26th Jan 2022 15:01
(Alliance News) - Wizz Air Holdings PLC announced on Wednesday what Irish stockbroker Davy has dubbed a "underwhelming" set of results, with the airline adding that it expects demand in January, February and March to be hurt by travel uncertainty caused by the Omicron variant of Covid-19.
The Hungary-based European budget carrier said it now expects its operating loss for the fourth quarter of financial 2022 to be "slightly higher" than the EUR213.6 million loss in the third quarter that Wizz Air reported on Wednesday.
Wizz Air's financial year ends on March 31.
For the third quarter, which ended December 31, Wizz Air reported revenue of EUR408.4 million. This is nearly triple from a year before where revenue stood at EUR149.9 million. However, it remains below its pre-pandemic figure of EUR512.7 million in the last three months of 2019, which was the third quarter of financial 2020.
Victoria Scholar, head of investment at Interactive Investor said: "Omicron is clearly taking its toll on the low-cost carrier with profits set to worsen before they finally get a pick-up in spring. Not only has Wizz Air come up against reduced demand in the face of the latest Covid-19 variant, but also it has been facing a series of cost pressures from the inflationary background with wages and energy prices rising sharply."
In the third quarter,which ended on December 31, total operating expenses - including exceptional items - more than doubled to EUR621.9 million. This included fuel unit costs increasing by 23% to EUR1.24 per available seat kilometre.
Third-quarter passenger ticket revenue more than doubled to EUR162.3 million from EUR68.3 million and passengers carried more than tripled to 7.8 million from 2.3 million in the previous year.
In the third quarter of financial 2020, passenger ticket revenue was EUR291.1 million and passengers carried stood at 8.1 million.
Analyst Alexander Paterson of Peel Hunt said that Wizz Air's third quarter results were slightly worse than expected.
Paterson continued: "Wizz Air offers significant growth and demand for leisure routes should recover significantly for summer 2022. However, we are concerned about the outlook for the Ukraine, a market where Wizz Air is looking to more than double capacity, and see the rating as high enough, so we reiterate our Hold recommendation. We prefer operators with a higher holiday exposure such as Jet2 PLC and easyJet PLC, which report tomorrow."
Looking forward, Wizz Air said that, despite the short-term headwinds, the company is "cautiously" optimistic for a continued recovery into spring and a near-full utilisation from summer onwards.
Group Chief Executive Jozsef Varadi said: "Wizz Air continued its recovery during the third quarter of financial 2022 and well exceeded 2019 passenger and capacity levels in the peak holiday travelling period, despite the emergence of the Omicron variant.
"Our operating loss was EUR213.6 million as travel restrictions continued to affect demand as we continued to ramp up our workforce, fleet, bases and routes to support our path to full utilisation and pre-Covid 19 cost structure by late spring 2022."
Shares in Wizz Air were up 0.9% at 4,296.00 pence on Wednesday afternoon in London.
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