PLAY Airlines, a low-cost carrier based in Iceland, suddenly ceased operations on September 29, 2025, filing for bankruptcy and cancelling all flights due to mounting financial losses. This news came as a shock to thousands of passengers who were left scrambling for refunds and alternative travel arrangements.
The airline reported a net loss of £43 million ($66 million) in its latest financial statement, with an additional net loss of £17 million ($27 million) in the first quarter of 2025 and £10 million ($15 million) in the second quarter. This, combined with poor ticket sales and internal staff discontent over strategic changes, left the board with no viable options. Despite implementing a turnaround plan in late 2024, which aimed to focus on leisure markets and aircraft leasing, PLAY Airlines was unable to turn their finances around.
With negative media coverage further impacting demand, the board made the difficult decision to shut down the airline. Around 400 employees lost their jobs as a result of the collapse.
The PLAY Airlines fleet, consisting of six Airbus A320neo aircraft, is now grounded and will likely be sold or leased by the bankruptcy administrator to settle debts. This marks the end of the airline’s four-year run, which began in June 2021 after WOW Air’s bankruptcy.
Prior to the shutdown, PLAY had already scaled back its services, ending routes to major US cities and European hubs. This sudden collapse echoes the 2019 demise of WOW Air, making it the second low-cost carrier from Iceland to fail in the past six years.
The shutdown of PLAY Airlines has left approximately 1,750 passengers stranded and disrupted transatlantic connections. For those with future bookings, alternative flights can be found through carriers like Icelandair, though no special rescue fares have been confirmed. Passengers are advised to contact their credit card issuers for refunds or travel agencies for package deals under EEA consumer protection rules. EU air passenger rights may also apply, with claims directed to the bankruptcy administrator.
The board expressed regret over the situation, stating that they had exhausted all other options before making the decision to shut down the airline. Former CEO Birgir Jónsson had previously stated that the turnaround was evident, but ultimately, the airline’s deep-rooted challenges proved to be insurmountable.
Travellers are reminded to monitor official sources for updates as the bankruptcy process unfolds. This event serves as a reminder of the risks associated with budget aviation and highlights the importance of considering safeguards, such as travel insurance, for future bookings.