Airlines Strategy
PLAY Airlines to Wet-Lease Aircraft Amid Financial Challenges
Iceland’s PLAY to Wet-Lease Out Three Aircraft for Two Years
Icelandic low-cost carrier PLAY has announced a significant strategic move to wet-lease three of its aircraft to an undisclosed European operator until the end of 2027. This decision, disclosed alongside the airline’s 2024 financial results, marks a pivotal shift in PLAY’s operational strategy as it seeks to stabilize its financial performance and align with its long-term projections. The move comes amid a challenging financial landscape, with PLAY reporting a USD 66 million loss for 2024, a substantial increase from the previous year despite revenue growth.
Founded in 2019 and commencing operations in June 2021, PLAY has faced mixed results since its inception. While its flights between Iceland and Southern Europe have been profitable, the yields on transatlantic routes have been disappointing, particularly in 2024 due to increased competition in the North American market. This has prompted the airline to reassess its business model and explore alternative revenue streams, including the wet-lease market. The decision to wet-lease aircraft reflects broader industry trends where airlines are optimizing their fleets to reduce costs and adapt to economic uncertainties.
Background and Financial Context
PLAY’s journey has been marked by both successes and challenges. The airline initially adopted a hub-and-spoke model, connecting passengers from North America to European destinations via Iceland, similar to the now-defunct WOW Air. However, PLAY has focused on operating narrowbody jets, such as the Airbus A320neo and A321neo, to avoid the financial strains associated with twin-aisle aircraft. Despite this, the airline has struggled to achieve consistent profitability, particularly on transatlantic routes.
In 2024, PLAY faced significant financial headwinds, leading to a USD 66 million loss. This was attributed to increased competition in the North American market and the need to adjust its business strategy. As part of its financial restructuring, PLAY has paused its fleet growth for 2024, terminated two Letters of Intent (LOIs) for dry leases of aircraft due in 2025, and is seeking to boost its capital by uplisting from the First North Growth Market to the Nasdaq Main Market in Iceland. These measures are aimed at ensuring the airline’s long-term viability and financial stability.
Einar Örn Ólafsson, CEO of PLAY, emphasized the airline’s commitment to focusing on profitable routes and exploring new opportunities. “While our EBIT remains substandard, we saw a clear improvement in the fourth quarter, signaling that our revised flight schedule is already driving higher revenues and improved financials,” he said. “Looking ahead to 2025, we are optimistic about continued progress.”
“In short, we will focus on the aspects of our business that have proven both successful and profitable—namely, transporting passengers between Southern Europe and Iceland.” – Einar Örn Ólafsson, CEO of PLAY
Operational Shifts and Wet-Lease Strategy
PLAY’s decision to wet-lease three of its aircraft is a strategic move to optimize its fleet and generate additional revenue. The airline’s fleet currently comprises ten Airbus narrowbodies, including six A320-200N, three A321-200N, and one A321-200NX. One A321-200N is already wet-leased to GlobalX, a US-based carrier operating out of Miami International Airport. The new wet-lease agreements, set to begin in spring 2025, will see three additional aircraft leased to an undisclosed European operator until the end of 2027.
This shift towards the wet-lease market is part of PLAY’s broader strategy to focus on profitable routes and reduce its exposure to the volatile transatlantic market. The airline has also applied for an air operator’s certificate (AOC) in Malta, with plans to register six to seven of its aircraft in Malta and maintain three to four in Iceland. This move is expected to provide PLAY with greater operational flexibility and access to new markets.
Birgir Jónsson, CEO of PLAY, highlighted the importance of adaptability in the face of external challenges. “The last few months have shown us that external factors are something that we need to take into account, and we basically need a buffer for those fluctuations,” he said during a quarterly investor call. This underscores the airline’s focus on financial stability and its efforts to navigate the complexities of the aviation industry.
