Central and Eastern European ultra-low-cost airline Wizz Air presented mixed results on January 30 in its Q3 FY2018/2019 results update. While revenues increased 21.2% to €512.7m, its net profit year-on-year dropped 87.6% to just €1.7mln and net profit margin to a meager 0.3%.
How come? Ticket revenues were up 20.4% to €291.1mln and ancillary revenues were up even 22.3% to 221.5mln, boosted by the carry-on bag charge introduced in November. On average each passenger spent €63 on traveling on the pink airline, which saw load factors soar 2.0% to 91.4%. Together this makes €512.7mln, but that’s the exact amount of Wizz’ costs for the three month period.
The biggest cost increase was on staff costs: +40.4% to €50.6mln. This reflects the growth in capacity, higher pilot salaries and a one-off charge in the formation of Wizz UK, which should secure the airline’s position as a British airline operating to non-EU countries regardless of a Brexit deal. Wizz UK will grow to 11 aircraft this Summer.
Next in the costs line-up comes to fuel (+39.9% to €166.2mln), which Wizz countered by slightly reducing capacity. The Budapest-based airline also spent 22.7% more on aircraft rentals (€84mln). Costs per available seat kilometer increased 9.3% to €3.53.
Despite higher costs, Wizz is happy with its cash position (€1.0bln free cash position).
Full year guidance net profit is €270-300mln, but this depends on March yields and the effects of Brexit. Capacity is set to increase by 17%. After opening 53 new routes in Q3, Wizz plans to further expand its network. The all-Airbus A320 family fleet should have grown to 112 by the end of FY2018/19, to 122 next year, 140 in FY2020/21 and 277 in FY2026/27. The fleet should consist of 184 A321neo’s and 72 A320neo’s, with only 21 ceo’s remaining in the fleet. The airline has 263 aircraft still on order, including 256 neo’s.
Wizz is most happy with the performance of the A321neo, which has shown a 16% lower fuel consumption thanks to the P&W GTFs.
Wizz received its 100th aircraft in 2018, an A321ceo. (Airbus)
