Information Memorandum
14 June 2021
This Presentation has been prepared by Arctica Finance hf. (“Arctica”) at the request of Fly Play hf. (“Play”) and is being furnished by Arctica and Arion Bank hf. (“Arion”) for the sole purpose of assisting the recipient in deciding whether to
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Disclaimer
2
Summary
On 24
th
of June PLAY is scheduled to finally make its maiden flight after two years of preparation
3
› Favourable market
conditions
› Optimal new fleet of
aircraft secured
› No legacy liabilities
The
Opportunity
Successful Private
Placement
IPO & First North
Listing
› PLAY has already
raised USD 47m in a
Private Placement
› Over 60
shareholders
› Base case fully
funded
› Raising additional
USD 33-36m further
boosting liquidity
› Inviting the public and
professional investors
to participate in
PLAY‘s journey
› First day of trading in
July
COVID HAS CREATED A
UNIQUE OPPORTUNITY FOR
PLAY...
...WITH SIGNIFICANT
POTENTIAL INVESTMENT
UPSIDE WHEN THE MARKET
RECOVERS
4
› PLAY is a new low-cost airline which will operate flights between Iceland and Europe.
PLAY offers low-cost flights and a safe and pleasant journey in our new and
comfortable Airbus aircraft
› At PLAY, our primary goal is to make flying affordable for everyone and offer lower
prices to and from our destinations
HOW
WE DO IT
PLAY is in the air!
Simplicity
› Simple strategy – lean and mean
› Simple offering – all economy product
› Outsource non-core activities where
PLAY lacks economies of scale, e.g.,
ground handling, maintenance, catering,
etc.
2.1.
› With PLAY’s low-cost culture and
streamlined operations, we are able to
offer great prices to our customers
› PLAY’s entire team is dedicated to
achieve this goal
Low-Cost Culture
› Culture of operational discipline
› A sensible approach and clear decision-
making
› We’re taking conservative and thoughtful
steps
Operational Discipline
3.
PLAY has Strong Foundations for Future Growth
Unique timing, experienced personnel and strong cornerstone investors with a clear vision for PLAY
5
› Market downturn
› Modern aircraft available at
historically low prices and for
long-term lease
› Competitors facing difficulties,
high debt and increased unit cost
Unique Timing
› Access to highly skilled staff
› Committed and highly
experienced management team
Experienced Personnel
› Lead cornerstone investors with a
strong track record in airline
investments
› Airline industry know-how
› Diverse ownership with an
aligned vision on PLAY
Well Funded Airline
PLAY – A Jump Start with no Barriers
PLAY infrastructure is ready – First flight scheduled on 24
th
of June 2021
6
✓ Air Operator Certificate (AOC) granted
✓ Key systems, installed, tried and tested
✓ Crew with full qualifications hired
✓ Initial aircraft leased and slots secured
✓ Ticket sales launched in May 2021
Preparation Phase
Completed Infrastructure
› First flight scheduled on 24
th
of June 2021
› Ticket sales above expectations
› Onboarding of new employees
› Establishing and expanding network
Execution Phase
Ramp-up
Flexibility – Expand Offering when Timing is Right
PLAY has the ability to ramp up when market conditions are favourable
1) Point to Point = Flights to a destination, not through central hub 2) TO: Passengers travelling to Iceland, FROM: Icelandic passengers travelling from Iceland, VIA: Connecting passengers
7
Aircraft in operation: 3 aircraft
Operating Model: Point to Point
1
offering
in accordance with demand
Destinations: Europe
Customers
2
: TO │ FROM
Phase 1
Soft Take Off
Phase 2
Hub & Spoke
Aircraft in operation: 6+ aircraft
Operating Model: Hub and Spoke
Destinations: Europe and North America
Customers
2
: TO │ FROM │ VIA
Starting with Popular Destinations in Europe
PLAY’s flexibility allows for choosing the most profitable destinations
8
Current Destinations
We will start small and expand when the timing is right.
First, we will begin servicing a few destinations in Europe...
› Alicante
› Barcelona
› Berlin
› Copenhagen
› London
› Paris
› Tenerife
…At a later phase, we will expand our operations further in
Europe and North America with our Hub & Spoke model
Key Management
Committed and highly experienced management team
9
Flight Operations
Finnbogi Karl Bjarnason, Director
Technical Operations
Andri Geir Eyjólfsson, Director
Ground Operations
Rúnar Friðriksson, Director
Crew Training
Halldór Guðfinnsson, Director
Safety and Compliance Monitoring
Margrét Hrefna Pétursdóttir, Director
Security
Snorri Birgisson, Director
Finance
Þóra Eggertsdóttir, CFO
BI & Data
Sveinn Ingi Steinþórsson, Director
People & Culture
Jónína Guðmundsdóttir, CPO
Network & Scheduling
Daníel Snæbjörnsson, CNO
Operations
Arnar Már Magnússon, COO
Revenue Management
Sonja Arnórsdóttir, Director
Sales & Marketing
Þórður Bjarnason, Director
Service Delivery
Hildur María Haarde, Director
Commercial & Digital
Georg Haraldsson, CCO/CIO
CEO
Birgir Jónsson
Board of Directors
10
Einar is the chairman of the
boards of Terra and Löður
Einar was previously the
general manager of Fjarðarlax,
CEO of Skeljungur and before
that held various management
positions in banking
Einar Örn Ólafsson
Chairman
Skúli has over 25 years of
aviation and airline operations
experience. Skúli was one of
the founders of Airport
Associates and Bluebird Cargo
Elías Skúli Skúlason
Vice Chairman
Auður is the CEO of Two Birds,
a fintech company. Auður has
extensive experience in
marketing, management and
strategic planning
Auður B. Guðmundsdóttir
Board Member
Guðný has over 15 years of
experience in the airline
industry. Guðný served as a
Managing Director of cabin
crew for Icelandair and as VP
of Human Resources at Air
Atlanta for five years
Guðný Hansdóttir
Board Member
María is an independent
investor. She was one of the
founders of MINT Solutions.