Future Implications and Industry Trends
PLAY’s decision to wet-lease aircraft reflects broader industry trends where airlines are seeking to optimize their fleets and reduce costs in response to economic uncertainties and changing market demands. The wet-lease market, which involves leasing aircraft along with crew, maintenance, and insurance, has become an attractive option for airlines looking to generate additional revenue without the operational burden of managing the aircraft themselves.
For PLAY, this move is expected to provide a stable and positive contribution to its business, particularly as it shifts its focus away from the transatlantic market and towards more profitable routes between Southern Europe and Iceland. The airline’s efforts to obtain a Maltese AOC and uplist on the Nasdaq Main Market in Iceland are also part of a broader trend of airlines seeking more favorable regulatory and financial environments to enhance their operational flexibility and access to capital.
As PLAY continues to adapt to the evolving aviation landscape, its ability to navigate financial challenges and capitalize on new opportunities will be critical to its long-term success. The wet-lease agreements, along with its strategic focus on profitable routes and operational flexibility, position the airline to weather the uncertainties of the industry and emerge stronger in the years to come.
Conclusion
PLAY’s decision to wet-lease three of its aircraft to an undisclosed European operator marks a significant step in the airline’s efforts to stabilize its financial performance and align with its long-term projections. This move, set against the backdrop of a challenging financial landscape, reflects the airline’s commitment to adapting to changing market conditions and exploring new revenue streams. By focusing on profitable routes and optimizing its fleet, PLAY is positioning itself for continued progress and long-term viability.
Looking ahead, the airline’s ability to navigate the complexities of the aviation industry and capitalize on new opportunities will be critical to its success. As PLAY continues to implement its revised business model and explore new projects for its fleet, it remains optimistic about its future trajectory. The wet-lease agreements, along with its strategic focus on operational flexibility and financial stability, underscore the airline’s resilience and determination to thrive in an ever-changing industry.
FAQ
What is a wet-lease agreement?
A wet-lease agreement involves leasing an aircraft along with its crew, maintenance, and insurance. This allows the lessee to operate the aircraft without the operational burden of managing it themselves.
Why is PLAY wet-leasing its aircraft?
PLAY is wet-leasing its aircraft to generate additional revenue and optimize its fleet. This move is part of the airline’s broader strategy to focus on profitable routes and reduce its exposure to the volatile transatlantic market.
What are PLAY’s future plans?
PLAY plans to focus on profitable routes between Southern Europe and Iceland, obtain a Maltese AOC, and uplist on the Nasdaq Main Market in Iceland. These measures are aimed at enhancing the airline’s operational flexibility and financial stability.
Sources: ch-aviation, Simple Flying
Airlines Strategy
Japan Airlines and Korean Air Sign MOU Ahead of Asiana Merger
Japan Airlines and Korean Air expand their 60-year partnership with an MOU covering codeshares, cargo, and SAF ahead of the Asiana integration.
Japan Airlines Co., Ltd. (JAL) and Korean Air (KE) signed a Memorandum of Understanding on September 3, 2026, to expand their strategic partnerships ahead of Korean Air’s scheduled integration of Asiana Airlines. The agreement prepares the carriers to scale their bilateral cooperation across a significantly larger combined network.
In a press release, Japan Airlines stated the expanded alliance builds upon a 60-year relationship between the two flag carriers. The partnership will encompass expanded codeshare operations, frequent flyer program alignment, and joint initiatives in cargo, ground handling, and sustainable aviation fuel.
Preparing for the Asiana integration
The timing of the agreement aligns with the final stages of Korean Air’s acquisitions of Asiana Airlines. Following formal approvals from the Korean Air board and Asiana Airlines shareholders on August 12, 2026, the integrated airline is scheduled to launch on December 17, 2026.
Japan Airlines indicated that existing partnerships will be evaluated and progressively aligned with the expanded network of the integrated airline. According to AeroCorner, codeshare operations between Japan Airlines and Korean Air are expected to increase from approximately 250 weekly flights to roughly 400 weekly flights following the December integration.
