PLAY, the low cost, Icelandic airline, announced in its Q3 2023 financial results that it turned a profit of USD 5.2 million, an increase of 84% over the third quarter 2022. From adding four aircraft and 13 destinations, the third quarter of 2023 was PLAY’s most successful financial quarter to date.

Birgir Jónsson, CEO of PLAY, said: “We are all very proud of our financial and operational results for the third quarter and especially of the fact that PLAY generated a net profit of 5.2 million USD, the first-ever quarterly net profit since our inaugural flight in June 2021.  Operational profit grew tenfold from the same quarter last year, revenues were up 84%, and passenger numbers increased by 74%, quite remarkable facts and a testament to a well-performing business model and a great team of professionals.”

Higher revenues and higher load factor despite significant increase in capacity
During Q3 2023, PLAY operated flights to 33 destinations in Europe and North America with the capacity, measured in available seat kilometres (ASK), increased by 71% compared to Q3 2022. Load factor improved by 3.4%from 85% in Q3 2022 to 88.4% in Q3 2023. In Q3 2023, PLAY flew a total of 540 thousand passengers,74% more than the 311 thousand passengers flown in Q3 2022.

Revenue increased 84% and unit revenue (RASK) increased 9%. The year-on-year improvement in load factor and unit revenue is a testament to how well-established PLAY has become in its key markets.

In Q3 2023, 24% of total passengers flown were traveling from Iceland, with 33% going to Iceland and 43% connecting passengers (VIA). Via traffic increased by 4%year-on-year, while load factor on routes to and from North America was 92% during the quarter. The number of passengers flown increased by 74% year on year, with an 88% increase in passengers flying to and from North America and a 66% increase in passengers to and from Europe.

The increase in VIA traffic, both in terms of number of passengers as well as share of total traffic compared to Q3 2022 was driven by increased connectivity within the network, greater awareness of PLAY in foreign markets, and strong U.S. consumer demand. All these factors, along with the launch of bundled fares in February, resulted in improved yields from VIA passengers compared to Q3 2022.

PLAY continued to deliver a strong operational performance with 85.1% of flights arriving on time in Q3 2023, which is a significantly better performance compared to the airline’s main competitors.

Q3 2023 Financial Results
PLAY’s net profit for the quarter amounted to 5.2 million, a turnaround of USD 8.1 million from last year when the net loss was USD 2.9 million, with revenues for Q3 2023 at USD 110.2 million compared to USD 59.9 million in Q3 2022.

PLAY has placed significant emphasis on increasing ancillary revenue with improved product offerings such as bundled fares which launched in February and other additional ancillary products. Ancillary yield per passenger in Q3 2023 was USD 58 and increased by 35% compared to Q3 2022 when it was USD 43. Total ancillary revenue this year to date is 150% higher than at the same time 2022.

Total operating expenses, including depreciation, amounted to USD 82.1 million in Q3, resulting in unit cost per available seat kilometre (CASK) of 5.3 US cents, which decreased by 2% compared to the same period last year. Ex-Fuel CASK was 3.4 US cents and increased 11% year-on-year due to inflation and one-off maintenance items. PLAY expects its Ex-Fuel CASK to be around 3.7 USD cents for the full year.

Financial income and expenses were negative in the quarter in the amount of USD 6 million., USD 4.6 million was due to interest expenses of lease liabilities.

PLAY’s total assets amounted to USD 493.8 million at the end of the period compared to USD 331.5 million at year-end 2022. The company operated ten aircraft for the whole period. Trade and other receivables amounted to USD 27.9 million and comprised mostly of acquirer’s unpaid ticket sales. Deferred income decreased during the period and was USD 40.7 million at the end of September compared to USD 82.4 million at the end of June, this is expected due to seasonality. Unwinding of working capital position during the third quarter, due to seasonality, resulted in decreased cash from Q2. At period-end, the company’s cash position was USD 39.2 million, including restricted cash. Total equity at period-end was USD 25.5 million. The company has no external interest-bearing debt.

Jónsson continues: “PLAY has been on a very steep growth trajectory as we have been increasing our fleet size, expanding our network, and welcoming many new Players to our team. Growth is expensive, and it is, therefore, a notable achievement that we have been able to increase our unit revenues and grow our ancillary revenues at the same time, resulting in a strong net profit and a healthy cash position.

 “We do not plan to grow as much next year but will focus on optimising and stabilising our operation and increasing our profitability before we commence our next growth phase in 2025, which will see more aircraft, some of whom have already been secured, and a more extensive and dense network.”

 “We continue to have a laser focus on our cost base, and our team has been successful in maintaining a very competitive unit cost, something that is absolutely critical for our success, but nonetheless a real challenge in today’s inflationary business environment. I sincerely want to thank all the exceptional individuals who make up the PLAY team for their fantastic work, and I am absolutely convinced that nothing can stand in their way in the future as they continue to play to win!”

 On selected aircraft PLAY has been introducing a digital onboard passenger self service via passengers’ own personal devices, alongside Space Seats; aisle or window seats with more legroom at the front of the plane without a neighbour, due to the middle seat being blocked with a comfortable side table. This reduces capacity in low season to 200 seats per Airbus A321neo aircraft instead of 214 seats and therefore reduces labour cost as fewer crew members are needed. The product increases ancillary revenue and is easy to remove when seasonal demand returns.

Outlook
PLAY’s outlook for the full year is unchanged from the end-of-summer information that was provided at the end of September. The outlook anticipates carrying around 1.5 million passengers in 2023 and EBIT will be around negative USD 10 million. PLAY is projected to generate a total revenue of around USD 280 million in 2023.