María currently sits on the
board of numerous companies
María Rúnarsdóttir
Board Member
The Opportunity
Market Environment
Historically, leisure and VFR traffic has been less affected by economic shocks
12
› Flying has become more affordable
than previously
› Low-Cost Carriers increased their
market share in Europe from 26% in
2011 to 37% in 2019
› In general, consumers are price
sensitive – they want to Pay Less,
Play More!
Change in consumer
behaviour
1) VIA=Connecting passengers between Europe and North-America 2) VFR = Visiting friends and relatives
› Uncertainty for recovery of business
travel
› Many Transatlantic carriers are
reliant on business travel and are
likely to maintain low capacity due
to uncertainty
› Historically, the VIA market recovers
quickly following crisis
Strong VIA
1
market
following crisis
› Historically, leisure and VFR traffic is
less affected by economic shocks
› Leisure/VFR travellers continue to
travel, and Low-Cost Carriers
benefit in a recession as traveller's
price awareness increases
Leisure & VFR
2
will
pick up first
PLAY‘s customer base will consist mainly of passengers travelling for leisure and VFR
1
purposes
to and from Iceland as well as across the Atlantic
Passenger Traffic at KEF is Dominated by Leisure and VFR Traffic
In 2019, 90% of passengers travelling to/from KEF were travelling for leisure or VFR purposes
13
Passengers Journey Purpose at Selected European Airports
1
1) Traffic data for the year 2019
Source: ISAVIA, UK CAA and various airport websites
93%
90%
88%
87%
86%
79%
77%
75%
74%
73%
72%
67%
66%
7%
10%
12%
13%
14%
22%
23%
26%
26%
27%
28%
33%
34%
Palma de Mallorca
Keflavik (KEF)
Malaga
Alicante
London
Gatwick
Edinburgh
Barcelona
London
Heathrow
Madrid
Gothenburg
Stockholm
Arlanda
Copenhagen
Oslo
Gardemoen
Leisure & VFR Business
755m
143m
89m
5m
U.S. Domestic Market The London Aviation Market The Transatlantic Market (VIA Market) The TO/FROM Iceland Market
The majority of markets to/from Iceland and across the Atlantic do not have enough traffic to sustain non-stop service on frequent basis
14
The Hub & Spoke Model Provides Access to Larger Markets
Total Annual Passengers in 2019 by Market
1
The U.S. domestic market is
145 times bigger than the
market to and from Iceland
1) The London Aviation Market includes all passengers terminating or originating their journey at London Heathrow, London Gatwick, London Stansted, London Luton and London City. The TO/FROM Iceland market excludes passengers
transferring at KEF airport. U.S. domestic market size estimated based on Bureau of Transportation Statistics Origin & Destination Survey
Source: European Travel Commission, UK CAA, Bureau of Transportation Statistics and Icelandic Tourist Board
In smaller markets, a hub is required to combine passenger flows allowing more destinations and frequencies to be offered
15
The Hub & Spoke Model is Key in Connecting Markets Together
1) The picture is for illustrative purposes only
› Having a hub at Keflavik Airport creates an opportunity for PLAY to connect
with larger markets by combining passenger flows, which enables PLAY to
offer more frequency of service and serve markets that otherwise couldn’t
sustain service depending on the TO/FROM Iceland market alone
› Iceland’s location allows PLAY to use smaller narrow-body aircraft, such as
the Airbus A320neo Family, to connect cities in Europe and North America
› Because of the distance between these cities, an airline operating directly
between Europe and North America would usually have to use wide-body
aircraft which in most cases have a greater risk profile than narrow-body
aircraft due to their larger size, generally higher ownership cost and higher
operating cost versus a narrow-body aircraft
› Long-range narrow-body aircraft that can operate directly between Europe
and North America do pose a challenge to the hub-and-spoke model.
