Wizz Air predicts it will swing to a profit this year

Wizz Air posts £460m loss but shares jump as low-cost airline predicts it will swing to a profit this year

  • Budapest-based Wizz Air posted a €535.1m loss for the 12 months ending March
  • Soaring oil prices and looser Covid curbs caused the firm’s fuel costs to triple
  • The company anticipates posting a net profit of €350m to €450m this year

Wizz Air’s narrowed losses modestly last year after the low-cost airline achieved record turnover and passenger numbers.

The Budapest-headquartered group posted a €535.1million (£460million) loss for the 12 months ending March, compared to a €642.5million loss the previous year, as revenue improvements were offset by higher costs. 

However, it told investors on Thursday it now anticipates posting a net profit of €350million to €450million for the current financial year.

Results: The Budapest-headquartered group posted a €535.1million loss for the 12 months ending March, compared to a €642.5million loss the previous year

Soaring oil prices following Russia’s full-scale invasion of Ukraine and the loosening of pandemic curbs sent the airline’s fuel costs tripling to nearly €2billion over the period. 

Wizz was further impacted by significant disruption last summer from staff shortages that left airlines struggling to cope with the resurgence in demand following the end of Covid-related travel restrictions.

Widespread industrial action and capacity limits by airports such as London Gatwick, one of Wizz Air’s two UK bases, further slowed the recovery in overseas travel.

Consequently, Wizz terminated much of its flight schedule during the peak holiday season, while many of its customers were victims of long delays or cancellations.

Passenger numbers still surged by 88.3 per cent to 51 million as many families took their first foreign holiday since before the pandemic.

During the Covid crisis, the Hungarian airline embarked on a risky strategy of buying more planes and expanding its route network in an attempt to grab market share from rivals when the inevitable recovery in travel happened.

This helped its revenue soar by 134.2 per cent to a record €3.9billion, with sales additionally benefiting from higher ticket prices and a doubling of ancillary revenue.

Wizz expects an even stronger performance this year, having noted that the proportion of seats filled on its planes exceeded 90 per cent in the first quarter and average passenger fares surpassed last year’s levels in the following three months.

However, chief executive József Váradi said its annual performance  would be dependent on the impact of events like the Ukraine war and trading over the summer period.

The FTSE 250 company has sought to better prepare for the peak travel season with ‘significant investments and improvements in operational processes’.

Váradi said: ‘We are now well placed to continue to drive profitable growth through the rest of the decade and beyond.

‘The airline industry remains exposed to externalities such as air traffic control disruptions and continuing operational issues within the airports sector, but today we are a more resilient business and expect this year to deliver a new set of record operational and strong financial results.’

Wizz Air’s results come three days after the International Air Transport Association (IATA) predicted that the global airline sector more than double its profits forecasts to £8billion this year.

Travel restrictions left the industry nursing an estimated £145billion in losses from 2020 to 2021 and caused the collapse of operators like Flybe and the Italian flag carrier Alitalia.

IATA additionally forecasts that revenues and passenger volumes will almost return to pre-pandemic levels, partly helped by the reopening of China.

Wizz Air Holdings shares were 2.3 per cent higher at £28.42 on Thursday morning, meaning their value has grown by approximately 46 per cent so far this year.

Mark Crouch, an analyst at eToro, said: ‘While Wizz Air is still loss making on an operating basis, its recovery is in full flight. 

‘Based on these numbers, this airline is in a very different position to what it was a year ago – and, given the rapid ascent of its share price this year, investors are clearly buying into that.’ 

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