Wizz Air shares took flight on Thursday as the low-cost carrier announced a swing back into profit during the last financial year.
At £20.76 per share, the Wizz Air share price was last 5.8% higher.
Revenues at the FTSE 250 company rose surged 30.2% during the 12 months to March, to €5.1 billion, as revenue per available seat kilometer (RASK) increased 4.6%, to 4.17 euro cents per share.
This helped it swing to a net profit of €365.9 million from a €535.1 million loss in fiscal 2023.
Passenger numbers increased 21.4% to just over 62 million, while Wizz Air’s load factor improved to 90.1% from 87.8% the year before.
Costs per available seat kilometer (CASK) — excluding fuel — dropped 7.8% year on year, to 2.38 euro cents per share. Fuel CASKs, meanwhile, fell almost a quarter over the period to 1.52 cents.
Engine Trouble
However, the Hungarian company’s performance was dulled by aircraft groundings related to problems with Pratt & Whitney’s GTF engine.
There were 47 of Wizz Air’s planes sitting on the tarmac as of 17 May, representing 22% of the firm’s total fleet.
This number is tipped to rise to 50 by September.
The business said it had secured “a comprehensive support and compensation package” from Pratt & Whitney that had “[mitigated] the operational and financial impact on the business.”
“Healthy Demand”
Chief executive József Váradi commented that “sustained healthy demand for air travel across our markets was a defining feature of [last year], signalling that the surge witnessed post pandemic has evolved into a longer-term trend in consumer behaviour. Wizz Air has been strongly positioned for this trend as reflected in our performance for the year.”
He added that “while our capacity expectations for the year have been moderated in response to these changes in the operating environment, new aircraft deliveries persist, and our efforts to drive productivity and utilisation continue to deliver results.”
Váradi noted that “demand for air travel remains robust, with no sign of abating in the near term, supporting a higher yield environment as capacity across the whole industry remains constrained.”
Wizz Air expects RASK to rise by high single-digit percentages in financial 2025, resulting in improved net profit of between €500 million and €600 million.
Capacity per ASK is tipped to be flat this year due to those grounding issues, while the load factor is expected to edge up to 92%.
CASKs excluding fuel are predicted to rise by high single-digit percentages. Fuel CASKs are tipped to be “flattish” year on year.
Back In Profit
Analyst Mark Crouch of eToro noted that “record passenger numbers amid surging demand, improving load factors and lowering unit costs have all played their part in propelling the airline back to profitability.”
He added “there is though, an air of what might have been. Disruption caused by the conflicts in Ukraine and the Middle East has significantly impacted the company’s bottom line with thousands of flights cancelled. And the ongoing problems of production hiccups with their Pratt and Whitney engines is another headwind the low-cost carrier could do without.”
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