The news comes after the airline revealed that it expects its full-year earnings to fall below last year’s numbers although it added that its financial position remains “secure” and that it has “no current plans to raise capital”.

Launched in 2021, the Reykjavík-based carrier aimed to fill the gap left by WOW Air’s demise, offering European passengers the chance to connect in Iceland to several North American destinations.

However, the airline has now said that the yields on this hub-and-spoke part of the business across the Atlantic have been “disappointing”. It added: “The North American market has changed substantially recently, with a general increase in supply having a negative effect on PLAY’s financial results.”

In response, the airline will now “significantly” reduce capacity on North American routes, with the changes “already underway” and set to continue into next year. The airline currently serves five destinations across the US, including Boston, Baltimore/Washington, Washington/Dulles, New York/Stewart and Hamilton. The airline said that the changes “will have no or minimal effects on passengers that have already booked flights”.

PLAY will now focus on its point-to-point leisure operation, primarily on flights between Iceland and southern Europe, which have been “popular and profitable from the beginning”.

Other changes to PLAY’s business model include establishing a new air operating certificate (AOC) in Malta, which it hopes to complete by spring 2025. The first aircraft under the new AOC will be based in Tenerife, operating flights to Keflavík and Akureyri in Iceland and other destinations yet to be announced. In the long term, it expects to have six or seven aircraft operating under its Icelandic AOC and three or four on its Maltese AOC. PLAY will also lease one of its ten-strong Airbus A320neo Family aircraft fleet to US carrier GlobalX from November 1 until March 15.