However, that does mean that it is critical to have low unit cost to be able to
withstand increased competition
› The introduction of long-range narrow-body aircraft also creates an
opportunity for PLAY to reach destination further East and West
PLAY’s Passenger Mix
1
› VIA: Connecting passengers between Europe and N-America
› TO: Originating outside of Iceland travelling to Iceland
› FROM: Passengers originating in Iceland and travelling abroad
Iceland’s geographical location & the Hub & Spoke model
enables PLAY to connect with larger markets
Leisure Passengers are Driven by Price
The price and whether the flight is non-stop or not are the two most important factors that consumers look at when choosing an airline
16
Main Factor in Airline Choice for International Travellers to/from the U.S.
1
1) Survey data for the year 2017
Source: U.S. Department of Commerce Survey of International Travellers
3%
7%
8%
10%
18%
18%
37%
4%
5%
11%
15%
22%
18%
25%
Loyalty to carrier
Previous good experience
Mile bonus/frequent flyer program
Other factors
Convenient schedule
Non-stop flights
Price
U.S. Nationals Travelling from the U.S.
Business Leisure
2%
5%
8%
13%
14%
20%
39%
3%
8%
9%
20%
21%
17%
21%
Loyalty to carrier
Mile bonus/frequent flyer program
Previous good experience
Other
Convenient schedule
Non-stop flights
Price
Foreign Nationals Travelling to the U.S.
Business Leisure
Fundamental decisions that a Clean-Sheet airline has the opportunity to make – Low unit cost achieved through decisions on:
17
Low Unit Cost is Key to Success in Leisure Dominated Markets
New versus old aircraft,
aircraft commonality
and seat density
Fleet
Connecting versus point-to-
point network and
geographical location of the
airline
Route Network
Competitive utilization
of all staff employed by
the airline
Staff Productivity
Low cost online distribution
versus legacy-style/high-cost
distribution via global
distribution systems
Distribution Strategy
Outsourcing of non-core
functions where the airline
lacks economies of scale and
speciality knowledge
In- vs. Outsourcing
Focus on low-cost part
of the organizational
culture
Low-Cost Culture
Lowest CASK on the Transatlantic
Current operators likely to face higher cost post-COVID as they cut capacity and number of cost items are fixed
1) Stage adjusted with PLAY’s average sector length in 2023 of 2.899 km. 2023 targets for Icelandair and PLAY discounted to 2019 with 2.5% inflation. Icelandair’s stage length in 2023 assumed to be 3,100 kilometers compared to 3,208 kilometers in 2018
2) RASK= Revenue per available seat kilometer – CASK=Cost per available seat kilometer
3) CASK for Norse Atlantic Airways is based on projected CASK in 2022 presented in company’s prospectus, discounted to 2019. The company has not published target RASK
18
7.6
8.3
9.0
8.3
6.3
6.4
6.4
5.1
4.5
4.0
3.3
3.2
6.0
5.9
5.8
5.7
4.2
4.0
4.7
4.3
3.6
3.2
2.8
1.9
1.7
American Airlines United BA Delta Jet Blue Norse Icelandair 2023 Aer Lingus Play 2023 easyJet Norwegian Wizz Air Ryan Air
RASK
CASK ex fuel
2019 Transatlantic direct flights Airlines –
RASK & CASK ex fuel
1
2019 Low-Cost European Airlines
RASK & CASK ex. Fuel
1,2
2019 Transatlantic direct flights Airlines
RASK & CASK ex fuel
1,2
Transatlantic VIA Airlines
RASK & CASK ex. Fuel
1,2
2023 target
2023 target
3
PLAY has secured 3 Airbus A321neo
Power-by-the-hour (PBH) contracts in 2021 and long-term lease rates significantly below pre-COVID levels
19
1) Source: Company Info 2) PBH = Power by the Hour = Lease is paid based on number of flight hours, no flight = no lease payment
The Eco-Friendly Airbus A320 Family is Perfect for PLAY’s Operations
PLAY has secured long-term lease agreements for the first three A321
Neo aircraft at a price up to 24%
1
lower than pre-COVID – excluding
PBH
2
effects
› The A320 family has size and range flexibility which allows PLAY to
reach small and larger markets close by and far away
› Lower fuel consumption and crew commonality creates a
competitive advantage
› Favourable 10-year lease agreements secured for the first three
aircraft
› PBH in 2021 to provide flexibility during the ramp-up period
› With delivery in 2022 and 2023, PLAY has sufficient access to
aircraft for future growth of its fleet at expected favourable
lease rates – securing low future CASK
› The lessor is AerCap, the world‘s largest commercial aircraft
leasing company with 2,000 aircraft and over 200 customers
PLAY Airbus NEO 321
› As a Clean-Sheet airline with no legacy liabilities, PLAY is a
favourable counterparty for leasing companies
› Current operators expected to return to previous lease rates
and repayment profiles in the next 1-2 years when payment
holiday and forbearance periods expire
Lower lease rates creates long-term opportunity
for PLAY
Collective bargaining agreements
Cost savings not driven by lower salaries – Competitive remuneration comparable with the general labour market
20
1) The time from the moment the aircraft door closes at departure of a revenue flight until the moment the aircraft door opens at the arrival gate following its landing
2) Based on 4 hours and 13 minutes block hours per sector for PLAY and Icelandair and 2 hour and 10 minutes for European low-cost carriers
Source: Company Info
New Collective Bargaining Agreement Creates Flexibility in the Network
Collective bargaining agreements with both pilots and cabin crew
were signed in September 2019 and expire in February 2025
› Salary in line with responsibility and work – not factors such as
number of years with the company
› Promotions based on performance, not seniority lists
› Vacation days in accordance with what is customary on the
general labour market
› Assumed average utilization is 805 block hours
› In 2017, the average number of block hours for low-cost airlines in
Europe was 750
› Low-cost airlines in Europe fly shorter sectors, typically between
1,000 – 1,500 km, while PLAY will on average have ~3,000km –
resulting in more block hours, but less number of flights
2
› Cost savings are not driven by a decrease in salaries
Block hours
1
and average number of flights per year
640 BH
688 BH
750 BH
805 BH
900 BH
76 flights
82 flights
174 flights
95 flights
Icelandair pilots -
upper limit new CBA
Icelandair crew -
upper limit new CBA
Europe low-cost
average
PLAY (Pilots &
Cabin)
EU regulation
Upper limit 850 block
hours
› No pay scales
› No seniority lists
› Better utilization
› No pickup from Reykjavík - Work starts at Keflavik airport
› New Crew 24-30 vacation days (WOW air was 36-38 days)
What drives cost savings?
