ii view: Wizz Air details strong March passenger numbers

Shares for this European airline are down by around a third year-to-date. Buy, sell, or hold?

Passenger number update

ii round-up:

Low-cost European airline Wizz Air (LSE:WIZZ) today announced that it had carried 2.47 million passengers over the month of March.

That’s more than 400% up from the pandemic-hindered total 480,000 passengers carried in March last year, and close to the 2.72 million passengers flown in the pre-pandemic month of March 2019. 

Wizz Air shares fell by around 2% in UK trading, leaving them down by around a third year-to-date. Shares for rivals easyJet (LSE:EZJ) and International Consolidated Airlines Group (LSE:IAG) are both down by around 2% during 2022. The FTSE All World index is down by more than 5% during 2022.

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Wizz Air flies to more than 150 airports in over 40 countries, including many destinations across central Europe. It recently halted flights to Russia, Ukraine and Moldova following Russia’s invasion of Ukraine.  

The airline continues to offer a number of free seats to Ukrainian refugees travelling on European flights departing from Ukraine's border countries of Poland, Slovakia, Hungary and Romania.

Wizz also announced that it will continue its expansion of its operations in Romania, adding a new aircraft to its base in Bucharest and one aircraft to its base in Cluj-Napoca. 

Wizz Air’s load factor came in at 86.2% for March, up from 62.5% in March 2021. It also reiterated that it continues to operate among the lowest CO2 emissions per passenger/km across all competitor airlines. 

ii view:

Wizz Air made its maiden flight in May 2004 flying from Katowice in Poland to London Luton. Today, it operates a fleet of 153 Airbus A320 and A321 aircraft. It is targeting a fleet of 500 aircraft by the end of the decade. 

For investors, the war in Ukraine and the suspension of operations to a series of airports across Ukraine, Russia and Moldova is clearly a concern. The worry that the conflict might spread further across the region cannot be dismissed, while the West’s desire to avoid using Russian oil has helped the price push higher year-to-date. 

More favourably, a recovery in passenger numbers from the height of the pandemic is being seen. The young age and fuel efficiency of its aircraft fleet provide it with high environmental credentials, while management previously expressed confidence that the pandemic had given it an even greater cost advantage over rivals. Nonetheless, with the shares sat on an estimated price to net asset value of 3.9 times compared to under 2 times for rival easyJet, investors may wish to wait for more evidence of recovery before adding to any existing shareholdings. 

Positives: 

• Bearing down on costs
• Positive environmental credentials

Negatives:

• Operations hit by Ukraine conflict
• Uncertain outlook

The average rating of stock market analysts:

Strong hold