IcelandAir Airbus A321LR
Icelandair is interested in acquiring a 49 percent stake in a still existing entity of Fly Play, the Icelandic low-cost carrier that went bankrupt in September. It is seeking a minority share in Malta-based Fly Play Europe, which has a valid Air Operator Certificate (AOC).
Icelandair said in a stock filing on April 1 that it has signed a letter of intent to initiate discussions about the partial acquisition of Fly Play Europe. It is still early days, and any deal is conditional on due diligence and the arrangements with the creditors of defunct Fly Play.
Play launched services in 2021 on the foundations of other Icelandic low-cost airlines, Primera and WOW, both of which went bust. In November 2024, Play established Fly Play Europe as part of its own restructuring process to benefit from Malta’s lower tax treaties. For the same reason, various airlines like Ryanair, Wizz Air and even Lufthansa Group have established subsidiaries in Malta.
Fly Play Europe secured the AOC in March 2025, and four of Play’s Airbus A321neos were transferred to the operating licence in Malta by July 2025. Two A320neos were to join in September 2025 as Play changed its business model from operating scheduled transatlantic services to more leisure flights to Europe and ACMI.
Fly Play Europe operated flights on behalf of the parent airline as well as offering ACMI and charter services to others. It was in talks to provide aircraft to a Kosovo-based start-up before the parent airline abruptly ceased operations on September 29 and filed for bankruptcy.
Fly Play Europe is based in Saint Julian’s at an address that shows 108 other companies listed at the same place. It is owned by various shareholders, including pension funds. Since January, the company has listed six filings about the return of shareholders, changes amongst directors, or the appointment of an auditor.
Double taxation treaties
In the filing, Icelandair says it is seeking to benefit from favourable terms and conditions in Malta. “Acquiring a share in the company would open up new opportunities for Icelandair, for example, in charter services as the Maltese company has access to more extensive air service agreements and double taxation treaties.”
“At the same time, it would create opportunities to separate the company’s fleet operations, with aircraft intended for the long term in Icelandair’s passenger route network being operated in Iceland, while other aircraft would be operated in Malta. Such a separation would simplify Icelandair’s operations and increase efficiency.”
Flexibility
Icelandair CEO Bogi Nils Bogason says in the filing: “Most airlines in our markets, especially in Europe, operate more than one air operator certificate, giving them greater flexibility in their operations. If the transaction goes through it would similarly increase Icelandair’s flexibility and competitiveness. Having access to an air operator certificate in Malta in addition to the Icelandic one can open up new and exciting business opportunities and at the same time simplify our operations in Iceland and increase efficiency.”
Icelandair has a 100 percent share in Loftleidir Icelandic, a subsidiary that is involved in the leasing of aircraft for airlines and tour operators, with a turnover of $112 million and EBIT of $20.4 million in 2025 to the benefit of Icelandair Group. But Loftleidir doesn’t offer the same benefits as an entity would under more favourable terms.
Icelandair’s fleet comprises six Airbus A321LRs, 17 Boeing MAX 8s and four MAX 9s, nine 757-200s and two -300s, and four 767-300s. The older Boeing aircraft are gradually being phased out by early 2028, leaving just two aircraft in the international fleet this year. The A321LRs will replace the 757. The carrier expects to operate 52 aircraft during 2026. The first of 13 A321XLRs is due in 2029.
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