Key points
The assumed average number of block hours per month is 67 – equivalent to 8 flights per month
1
21
1) PLAY’s average sector length will be approximately 4 hours and 13 minutes resulting in round trip time of 8 hours and 26 minutes. Based on 67 block hours, average total number of monthly flights will be 8 (67 hours/8 hours and 26 minutes).
Crew Member Salary
› The table presents salaries for a different level of cabin crew members
› NCCM: New Cabin Crew Member, beginners with no previous
experience. Often temporary (seasonal) workers, maximum 2
years as NCCM
› CCM: Cabin Crew Member. The largest group, consisting of
cabin crew members with experience
› SCCM: Senior Cabin Crew Member, cabin leaders onboard (one
SCCM required per flight)
› Trainer/LC: Senior Cabin Crew with additional privileges, either
qualified to conduct ground training or perform Line Checks
› Salaries are based on 67 block hours which is the projected average
utilization for cabin crew members in the business scenario
› Guaranteed salaries range from ISK 352-454 th. – regardless of
working hours (i.e. sick leave, parental leave)
› PLAY’s contribution to a pension fund is 8% for mandatory contribution
and 5.5% for supplementary pension – total 13.5%
› Based on 67 block hours per month, the net salary of crew members
after taxes and other deductions is between ISK 372-521 th.
ISK th. NCCM CCM SCCM Trainer/LC
Base salary (incl. sale bonus) 301 311 362 403
Car subsidy 51 51 51 51
Total guaranteed salary 352 362 413 454
Other Salaries
On-board sale bonus 15 15 15 15
Block hour pay 4 18 28 31
Pay Per Diem 79 116 135 154
December-/ Holiday bonus 12 12 12 12
Red days 8 9 10 11
Total salaries+Pay Per Diem 470 532 613 678
Taxes (126) (135) (159) (176)
Personal tax discount 51 51 51 51
Union dues (2) (2) (2) (3)
Pension contribution (20) (22) (26) (28)
Net payout after taxes 372 424 477 521
PLAY is Committed to Sustainable Operation
The low-cost business model and investment in the latest aircraft technology will minimize PLAY‘s environmental impact
1) Source: IATA 2) Source: Airlines company reports, CO
2
emissions reported by the airlines per their Revenue Passenger Kilometres
22
Social Impact
› Air transport provides significant social benefits by connecting
people and advancing cultural understanding
› PLAY is committed to promoting gender equality and to that effect
has formally received equal pay certification in recognition of its pay
structure, which fulfils the requirements of the ÍST equal pay
certification standard
Economic Impact
› PLAY’s operation will make a significant economic contribution
› Pre-Covid, the air transport sector in Iceland supported 11,000 direct
jobs, 61,000 indirect jobs and 38% of Iceland’s GDP
1
Environmental Impact
› We are aware of the impact that air transport has on the environment
› Therefore, we are committed to minimizing the environmental impact
of our operations by investing in the latest aircraft technology,
comply with all environmental laws and regulation and promote
environmental awareness amongst our employees
107
99
92
90
79 79
70 70
66
58
65
61
0
20
40
60
80
100
120
SAS Icelandair Lufthansa IAG Finnair Air France - KLM Norwegian easyjet Ryanair Wizz Air PLAY
CO
2
Grams per
Revenue Passenger Kilometres
2
2019
PLAY Target (2022)
PLAY Target (2024)
A low-cost model with high seat density and seat factor
and investments in the latest aircraft technology will help
us to minimize the environmental impact
PLAY will provide social and economic benefits due to its
operations, but we realize that our operations impact our
environment
Our primary goal is to make flying affordable for everyone
PLAY’s Focus is on Digital Media
23
Pay Less, Play More!
› Our marketing mantra is
"Pay Less, Play More!"
