Iceland’s New Airline PLAY Is Already Being Questioned

First there was WOW, then there was WAB. Somewhere along the line WOW 2 came and went (and could come back again), but most recently we’ve seen the entry of PLAY. If you thought Icelandic aviation was confusing, we don’t think it’s over yet. Now, it seems PLAY needs several million in funding if it’s going to get off the ground before the new year.

The airline is in need of further investment. Photo: PLAY

PLAY needs almost $14m investing

According to reporting in Icelandic news outlet Visir, the airline requires ISK 1,700 million ($13.8m) in share capital to match with the already secured funds. In the initial presentation of the airline, Director Arnar Már Magnússon said that 80% of the airline’s startup funding was known to be foreign, with local investors sought for the remaining 20%.

So far, the airline is reported by Fréttablaðið as having secured €40m ($44m) in loan financing from the British investment fund Athene Capital. The fund has the option to purchase a 10% stake in PLAY, and PLAY’s founders and employees are expected to hold a further 50% stake in the airline.

WOW airliner on runway
PLAY’s business model is similar to that of defunct WOW Air. Photo: WOW Air

Prospective investors, therefore, are left with a pretty slim slice of the pie to bid for, possibly something that is putting them off.

Investors are hard to find

Investors are apparel concerned with the large stake currently held by PLAY’s founders and have been questioning the flight experience of the team. Reports that the airline will be earning a profit of ISK 70m within its first quarter are seen as optimistic and somewhat naive. As such, an investor has yet come forward.

According to Visir, Icelandic Securities (IV) has approached numerous investors, including tourism operators and fund managers, but are as yet to find an interested party.

What does this mean for PLAY?

The lack of local investment coming forward is not good news for the airline. A new low-cost carrier should be celebrated in Iceland, as a means to replacing lost tourism income, not to mention affordable freight options too.

However, the worries of local investors are likely well-founded. It’s almost unheard of for a new airline to begin serving up profits so soon into its operation, particularly in the difficult European low-cost carrier market.

Icelandair got a bump in share value when it was revealed PLAY was struggling to find an investor. Photo: Icelandair

However, the airline appears to be remaining upbeat about the situation, telling BusinessMoggann that,

“This is not right; we feel great enthusiasm and a great head start.”

A spokesperson insisted that IV is still working on the investment and that PLAY executives are happy with the current situation. Indeed, Arnar Már Magnússon is reported to have said that they wouldn’t need the whole amount to secure the $44m loan, only around $8m in total.

As for the forthcoming launch, it seems nothing has yet changed. The spokesperson told BusinessMoggann that,

“There is still a plan to start selling tickets at the end of November or early December and then start flights.”

There’s very little in the way of firm announcements about routes, destinations or anything else. However, the airline’s social media pages are hinting at launch routes including Dublin, London and Tenerife.

According to reports, some 40 to 50 thousand people have already registered for the pre-launch mailing list. However, recruitment for the airline’s staff is still ongoing, and they don’t seem to have an AOC just yet. For now, we’ll just have to wait and watch.