Wizz Air lowers FY profit guidance as higher fuel prices and disruption bite

No post image

Wizz Air has lowered its full-year profit guidance in its six-month results ending 30 September to €270 million to €300 million due to higher fuel prices and summer disruptions.

The largest low-cost airline in Central and Eastern Europe reported a 20 per cent year-on-year (YOY) rise in revenue to €1.37 billion and a profit for the period of €292.2 million, a YOY increase of 1.2 per cent.

This was achieved on the back of carrying 18.8 million passengers in the six months, 20 per cent more than the same period last year and a load factor across its network of 93.6 per cent, 0.8 percentage points up on the same period in 2017.

In the six-month period from 31 March to 31 September, Wizz Air started 91 new routes and now offers more than 600 routes to 44 countries from 25 bases.

The carrier’s fleet has continued to grow with six new Airbus A321 and five new Airbus A320 aircraft added taking the total to 104 aircraft, a mix of 72 A320s and 32 A321s.

Wizz Air chief executive, József Váradi said: “The arrival of game-changing, well-priced A321 NEO aircraft into our fleet in the fourth quarter, financed at very attractive levels, will enable Wizz Air to increase its cost advantage even further.

“We are delivering on our mission to be the undisputed cost leader among European LCCs, with market leading growth rates and one of the highest profit margins in the industry.

“Our ultra-low cost business model provides a significant competitive advantage in an environment of higher fuel prices.  As Wizz Air continues to drive its cost base even lower and profitably stimulate traffic, this advantage allows us to capture an even greater share of our market and extend our reach. We anticipate the capacity rationalisation resulting from this increased pressure on our competitors will result in a better yield environment.

“On the back of the rising fuel price in the first half the company has trimmed second half capacity growth to 14% (previously 18%) and as a result second half yields are responding well, tracking 7% higher than last year with load factors also higher.

“The operating environment in the first half was particularly challenging for all European airlines with unprecedented disruptions caused by ATC strikes, slot constraints as well as heavily congested airports.

“These conditions also coincided with the Company’s ramp up of our new UK airline, Wizz Air UK, and an extensive delivery program of 17 aircraft in 17 weeks. Our operations are now back on track with October and November KPIs ahead of last year.”

As for the future, he added: “The encouraging revenue environment, robust demand and an improved operational performance combined with our relentless focus on costs will enable the Company to offset approximately half of the fuel headwind which is estimated at around €80 million for the full year and disruption costs. As a result our full year net profit guidance is lowered to a range of between €270m and €300m.”