› In line with what the majority of
travellers think about when
booking their vacation
› They want to spend their hard-
earned money at their destination
Own Media
Website, social media, email marketing, app
Earned Media
Working with a local PR agency in each market. Creating
discussion and references. PR stunts & awareness.
Search Engine Optimisation (SEO)
Bought Media
Google Partner Campaign, Search (PPC), Public ads,
re-target ads, influencers, placements, social media ads.
Come out
and Play!
Book now on flyPLAY.com
Pricing and availability controlled at a single point
Streamlined and Cost Effective Sales & Distribution Strategy
24
CUSTOMER
PLAY‘s
WEBSITE
TRAVEL
AGENTS
AGGREGATORS
GLOBAL
DISTRIBUTION
ONLINE TRAVEL
AGENTS
All channels are digital
› Focusing on driving all sales directly through our website
› Lean & Mean – Fewer staff / low overhead
› Distribution channel management
PLAY’s Uniforms
25
Simple, Stylish, Unisex and Comfy
Financials
Flexibility characterizes PLAY’s operations
The presented business scenario should not be interpreted as PLAY’s future earnings forecast
27
1) RASK = Airfare + ancillary revenue per available seat kilometres (ASK) 2) Increases from 2021 to 2022 due to fewer FTEs during the first part of 2021 3) Number of aircraft at year end
PLAY’s Business Scenario
The key to PLAY’s operations is flexibility. In accordance with market
conditions, PLAY has the opportunity for faster or slower growth in ramp-up
phase than the presented potential business scenario
› The presented business scenario is a potential scenario for what the
company's operations might look like in the coming years but could
change significantly due to changes in the market environment
› The scenario assumes a strong liquidity position and flexibility which
enables the company to react to growth opportunities as well as negative
changes in market environment
› Revenue assumptions based on management experience, but downward
adjustments made to reflect the impact of COVID and ramp-up
› Targeted load factor of 72% in 2021 with a gradual increase from
85% in 2022 to 89% in 2025
› The business scenario assumes an increase in fuel prices to the highest
2019 levels of USD 660 per MT. The current spot price is approx. USD 600
› CASK is assumed to be higher in the first year due to less operational
efficiency in the beginning – targeting optimal level in 2024
› The scenario assumes first flight to North America in April 2022
Business Scenario
USD million 2021 2022 2023 2024 2025
Revenue 25m 170m 319m 422m 509m
EBITDA (10) 28m 64m 93m 122m
EBIT (16m) 11m 33m 53m 71m
EBIT% (61.1%) 6.4% 10.3% 12.6% 14.0%
Profit (15) 4 17 31 43
KPI’s and assumptions
RASK
1
US cents 4.9c 5.5c 5.6c 5.7c 5.8c
CASK ex. Fuel US cents 7.2c 4.3c 4.0c 3.8c 3.8c
Load factor% 71.8% 84.6% 87.2% 88.1% 89.2%
Air fare per pax 114 126 125 124 122
Ancillary revenue per pax 55 58 61 63 65
Total sold seats (pax) 143 th. 865 th. 1.651 th. 2.201 th. 2.669 th.
FTE per aircraft
2
42 50 49 48 47
#Aircraft in operation
3
3 6 10 12 15
Business Scenario - Liquidity Position
Strong cash position – PLAY assumes 100% hold back
1
, 90% hold back increases cash position significantly
28
Sensitivity Analysis on Cash Position (Load Factor)
Sensitivity Analysis on Cash Position (Fuel Price)
(6%), 46m
(4%), 67m
(2%), 88m
2% , 129m
4% , 150m
6% , 171m
BASE, 108m
0
20
40
60
80
100
120
140
160
180
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2021 2022 2023 2024
USDm
Base Load Factor
2021: 72%
2022: 85%
2023: 87%
2024: 88%
10% ; 90m
5% , 99m
(5%), 118m
(10%), 127m
BASE , 108m
0
20
40
60
80
100
120
140
160
180
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2021 2022 2023 2024
USDm
Base Fuel Price/MT
2021: USD 600
2022-2024: USD 660
1) 100% hold back= No payment to the company until after the flight has been flown
New IFRS16 inflates balance sheet as leases are
recognized as assets and liabilities
The presented balance sheet scenario should not be interpreted as PLAY’s future forecast
29
1) The right of use asset is a lessee's right to use an asset over the life of a lease
Business Scenario - Balance Sheet
Balance Sheet
72
76
93
124
168
15
36
57
66
77
90
187
322
369
462
177
299
473
559
706
2021 2022 2023 2024 2025
Equity Other Liabilities Lease Liabilities
USD million 2021 2022 2023 2024 2025
Right of use assets
1
87 180 310 352 439
Cash & cash equivalents
59 60 75 108 154
Other assets
32 59 87 99 114
Total assets
177 299 473 559 706
Equity and liabilities
Equity
72 76 93 124 168
Lease liability
90 187 322 369 462
Other liabilities
15 36 57 66 77
Total equity and
liabilities
177 299 473 559 706
Expenditure
in Iceland
+ISK 50bn
Bringing tourists to
Iceland
440 th. +
22% of total tourists in 2019
Strong Impact on the Icelandic Economy
Source: Play, Reykjavik Economics and Icelandic Tourist Board
30
545
+~1.400 in derived jobs
Full Time
employees
PLAY’s desired impact in 2024
31
1) Yield = the average air fare per passengers kilometer
Published KPI’s after Listing on First North
Key items
Publishment of KPI’s will provide better regular
disclosure of information to the public and
discipline towards the company’s management
› PLAY will publish quarterly financial
accounts and investor presentation
› Traffic data will be presented monthly,
