Wizz Air expects to be the first European airline to operate at 100 percent capacity again in August. “We will be the first major airline in Europe to have fully recovered from the pandemic”, CEO Jozsef Varadi said on July 28 during the Q1 quarter FY22-results presentation. The ultra-low-cost airline is very confident about the Covid-19 reset but remains cautious about its HY2 financial guidance. Wizz Air first airline to fully recover in Europe.
Wizz reported a €114.4 million net loss in Q1 compared to €-108 million last year. The operating loss was €108.6 million versus €106.4 million. Yet, it has been the first quarter that was cash flow positive since the start of the pandemic. Total revenues were €87.2 million, up from €29.4 million. Ancillary revenues up 82.2 percent to €111. 9 million, but per passenger were down by 56.7 percent to €37.6. Liquidity was €1.6 billion, of which €1.5 billion is unrestricted.
The airline carried three million passengers, which is four times that of the April-June quarter last year. The average capacity for Q1 was 33 percent, but this increased to 62 percent in June and to 90 percent in July compared to 2019 levels. As said, capacity will hit 100 percent in August.
Only ten percent of all flights on the Wizz network is unrestricted, with the remaining ninety percent unrestricted only to fully vaccinated passengers. Wizz’s key markets in Rumania, Hungary, Poland, and Italy have high levels (80-90 percent) of unrestricted flights, but despite the easing of travel restrictions for UK citizens, the country remains almost fully restricted to non-UK travelers. This and ‘slot hysteria’ at London Gatwick hampers growth options for Wizz Air UK.
As Wizz said earlier this year, Italy will become an ever-more important market for the ultra-low-cost airline. Five aircraft have been based at Rome Fiumicino since July and two will be stationed in Naples from August. Tirana (Albania) will get a fifth Airbus A321neo from August. Four aircraft remain to be based in Oslo despite Wizz foregoing on its ambition to become a force on the Norwegian domestic market. Wizz Air Abu Dhabi is lagging behind as the Gulf region continues to be affected by travel restrictions. The subsidiary operates on only three corridors here, but Varadi expects this to change soon when restrictions are eased. Wizz has now 44 bases, 11 more than last year.
Wizz denies it is understaffed, blames recent cancelations on others
Wizz Air was forced to cancel flights recently as it seemed to be understaffed and unable to cater to the sudden extra demand. Varadi blamed the ‘operational hiccups’ on capacity problems at the supply chain at airports and ground handling companies, but these have been stabilized. The airline has wet-leased a number of aircraft to satisfy demand, but this will be only a temporary measure. Wizz has recruited over 600 staff and will add thousands more over the next years as it plans for twenty percent growth with a fifteen percent margin, so Varadi rejected claims that his airline is understaffed and blamed negative media reports on its Irish competitor.
Wizz’ latest fleet plan until FY26/27, but according to Varadi, this is a ”moving target.” (Wizz Air)
The Central European airline took delivery of six A321neo’s in Q1 and returned two A320ceo’s to the lessor, bringing the total fleet to 141. As it prepares for further expansion, Wizz has advanced deliveries of ten A321neo’s to the summer of 2022. Including other deliveries, this will bring the total fleet to 173 in FY22/23, of which 88 will be A321neo’s compared to 49 in FY21/22. Net fleet growth is only five more compared to a previous plan.
Fleet to grow to 500 aircraft by 2030, so new order to be expected
While describing the fleet plan as a ‘moving target’, Varadi says that Wizz Air is committed to aggressive growth. The current plan includes 268 aircraft in FY26/27, but Wizz wants to end the decade with a fleet of some 500 aircraft. This means that Wizz or its shareholder Indigo Partners is likely to place an order for up to 300 aircraft within the next two to three years. “The rule is that you buy aircraft when the time for buying is right.”
So Wizz Air first will be the airline to fully recover in Europe. If this continues remains to be seen. Whereas Ryanair last Monday predicted lower capacity for the coming months and year, Varadi is buoyant about the rate of recovery in Europe. “I don’t have a crystal ball, but what I see is that once restrictions are lifted, the market recovers quickly.”
The unpredictability of government decision makes it difficult to read the situation for the next winter season, “but we are very confident in our competitive positions in the short, mid, and long-term arising from continuous fleet growth based on new aircraft deliveries, an extended market footprint as well as structural cost advantages arising from fleet up-gauging, improved commercial arrangements with airports and not being trapped in debt burden contrary to the vast majority of the industry.” In June, the airline was also cautious about the current financial year.
During the annual general meeting on July 27, one-third of Wizz Air shareholders opposed a resolution on the Wizz Air Value Creation Plan that entitles Jozsef Varadi to £100 million in shares in Wizz Air UK if the share value of the company grows beyond £120 in the next five years. The vote was controversial as only 15.97 percent of the share capital was represented.