The carriers plan to extend their cooperation beyond passenger flights. The memorandum outlines large-scale collaboration in operational areas including aircraft maintenance, cabin crew training, and ground handling services.
Financial ties and historical context
Alongside the operational agreement, Japan Airlines acquired an undisclosed equity stake in Hanjin KAL, the holding company of Korean Air. In a statement reported by The Korea Herald, Japan Airlines characterized the acquisition as an independent investments decision based on the long-term market value of Hanjin KAL. The exact size of the stake remains undisclosed, as no regulatory filings indicating a holding of five percent or more have been published.
The strategic partnership memorandum was signed in Tokyo by Japan Airlines President and Group CEO Mitsuko Tottori and Korean Air Chairman and CEO Walter Cho. The agreement marks a continuation of ties that began in April 1963 with an initial cooperation agreement, followed by the launch of joint flights between Japan and South Korea in the spring of 1964.
Japan Airlines stated the partnership will “elevate the strong cooperative system that both companies have cultivated to the next level, creating new value and customer experiences in the global market.”
AirPro News analysis
We view the timing of this expanded partnership as a strategic maneuver by Japan Airlines to secure its position in the Northeast Asian market ahead of the Korean Air and Asiana Airlines merger. By deepening ties now, Japan Airlines ensures it remains the preferred Japanese partner for the incoming mega-carrier. The equity stake in Hanjin KAL, while undisclosed in size, serves as a financial anchor to the operational memorandum. This investment likely provides Korean Air leadership with a stable, friendly shareholder as they navigate the complex final stages of the Asiana integration.
Sources: Japan Airlines
Photo Credit: Japan Airlines
Airlines Strategy
Southwest Airlines to Launch First Airport Lounges in 2027
Southwest Airlines plans to open its first airport lounges in late 2027 at four locations, in partnership with Chase.
Southwest Airlines Co. (LUV) and JPMorgan Chase & Co. announced plans on September 2, 2026, to launch the carrier’s first-ever airport lounge network, with initial locations slated to open in late 2027. The infrastructure investment represents a historic departure for the 55-year-old airline as it aggressively overhauls its business model to capture premium revenue and compete directly with legacy carriers.
In a press release issued on September 2, 2026, Southwest Airlines confirmed that construction is already underway at four initial lounge locations. The announcement follows a July 23, 2026, earnings call where CEO Bob Jordan first indicated that airport lounge development was in progress.
Initial locations and Chase partnership
The first phase of the lounge network will debut at four major Southwest operating bases. The confirmed locations are Austin-Bergstrom International Airport (AUS), Baltimore/Washington International Thurgood Marshall Airport (BWI), Daniel K. Inouye International Airport (HNL) in Honolulu, and Nashville International Airport (BNA).
The airline stated that at least seven additional lounges are planned for high-demand business and leisure markets over the next several years. While the specific airports for the subsequent expansion phase have not been officially disclosed, the initial four represent some of the carrier’s most critical nodes for connecting and point-to-point traffic.
The lounge network is being developed in partnership with Chase, expanding a 30-year relationship between the two companies. Access to the facilities will be tied to a new, premium Southwest Rapid Rewards credit card issued by Chase, which is scheduled to launch concurrently with the first lounges in 2027. The physical spaces will draw on the design and operational framework of the existing Chase Sapphire Reserve Lounge Network.
“Southwest Airlines has built one of the most trusted brands in travel by delivering authentic Hospitality that Customers value. Our lounges will be a natural extension of that experience, offering Customers a place to relax and experience the Southwest brand in a new way.”
Tony Roach, Executive Vice President and Chief Customer & Brand Officer at Southwest Airlines, noted in the release that the lounge network represents a strategic investment in the Rapid Rewards program and deepens the financial partnership with Chase.
A radical shift in the Southwest model
The introduction of airport lounges is the latest in a series of fundamental changes to the Southwest Airlines passenger experience. The carrier has been undergoing a radical transformation of its business model to improve profit margins and attract higher-spending premium travelers.