along with key environmental KPI’s
presented in the table on the right
PUBLISHED KPI’s
MONTHLY QUARTERLY
Number of Passengers
Load Factor %
Available Seat Kilometers (ASK)
Revenue Passenger Kilometer (RPK)
CO
2
Grams per Revenue Passenger Kilometers (gCO
2
per RPK)
CO
2
Emissions in Tonnes
Stage Length (KM)
On
-Time Performance
Quarterly Accounts
FTE per Aircraft
RASK US cents
Yield US cents
1
CASK US cents
Investor Meeting and Presentation
Share Offerings
and First North
Listing
Funding Overview
USD 57m funding to date – Raising additional 33-36m USD further boosting liquidity
33
FUNDING ROUNDS
10m USD │ Seed Funding from FEA Investors
December 2019 - March 2021
47m USD │ Private Placement
April 2021
33-36m
1
USD │ IPO
June 2021
1) The final size of the auction is determined by the final price that the sale takes place in Offer Book B and the exchange rate of USD/ISK
› Inviting the public and professional investors to
participate in PLAY‘s journey
› Proceeds used to ensure post-COVID ramp up and to
further support future growth of the business
IPO
1
Listing on First North
Listing will provide better regular disclosure of information to the public and discipline towards the company’s management
34
1) The Company has committed to issuing 33,636,366 new shares in the Company pursuant to option agreements with certain key employees and the CEO, subject to the vesting of these options. In
addition, the Board of Directors has the authority to issue additional options to employees for a total of 13,863,634 shares.
Listing on Nasdaq First North Iceland
PLAY considers a First North listing of the Company's Shares as an
important milestone for the Company and its expected growth
The listing will benefit the Company's future development, and
therefore, the Company has applied for listing of the Company's
shares on Nasdaq First North Iceland
› The listing will provide better regular disclosure of information
to the public and discipline towards the company’s management.
Provides better access to capital markets and enables additional
investors to take part in the Company’s future growth and value
creation
› Furthermore, it allows for a trading platform and provides
increased liquidity in the trading of the Shares, which is
advantageous for existing shareholders
› Finally, a listing enhances the Company’s profile with investors
and customers, as well as media and other stakeholders
Top 20 Shareholders Pre-IPO
1
NAME
SHARES SHARES%
Birta lífeyrissjóður
59,984,252 12.55%
Fiskisund ehf.
56,699,294 11.86%
Stoðir hf.
40,000,000 8.37%
Fea
ehf. 28,184,920 5.90%
Brimgarðar ehf.
22,993,701 4.81%
Dalía ehf.
22,047,244 4.61%
Akta HS1
20,472,441 4.28%
Lífsverk lífeyrissjóður
20,472,000 4.28%
Akta
Stokkur 17,637,796 3.69%
Akta HL1
15,433,071 3.23%
Kjartan Páll Guðmundsson
11,791,526 2.47%
IS EQUUS Hlutabréf
10,000,000 2.09%
Gildur ehf
10,000,000 2.09%
Alpha
Hlutabréf 8,000,000 1.67%
Attis
ehf. 8,000,000 1.67%
IS Hlutabréfasjóðurinn
8,000,000 1.67%
Vátryggingafélag Íslands hf.
8,000,000 1.67%
P300 ehf.
6,681,864 1.40%
Skinnuhúfuklettur ehf.
5,000,000 1.05%
Innkaupafélagið ehf.
5,000,000 1.05%
Others
(45 Shareholders) 88,695,091 16.54%
TOTAL
478,093,200 100.00%
Private Placement
Certain investors in the Private Placement are subject to Lock-up requirements
35
Successful Private Placement
In March 2021, the Company launched a round of financing intended
to secure working capital for PLAY’s base case business plan, with the
aim to raise USD 35 million
› The Private Placement was successfully completed in April with a
total transaction size of ISK 6 billion or approx. USD 47 million in
new equity
› The Private Placement attracted strong support and interest and
was oversubscribed
Lock-Up
Certain investors in the Private Placement undertook to enter into a
lock-up arrangement in connection with any admission to trading on a
regulated market or a multilateral trading facility of the Company’
shares
The Private Placement Subscription Shares will be released from Lock-
up from the first day of admission to trading (the “First Trading Date”)
as follows:
› On the First Trading Date, 10% of the Subscription Shares are
released from Lock-up;
› On the date falling 6 months from the First Trading Date, a further
30% of the total Subscription Shares, are released from Lock-up
› On the date falling 9 months from the First Trading Date, a further
30% of the total Subscription Shares, are released from Lock-up
› On the first anniversary of the First Trading Date, a further 30% of
the total Subscription Shares, are released from Lock-up
The Lock-up does not apply to Pension Funds and Mutual Funds
21%
24%
55%
Pension Funds
Mutual Funds
Other
Institutional
& Private
Investors
Key Terms of the Share Offerings
The size of the offerings is ISK 3.99 - 4.31 billion
1) The issuer reserves the right to reduce the size of the Offer Book A in order to maintain its total subscriptions at a purchase value of below the equivalent of EUR 8 million in ISK. Currency fluctuations might affect the number of shares offered and/or sold through the Offer
Book A. The issuer reserves the right to change the relative size of offer books if demand proves to give rise to this and taking into account the objectives of the offerings.
