ii view: Wizz Air passenger numbers climb

Green credentials and a low-cost business model at this European airline. Buy, sell or hold?

June passenger update

ii round-up:

Low-cost European airline Wizz Air (LSE:WIZZ) today announced that it carried 1.55 million passengers in the month of June.

That’s significantly up from the heavily pandemic hit total of 502,000 in June last year, although still comfortably below the 3.6 million passengers flown in the pre-pandemic month of June 2019. 

Wizz Air shares were little changed in UK trading, having climbed by over 120% since pandemic market lows in March 2020. Shares for rivals easyJet (LSE:EZJ) and Ryanair (LSE:RYA) are up by around 75% and 90% respectively over the same period.  

Wizz Air also announced the opening of its sixth Italian base in Naples, offering 18 new international and domestic routes. The airline today flies to over 150 airports across more than 40 countries.

Ryanair also announced its June traffic figures, with 5.3 million passengers carrier in June compared to just 400,000 back in June last year. 

Wizz Air’s load factor of 64% compared with Ryanair’s June load factor of 72%. 

In May, Wizz Air flew 833,000 passengers and Ryanair a total of 1.8 million. Countries on the UK’s so called ‘Green list’ remains fluid, with Malta, Madeira and the Balearic Islands recently added.  

At its full-year results announced in June, Wizz outlined its expectation for another net loss for the current year to March 2022. That follows a loss of €576 million in the pandemic marred year to March 2021. 

ii view:

Wizz Air operates a fleet of 142 Airbus A320 and A321 aircraft. The airline made its maiden flight in May 2004 flying from Katowice to London Luton. Environmental credentials remain high on the board’s agenda, with management highlighting that it operates amongst the lowest CO2 emissions per passenger/km across all of its rival airlines. 

For investors, uncertainty in relation to the pandemic remains high. The spread of the Delta Covid variant, the varying pace of national vaccination programmes and the myriad of UK and European travel rules all make for a clouded outlook. A more than doubling in net debt to €1.69 billion over its last financial year, to help keep its operations ticking over, is also worth watching. 

That said, cash held rose by 8% year-over-year to €1.6 billion. Management is confident that it now has an even greater cost advantage over rivals, and the young age and fuel efficiency of its aircraft fleet provides high environmental credentials. For now, and with the share price having already travelled a long way from pandemic lows, the shares appear to be up with events. 

Positives: 

• Bearing down on costs
• Average monthly cash burn of €61 million over the last financial year

Negatives:

• Covid clouded outlook
• Increased net debt

The average rating of stock market analysts:

Strong hold