Wizz Air shares take off despite profit plunge
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FTSE 250 budget airline Wizz Air (LON:WIZZ) has reported that revenues for the three months ended 31st December were 21.2% ahead of last year as the company carried a million additional passengers during the quarter. However, profit margins narrowed sharply and overall profits dropped by 87% relative to the comparative period.
Chief executive József Váradi said: “In our third quarter Wizz Air delivered 15% passenger growth and 91% load factor, 2 percentage points higher year on year. Due to higher fuel prices we proactively adjusted growth capacity to help offset the cost pressure with higher yields. As a result the Company saw 6% increase in unit revenues per ASK in the reporting period. The introduction of a new carry-on bag policy in November of last year contributed to a strong performance in ancillary revenue with unit revenue per passenger 7% higher in the quarter. Our industry leading aircraft utilization, which helps drive our unit costs lower, was negatively impacted by the capacity adjustments in the quarter, but with the recent fall in fuel prices we will be increasing our utilization levels back to the high levels from the start of F20.
The Company maintains its net profit guidance range of between €270m and €300m for the full year, where we will be within this range will depend on the extent of March yield pressures which will be affected year-on-year given Easter falls after the financial year-end in April and external factors such as BREXIT uncertainty.
Wizz Air remains well on track to deliver its mission to be the undisputed ultra-low cost carrier in the industry as cost leadership positions the airline for disproportionate growth opportunities across Central and Eastern Europe and Western Europe, and makes us an increasingly formidable business under any market circumstances. The roll out of our A321 NEO fleet will commence in the fourth quarter, which combined with our industry leading unit cost, a highly valued employee base and an investment grade balance sheet with €1.1 billion of free cash makes Wizz Air a structural winner in the European airline industry“.
Wizz Air’s share price rose by 1.41% to 3,093p (as of 13:35 GMT).
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