Icelandic flag carrier Icelandair has initiated a process that could enhance its operational flexibility in the European market by signing a Letter of Intent to acquire a 49% stake in Fly Play Europe. The company is the Maltese subsidiary of former low-cost carrier PLAY Airlines, which went bankrupt in September 2025.
Unlike its parent company Fly Play hf., which was wound down following bankruptcy, the Maltese subsidiary has remained active and retained its Air Operator Certificate (AOC). This regulatory asset now appears to be the key element of interest in the potential transaction, as it would provide Icelandair with access to additional bilateral air service agreements, as well as certain operational and tax advantages.
Fly Play Europe had already played an active role in the market prior to the collapse. After obtaining its Maltese AOC, part of the Airbus A320 family fleet was transferred to the subsidiary and deployed under ACMI arrangements, including operations for SkyUp Malta Airlines. During the summer of 2025, there were also discussions about transferring the entire fleet to the Maltese entity as part of a last attempt to restructure the airline before its eventual collapse.
At Icelandair, management highlighted that such a move would align with common industry practice, as many European airlines operate multiple AOCs to increase flexibility and adaptability. The company believes that establishing a presence in Malta could simplify certain operations outside Iceland while opening the door to new business opportunities.
The transaction has not yet been finalized. Its completion remains subject to due diligence and reaching an agreement with the creditors of the former parent company. If successfully concluded, Icelandair would effectively enter an ownership structure linked to its former competitor, taking over part of its remaining operational framework.
