Words by

Jón Trausti Sigurðarson

Photo by

PLAY

At around 10:00 on the morning of Monday, September 29, PLAY, the low-fare airline that had operated out of Iceland since June 24, 2021, announced that it was bankrupt. The announcement went on to say that “it is clear that thousands of passengers will have to reschedule their journeys home, about 400 people will lose their jobs, and the company’s partners will suffer losses.” 

A few days later the winding-up proceedings had already begun, with PLAY’s office furniture being sold off for a modest price, a boon for those who are into red furniture, the company’s brand colour. 

Though it was well known that PLAY had been having financial difficulties for most of 2025, the bankruptcy still came as a shock to many, not least because, just a month earlier, the company had managed to borrow 2.8 billion ISK from investors, which led many to believe that even though the company was in trouble, its demise would probably be postponed for some time. As it turned out, the 2.8 billion ISK only added a month to the airline’s life.  

“It’s really every person for themselves” 

In an interview on September 30, Minister of the Interior, Eyjólfur Ármansson, told Vísir that the collapse of PLAY left around 9,300 Icelanders stranded abroad who were supposed to fly back home to Iceland the week following the bankruptcy. Around 9,000 tourists were, for the same period, stuck in Iceland. Due to demand, ticket prices soared in the hours after the bankruptcy was announced. This led to many of those who had the option of cancelling their travel plans to do so, something that wasn’t optional for up to 20,000 people.  

Booking new flights has, for many stranded passengers, not been a cheap affair. “I had already locked in the fee, entered all the information, and the only thing left to do was to pay. Then I see their whole page update right in front of me, and the price doubles,” a woman told Morgunblaðið on the day of the bankruptcy, describing how the price of Icelandair tickets she was trying to book from London to Keflavík went from 150.000 ISK to 300.000 ISK in front of her eyes. Icelandair is Iceland’s largest airline. 

In an interview the day after the bankruptcy of PLAY, Icelandair’s CEO Bogi Nils Bogason told RÚV that “this came up very unexpectedly yesterday, and before this happened our flights over the next few days were already very full, with very few available seats,” he however assured the public that Icelandair would be adding some flights on their more popular routes to make sure passengers could get back home.  

In an interview on Vísir the same day the airline went bankrupt, its CEO, Einar Örn Ólafsson, had very little to offer on the plight of those left stranded by his airline’s demise.  “Unfortunately, we are not in a position to do anything for those passengers. It’s really every person for themselves in that regard. I hope people manage to sort something out. Fortunately, there are quite a lot of flights to and from the country.” 

Accusations of foul PLAY 

The unexpected bankruptcy of PLAY, so soon after the airline secured 2.8 billion ISK in funding, has led to some speculations of foul play. PLAY had consistently lost money every single year since its founding, with 9.4 billion ISK lost in 2024 alone. The airline’s board had started to look for ways to stabilise the company’s operations and, in October last year, the company’s CEO announced that PLAY would apply for an air operator’s license (AOC) in Malta. In March 2025 a subsidiary of PLAY acquired such a licence in Malta. 

In June this year, a group of investors, led by CEO Einar Örn Ólafsson, made a takeover bid for the company, with the aim of folding operations in Iceland, and operating out of Malta instead. The takeover bid never materialised and instead a two-year bond was issued by investors to the airline, among them CEO Einar Örn Ólafsson, for 2.8 billion, with collateral in shares in the company’s Maltese subsidiary. In early August it was announced that PLAY was still operating under losses. 

The day after the bankruptcy was announced, Vísir reported that an email had been sent out to the employees of the Maltese subsidiary that operations from Malta were in progress, but that the matter was complex, and it might take up to 10 weeks before operations there could begin. 

This turn of events led to speculations that the bond issuing of 2.8 billion ISK had simply been a ruse with the aim of leaving the airline’s debts in the now-bankrupt company, while moving its branding, sales system and flight operations to its debt-free subsidiary. 

In an interview with Vísir on October 2, attorney Sveinn Andri Sveinsson, who oversaw the winding up of WOW Air, the last Icelandic low-fare airline to go bust in 2018, commented on the collateral bondholders received in PLAY’s Maltese subsidiary saying that “some claim that it was the intention all along, that when the collateral was granted, the plan was to transfer ownership of the subsidiary to these creditors. This is something the [attorneys responsible for the winding up] need to investigate.” That is, to determine whether this action was legal.  

Subsequent to the interview with Sveinn Andri Sveinsson, former PLAY CEO Einar Örn, sent out a statement to the media denying the speculations of an orchestrated ruse saying, “The matter is much simpler — and unfortunately sadder — than the theories suggest.” He went on to say that “At this point, Fly Play Europe [the Maltese subsidiary] does not have any aircraft in operation. The company still exists and holds an air operator’s certificate. It will likely try to get back on its feet, but I won’t be the one to lead that effort. At this moment, it’s entirely unclear whether the subsidiary will survive.”  

Will we Fly PLAY again? 

Einar Örn’s statement left much to be desired in terms of details. However, whether or not the whole affair was a thoroughly coordinated ruse or a perfectly legal move will be investigated by the attorneys tasked with winding up the bankrupt estate of PLAY, and, if need be, by the Icelandic judicial system. Meanwhile, tens of thousands of travellers scramble to find their way back home, and irreparable damage has been done to the PLAY brand, regardless of whether operations continue under that name out of Malta in the future or not.