2) The issuer reserves the right to deviate from the principles regarding allocation and reduce subscriptions and allocate shares in the manner they deem desirable to achieve the objectives of the offerings, including rejecting subscriptions in whole or in part without special
notice or justification. Efforts will be made to provide allocation to PLAY’s members of staff who participate in the offerings.
36
Offer Book A Offer Book B
Offering Price
Fixed price of ISK 18 per share
Offer made within the price range ISK 18-20 per share.
The sale takes place at a fixed price, which is determined equally as
the lowest of the accepted bids (Dutch Auction)
The size of the offerings is
ISK 3.99 - 4.31 billion
1
ISK 1.15 billion purchase value
64,000,000 shares (about 29% of the offerings)
ISK 2.84 - 3.16 billion purchase value
157,906,800 shares (about 71% of the offerings)
Subscription amounts
Subscriptions at a purchase value of
ISK 100 thousand to ISK 20 million
Subscriptions for a purchase value exceeding ISK 20 million
Allotment Principles
2
Efforts will be made not to reduce subscriptions below
a purchase value of ISK 500 thousand.
In the case of excess demand, the reduction will be proportional
Acceptance of bids will be determined on the basis of the bid price.
The Board of Directors has unilateral authority to determine share
allotment
Subscription Period
From 10:00 GMT on 24 June 2021 to 16:00 GMT on 25 June 2021
Key Dates of the Share Offerings
The subscription period is 24-25 June 2021
37
Key Dates
| 22 June │ Open investor meeting
| 24 - 25 June │ Subscription period
| 25 June │ The results of the Offerings expected to be published
| 28 June │ Allotment in the Offerings is expected to be announced
| 5 July │ Expected final due date for payment by investors
| 7 - 9 July │ Expected delivery of shares
| 9 July │ Expected first day of trading
July
Mo. Tu. We. Th. Fr. Sa. Su.
3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30
1 2
31
June
Mo. Tu. We. Th. Fr. Sa. Su.
5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30
3 41 2
The Subscription Period is 24 - 25 June
Subscriptions shall be registered electronically on a special order form (subscription website)
38
Investor Subscription in the Share Offerings
Subscriptions will be accepted electronically on Arctica Finance’s
website, www.arctica.is/play. A link to the subscription website can
also be found on PLAY’s and Arion Bank’s website
› To register subscriptions on the subscription website, investors
must login either:
a) With electronic ID;
b) Identification number or password requested via the
subscription website that will be sent as a digital document
to the investor's online bank
› Electronic confirmation through the subscription form is a valid
proof of a subscription, and such confirmation is displayed at the
end of the subscription registration. Electronic confirmation will
also be emailed to investors
› Electronic invoice for the subscription will be generated and
delivered to investor’s online bank, with a due date on the 5
th
of
July. Subscriptions may be cancelled if payment is not completed
on or before the due date
Further Information Regarding Offer Books
Arctica Finance
Lead Financial Advisor
Tel: +354 513 3300
Email: [email protected]
Arion Bank
Joint Financial Advisor
Tel: +354 444 7000
Email: [email protected]
Appendix
PLAY‘s Management Team
40
Birgir Jónsson
Chef Executive Officer
Birgir has extensive experience in international
management and operations, including in airline
operation, as CEO of Iceland Express and later Deputy
CEO of WOW air. He was CEO of Iceland Post and has
also been involved in many projects in the field of
restructuring and transformation across a diverse range
of industries
Þóra Eggertsdóttir
Chief Financial Officer
Þóra has over 17 years of experience working in finance,
operations and business management. She also has few
years of aviation experience. Her latest position was
Director of Regional Aviation within Icelandair, and
previously as CFO and Director of IT at Air Iceland
Connect. Prior to joining Air Iceland Connect, she
worked in a financial role within the energy sector and
before that she, worked for Morgan Stanley in Tokyo
Arnar Már Magnússon
Chief Operations Officer and Founder
Arnar is the COO and one of the founders of PLAY. Arnar
has over 14 years of experience within the aviation
industry. Arnar worked for WOW air for six years before
joining PLAY. He held various positions within the airline,
such as VP of Operations/Accountable Manager and
Director of Flight Operations
PLAY‘s Management Team
41
Georg Haraldsson
Chief Commerical & Infromation Officer
Georg has diverse experience. He worked as an
Ecommerce and Distribution Manager for Iceland
Express for 6 years and an Ecommerce Manager for
Dohop for a year. Georg held the position of Managing
Director and Regional Sales Director in the Middle East
for Marorka and as a Product Director for Valka. Then
he held the position of a CCO at Iceland Travel for a
year. For the last two years, Georg worked as Chief
Information and Digital Officer at Iceland Post
Daníel Snæbjörnsson
Chief Network Officer
Daníel has extensive experience within the aviation
industry, having worked for both airports and airlines.