This strategic pivot follows sustained pressure from activist investor Elliott Investment Management, which has pushed the airline’s leadership to adopt industry-standard revenue practices. Prior to the lounge announcement, Southwest abandoned its historic open seating model in favor of assigned seating and introduced extra-legroom premium seats.
The airline also ended its famous “Bags Fly Free” policy on May 28, 2025, introducing checked bag fees to align with competitors and generate ancillary revenue.
AirPro News analysis
We view the introduction of a proprietary lounge network as the final confirmation that Southwest Airlines has entirely abandoned its original low-cost carrier (LCC) identity. By adding assigned seating, premium legroom, bag fees, and now airport lounges, Southwest is transitioning into a hybrid carrier model designed to compete directly with Delta Air Lines, United Airlines, and American Airlines for lucrative corporate and premium leisure traffic.
The partnership with Chase is the financial engine making this infrastructure investment possible. To successfully launch a high-annual-fee premium credit card in 2027, Southwest requires a tangible premium product on the ground. The initial locations in Austin, Baltimore, Honolulu, and Nashville target markets with high volumes of originating traffic where Southwest holds a dominant market share, ensuring immediate utilization of the new facilities upon opening.
Sources: Southwest Airlines Co.
Photo Credit: Southwest Airlines Co.
Airlines Strategy
Riyadh Air and Saudia Launch First Codeshare Phase
Riyadh Air places its RX code on six Saudia domestic routes, launching the first phase of their codeshare agreement.
Riyadh Air and Saudia have officially launched the first phase of a strategic codeshare agreement, allowing the start-up carrier to place its “RX” designator code on six domestic routes operated by the Saudi flag carrier. Announced on August 27, 2026, via the Saudi Press Agency, the partnerships enables passengers to book connecting flights on a single ticket with baggage checked through to the final destination.
The integration aligns with Saudi Arabia’s National Aviation Strategy by linking the networks of its two major national carriers at King Khalid International Airport (RUH). The codeshare launch follows a Strategic Cooperation Memorandum of Understanding (MoU) signed by the two airlines on November 14, 2023.
Domestic network integration
The initial phase of the codeshare agreement covers Saudia-operated flights to Abha, Qassim, Dammam, Jeddah, Madinah, and Tabuk. Both airlines operate from Terminals 1 through 4 at RUH, a setup designed to facilitate seamless passenger connections between the two carriers.
Vincent Coste, Chief Commercial Officer of Riyadh Air, highlighted the technological focus of the partnership in the official announcement.
“Integrating different technology environments has been a fundamental principle of Riyadh Air’s digital model since its inception. This first major step in our cooperation with Saudia represents a significant milestone for the aviation sector. By bringing our strengths together, we are redefining the travel experience within the Kingdom,” Coste stated.
Broader expansion and global strategy
As a Public Investment Fund (PIF) company, Riyadh Air is building its operational framework ahead of its planned commercial launch. While the Saudia partnership secures domestic feed, the airline is simultaneously establishing its international footprint.
International regulatory approvals
Beyond domestic integration, Riyadh Air is rapidly securing international access. According to reporting by Aviation Week, the carrier recently obtained regulatory approval for flights to Beijing, Shanghai, and the United States. To build its global network, the airline has also signed strategic agreements and MoUs with multiple international operators over the past two years, including Delta Air Lines, Virgin Atlantic, Air China, and Turkish Airlines.
AirPro News analysis
We view this codeshare implementation as a critical operational test for Riyadh Air’s IT infrastructure before it begins operating its own aircraft. By utilizing Saudia’s established domestic network, Riyadh Air can market a comprehensive Saudi destination portfolio from day one of its commercial operations without needing to immediately deploy its own aircraft on short-haul domestic routes. This dual-carrier strategy effectively splits the market focus, allowing Saudia to maintain its domestic and religious traffic dominance while Riyadh Air concentrates on building RUH into a global transit hub to compete with neighboring Gulf carriers.
Sources: Riyadh Air
Photo Credit: Riyadh Air
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