30th Jan 2019 14:37
LONDON (Alliance News) - Wizz Air Holdings PLC on Wednesday reiterated its annual guidance despite reporting a sharp decrease in profit in the third quarter of its current financial year.
New baggage charges helped revenue rise sharply in the quarter.
Shares in Wizz Air were trading 1.3% higher at 3,089.00 pence on Wednesday afternoon, having fallen as low as 2,901.00 early on the day.
The low-cost airline reported that pretax profit in the three months ended December 31 dropped to EUR1.8 million from EUR14.6 million the year before, despite revenue rising by 22% to EUR512.7 million from EUR422.9 million.
Pretax profit fell due to a substantial rise in operating expenses, up 26% to EUR512.7 million from EUR408.2 million.
Staff costs jumped by 40% year-on-year to EUR50.6 million, reflecting the airline's 15% growth in capacity, a 14% average increase in pilot salaries, and one-off start-up costs relating to the Wizz UK corporate entity.
Fuel costs also surged by 40% to EUR166.2 million in the third quarter driven by higher oil prices. The average fuel price, including hedging impact but excluding into-plane premium, paid by Wizz Air during the third quarter was USD648 per tonne, up 23% from USD530 paid in the same quarter the year before.
Disruption costs were EUR5.9 million in the third quarter compared to EUR7.9 million in the same quarter the prior year. The company had to cancel only 79 flights out of a schedule of 45,946 flights, it said, versus 251 cancelled flights in the first half of its current financial year and 226 in the third quarter of financial 2018.
Despite the profit drop, Wizz Air maintained its net profit guidance for the full year in a range of EUR270.0 million to EUR300.0 million.
Net profit in the third quarter was EUR1.7 million, down by 88% from EUR14.0 million the year before.
Wizz Air said it carried 8.1 million passengers in the quarter, up 15% from 7.1 million the prior year, and its load factor rose by 2.0 percentage points to 91.4%. Wizz Discount Club membership increased by 25% to 1.3 million subscribers at the end of the third quarter.
Wizz Air said it launched 53 new routes in the third quarter and now offers more than 600 routes to 44 countries from 26 bases. Fleet has also continued to grow with two new Airbus A320 aircraft added during the period taking the total fleet to 106 aircraft, a mix of 72 A320s and 34 A321s.
At the end of the third quarter, Wizz Air said it ceased operations of its Tours, which had generated revenue by selling package holidays made up of flight tickets purchased from the airline and hotel accommodation purchased from wholesalers.
Ticket revenue increased 20% to EUR291.1 million and ancillary revenue grew 22% to EUR221.5 million, meaning ancillary revenue accounted for more than 40% of total revenue. Ancillary revenue is generated from non-ticket sources, such as baggage fees and on-board food and services.
"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," said Chief Executive Jozsef Varadi.
"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," added Varadi.
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