Before joining PLAY, Daníel served as a manager within
the network planning and scheduling team at Icelandair.
From 2014 until 2019, Daníel was Vice President of
Network Planning at WOW air. Before joining WOW air,
Daníel co-founded Altitude Aviation Advisory, a UK
based consultancy firm focusing on the aviation industry
Jónína Guðmundsdóttir
Chief People Officer
Jónína’s experience within the aviation industry includes
her work for WOW air as Senior Vice President of
Human Resources from 2015 until 2019. Before her
career in aviation, she worked for the information
technology service corporation, Advania, as Human
Resource Manager from 2012 until 2015. Jónína also
worked in recruitment and as an HR consultant for
Capacent from 2005 until 2012
Historical valuation multiples for airlines
42
Source: Bloomberg Terminal
Peer Analysis
Name
Market Cap
USD m. (2019)
EV
USD m. (2019)
EV/EBITDA
(2019)
EV/EBIT
(2019)
P/E
(2019)
EBIT margin
(2019)
Profit margin
(2019)
FCF Yield
(2019)
Equity ratio
(2019)
Aeroflot
1,773 10,649
4.1x
11.4x 10.4x 8.9% 1.6% 74.1% 0.2%
Air
Canada 9,861 12,445
4.5x
10.0x 9.1x 8.6% 7.7% 28.4% 15.9%
Air
France-KLM 4,777 12,299
2.7x
10.9x 14.7x 3.7% 1.1% 12.6% 7.5%
American
Airlines 12,281 41,899
5.7x
13.7x 5.9x 6.7% 3.7% (3.6%) (0.2%)
Delta
Air Lines 37,589 51,962
5.1x
7.9x 8.1x 14.1% 10.1% 9.2% 23.8%
EasyJet
5,611 5,956
4.8x
10.4x 13.0x 7.3% 5.5% 0.9% 36.6%
Finnair
839 1,760
3.2x
9.8x 10.1x 5.2% 2.4% 11.4% 24.9%
Icelandair
339 583
4.2x
(14.8x) (5.9x) (2.6%) (3.7%) (40.9%) 28.8%
IAG
16,449 24,957
4.7x
8.6x 8.5x 10.2% 6.7% 3.7% 19.3%
Jet2
1,534 1,156
2.6x
4.4x 8.1x 6.5% 4.6% 11.7% 20.2%
JetBlue
5,279 7,103
4.8x
8.9x 9.5x 9.9% 7.0% 5.3% 40.3%
Lufthansa
8,812 16,336
3.2x
9.3x 6.4x 4.3% 3.3% 8.7% 24.0%
Norwegian
703 7,396
8.9x
76.0x (3.0x) 2.0% (3.7%) (25.6%) 4.8%
Pegasus
Airlines 1,485 2,589
4.1x
7.1x 6.6x 18.8% 12.1% 34.8% 25.4%
Ryanair
14,835 15,379
8.0x
13.1x 15.1x 13.2% 11.5% 3.5% 39.4%
SAS
598 765
2.3x
6.1x 9.8x 2.6% 1.3% (27.6%) 15.8%
Southwest
Airlines 28,019 28,028
6.4x
9.5x 12.6x 13.2% 10.3% 10.2% 38.0%
Spirit
Airlines 2,759 5,233
5.8x
10.4x 7.9x 13.1% 8.8% 7.9% 32.1%
Turkish
Airlines 3,354 14,251
5.3x
16.4x 4.4x 6.6% 6.0% 33.5% 27.8%
United
Airlines 22,130 37,563
4.9x
8.7x 7.3x 9.9% 7.0% 10.4% 21.9%
Wizz
Air 4,013 4,603
5.7x
11.1x 20.0x 15.4% 5.3% 21.7% 30.6%
Median
4,777 10,649 4.8x 9.8x 8.5x 8.6% 5.5% 9.2% 24.0%
Andri Ingason
+354 892 0190
Grétar Brynjólfsson
+354 690 7811
Stefán Þ. Bjarnason
+354 820 6362
Arctica‘s Corporate Finance Team
Þórbergur Guðjónsson
thorbergur.gudjonsson
@arionbanki.is
+354 856 8623
Arion‘s Corporate Finance Team
Elka Ó. Hrólfsdóttir
elka.hrolfsdottir
@arionbanki.is
+354 856 6828
Lýður Þ. Þorgeirsson
lydur.thorgeirsson
@arionbanki.is
+354 842 5330
Further
Information
Provide:
