Recently, the Icelandic airline, Play, published its financial results for Q4 2022. Despite a challenging year, the company managed to keep its losses within its projections while also experiencing significant growth in its load factor.
For many airline enthusiasts, Play Airlines is considered the “WOW Air 2.0”. The initial WOW Air expanded too quickly and too far, resulting in financial troubles. As a result, seeing Play Airlines lose money and spend cash is seen as confirmation by the doubters.
Rather than painting a rosy picture, let’s see what 2022 was like for the airline, and what improvements were made to their operations that can lead to a better 2023.
Q4 was nether expected to be the best
The last financial update on Play was given during the Q3 reporting presentation. At that time, the CEO expressed optimism due to the company’s first positive EBITA quarter. However, he warned that the positive trend might not continue into Q4, which is typically one of the weaker quarters, along with Q1.
Iceland is a small island country located in the North Atlantic Ocean. Despite its small size, Iceland offers a unique and diverse range of natural wonders that are virtually unparalleled worldwide. In the summer months, Iceland is a popular destination for tourists worldwide, with its stunning landscapes, rugged terrain, and endless opportunities for adventure. Iceland has something to offer everyone, from hiking and camping to whale watching and hot springs.
Iceland in the winter is often missed by tourists who think it’s only worth visiting in the summer. But the winter lights, ice caves, snowmobiling, and Northern Lights make it just as beautiful and awe-inspiring.
Play and Icelandair actively market the winter lights period, but it still needs to reach the same level of tourism as the summer season.
One last look over last year
Over the past year, Play launched operations in the United States, significantly transforming the company. Play transported 800,000 passengers to 25 destinations on both sides of the Atlantic with six aircraft in operation. The on-time performance was a remarkable 87%, and the load factor was 79.7%. Play also succeeded in attracting 34 passengers who only had a short stopover in Iceland before heading from the US to Europe, and 36 Icelandic or tourist passengers travelling to Iceland.
Since the start of its flight operations, Play has seen significant growth in its load factor, achieving an 80% load factor throughout the year. The company has also seen an 18% increase in revenue per seat kilometre due to the company’s capacity increase rather than a decrease in prices. Therefore, Play’s CEO believes their business model is sound, and the airline is confident in its future.
Play Airlines has also maintained impressive performance levels, particularly during the fourth quarter, corresponding to winter in Iceland.
The company has been well-received in the local market, with a 25% to 35% market share. Furthermore, Play Airlines represents about 16% of all entry and exit movements at Keflavik airport. The airline plans to continue growing in the years to come. Play may have attracted fewer tourists to Iceland last year, but the airline sees a positive trend in this area.
Better look for the future
The CEO of Play Airlines expressed optimism during the last quarterly presentation, noting that the year had started strong. The airline recorded vigorous booking activity in January, confirming that its network, destinations, and network plan are well-designed and responding favourably to the market.
Play Airlines has managed to keep its costs under control, increase its revenue, and mainly its unit revenue, which should enable it to achieve good results.
Although the airline may have attracted fewer tourists to Iceland last year, it is seeing a positive trend in this area. Some long-standing tour operators that offer flights to Iceland are beginning to work with Play to bring their clients to Iceland. This will significantly increase Play’s income over 2023.
Yet, Play Airlines has increased its ancillary revenues after the summer season thanks to innovative digital solutions, close cooperation with its handling agents, and below-wings freight revenue. The airline must now balance local and transit traffic well, focusing on margins and unit revenue.
Ultimately, Play has much to be satisfied within its financial results and prospects. The airline seems on the right track, with a solid business model, impressive load factor, and on-time performance. We thank Play for its hard work and hope the airline will continue to grow and prosper in the years ahead.
While Play Airlines has seen improvements in its load factor and revenue, it is essential to note that it is still burning cash. Despite this, the airline has remained optimistic and tried increasing its ancillary revenues and attracting more tourists to Iceland. Play Airlines is on the right track with a solid business model, impressive load factor, and on-time performance. However, it will be crucial for the airline to continue managing its costs and finding new revenue streams if it hopes to profit.
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