Ahead of the summer season PLAY has recorded increased venues and booking flows in its Q1 financial report.
In January 2022, the airline recorded a 95% increase in seats sold against those in December 2021.
“In February [2022], this positive trend continued with 59% more sold seats compared to January,” the airline’s statement continued.
“This improvement in booking inflow has continued into the second quarter of 2022, with 336% more sold seats in April compared to January, also reflecting more capacity. In April the load factor was 72.4% and we saw over 50% increase in passengers from the previous month,” PLAY added.
As of March 31, 2022, the airline reported a “strong” financial position.
“Cash and cash equivalents on the 31st of March amounted to USD 42.12 million. The equity ratio was 22% and the company has no external interest-bearing debt,” the airline said.
The airline’s “expected” negative earnings before interest and taxes (EBIT) is set to be $13.3 million in Q1 2022, which it attributed to having not yet reached economies of scale.
“The Omicron variant impacted revenue during the quarter and the war in Ukraine resulted in higher fuel prices towards the end of the quarter, impacting financial results negatively,” PLAY stated.
The airline reported a loss of $11.2 million for the first three months of 2022 compared to $0.4 million during the same period in 2021.
Lower costs, fuel hedging and expanding route network
However, PLAY highlighted its success “in keeping costs down” while its “CASK (Cost of Available Seat Kilometer) has been decreasing with increased operations”.
The airline expects “positive operating results in the latter half of this year with CASK excl. fuel steadily decreasing”.
PLAY has also begun implementing its fuel hedging policy following an agreement with Skeljungur. Founded in January 1928, Skeljungur, formerly Shell in Iceland, is an oil company and a provider of the Jet A-1 aviation fuel and Avgas 100LL across airports in the country.
CEO of PLAY, Birgir Jónsson said: “As we close the first quarter of 2022, we see and feel a growing demand in the market and a great response to our new destinations.”
“PLAY has clearly gained momentum, market share, and strength very quickly. After a challenging winter, it is good to see this positive feeling materialize in an increased load factor and a growing number of passengers month after month. This quarter, we took steps towards expanding our fleet, staff number, network, and we are confident that we are increasing our capacity at the right time as market demand has clearly recovered,” Jónsson added.
Jónsson said that the airline will expand its route network on “both sides of the Atlantic” by adding services to new destinations in May 2022 and June 2022.
Jónsson said: “PLAY will start operations to twelve new destinations in Europe and the U.S in May and June. This means that in summer 2022, PLAY will serve 26 destinations on both sides of the Atlantic, so it is safe to say that we have some very exciting times ahead.
“We expect that utilization will continue to improve in the coming months with the addition of the VIA market to PLAY’s network as we have started connecting cities in Europe and the United States.”