Strikes, flight delays and cancellations – here is the Wizzair’s plan

The Hungarian low-cost airline, Europe’s fastest-growing one, today provided an update on its first-quarter results ahead of its Q1 F23 earnings release on 27 July 2022. In the announcement, they shared their plans on how they would like to address the sector’s problems. These are the strikes challenging every European airport, the flight delays and cancellations we reported many times and the labour shortage. Below you may read their announcement.

According to the company’s statement, Wizz Air continued to ramp up its operation against a challenging macro and operational backdrop.

Q2 F23 outlook

Despite the factors impacting Q1 F23, the Company is expecting a material operational profit in the second quarter of the FY (July – September) as revenue and pricing momentum is expected to continue to improve, as we highlighted during the full year results release.

• We expect continued RASK improvement on the back of higher fares and improving load factors, resulting in a high-single digit RASK improvement for the quarter vs. F20. Load factors as of July improve to above 90% and the fare environment remains strong, with industry capacity reducing and consumer demand over summer strong.
• We expect our higher fleet utilization to help to further improve our ex-Fuel CASK, returning towards historical ex-Fuel CASK levels for the quarter and as we reduce the operational impact of disruptions.
• To be able to avoid cancellations and secure a more punctual operation to our customers, we have

further improved the agility and resilience of our network including adjusting schedules where we have seen a higher occurrence of issues (e.g. slot allocation issues, turn-around timings).

In total for the peak summer period we expect to reduce utilization a further 5% versus the plan outlined at the full year results to reduce the impact of ongoing external disruptions. We now expect summer ASK growth to be around 35% versus F20.

Read also: Reader’s letter: Wizz Air employee verbally abused passengers

Q1 F23 highlights

•  ASKs for the quarter were 30% higher versus F20, growing sequentially month-on-month as most restrictions from Covid-19 were being discontinued during the March-May 2022 period and as the capacity reallocation related to the war in Ukraine started to take effect during the course of the April-June 2022 quarter.
• RASK for the quarter was down -10% versus F20, with net fares in line with F20 but load factor at 85%, down 9 ppts, reflecting the efforts of Wizz Air to pass through higher input cost in its fares. RASK sequentially improved month on month with April and May at -14% versus the respective month in F20, and June RASK was at -1.5% on the back of higher net fares (+6% vs F20).

Read also: Budapest Airport: 10-15 flights to be cancelled a week due to chaos in Western Europe

• Ancillary revenues for the quarter were up 14% over F20, or 34.2 EUR/pax (up 4.1 EUR/pax vs F20), and, ticket fares were down 12% versus F20.
• Fuel CASK for the quarter was up 94% versus F20 driven behind an average fuel price of 1,239 USD/mT. The Company has recently announced F23 ‘insurance’ hedge coverage levels, which have been completed, and, a return to systemic hedging starting as of F24.
• Ex-Fuel CASK for the quarter was up 16% versus F20, at 2.62cts versus 2.27cts in F20, of which disruptions drove an 0.22cts increase versus F20, an increase of around 50m EUR. The balance of the ex-Fuel CASK increase versus F20 was largely driven by a 10% lower than historical utilization during the quarter, given the gradual ramp up month on month.
• The strength of the USD at the end of the quarter (1.04 vs. EUR) compared to the start of the quarter (1.11 vs. EUR) drove an unrealized FX loss on the Company of 136m EUR. This is a non-cash impact. The impact is driven by a revaluation of the USD lease liabilities on the balance sheet of the Company. This impact will reverse should the EUR regain strength relative to the USD during the next months and quarters, nevertheless, the spot rate saw a further strengthening of the USD versus the EUR (1.02 vs EUR).
• Cumulatively, the unrealized FX losses, the cost of disruptions and the lower utilization in the quarter, combined with the pricing environment especially in April and May 2022 drove an operating loss of 285m EUR for the quarter and a net reported loss of around 450m EUR (also including the unrealized FX losses).
• Wizz Air’s liquidity remains strong with the cash balance at the end of the quarter improving to around 1,570m EUR and the Company continues to maintain its investment grade rated balance sheet position.

Source: Press release/ir.q4europe.com/Solutions/WizzAir