Interactive Investor

ii view: Wizz Air promotes low costs and green credentials

Shares in this airline are down a third over the last five years despite having flown a record number of passengers in the year to March. We assess prospects.

14th June 2024 11:32

by Keith Bowman from interactive investor

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Full-year results to 31 March

  • Revenue up 30% to €5.07 billion 
  • Profit of €357 million, up from a loss of €535 million last year
  • Net debt up 23% to €4.8 billion 
  • No dividend payments over the year

Guidance:

  • Expects a load factor (the percentage of available seating capacity filled with passengers) for the year ahead of 92%, up from the year just gone of 90.1%
  • Expects net income for the year ahead of between €500-600 million

Chief Executive József Váradi said:

"Sustained healthy demand for air travel across our markets was a defining feature of F24, signalling that the surge witnessed post pandemic has evolved into a longer-term trend in consumer behaviour. Wizz Air has been strongly positioned for this trend as reflected in our performance for the year.”

ii round-up:

Wizz Air Holdings (LSE:WIZZ)made its maiden flight in May 2004 flying from Katowice in Poland to London Luton. 

Today it operates a fleet of over 200 Airbus A320 and A321 aircraft. 

It is targeting a fleet of 500 aircraft by the end of the decade. 

For a round-up of these latest results announced on 23 May, please click here.

ii view:

Starting operations in May 2004, Wizz Air today flies to over 190 airports in more than 50 countries. Headquartered in Budapest, Hungary, it flew a record 62 million passengers in this latest financial year, up from 51 million in the previous year. Employing around 8,000 people, its competitors include easyJet (LSE:EZJ), Ryanair Holdings (EURONEXT:RYA), Jet2 Ordinary Shares (LSE:JET2) and flights operated by travel company TUI AG (XETRA:TUI1)

For investors, heightened geopolitical tensions including potential for an escalation of military action both in the Middle East, Ukraine and elsewhere cannot be overlooked. Difficulties for industry suppliers such as Pratt & Whitney and Boeing Co (NYSE:BA) have created operational challenges for airlines, consumer and corporate spending budgets remain pressured given high borrowing costs, while the many factors outside of management’s control such as the weather, air traffic control strikes, and the price of oil warrant consideration. 

More favourably, a focus on environmental credentials persists, with Wizz recently converting its entire Luton fleet to new generation Airbus A321neos a year ahead of schedule, part of a target to power a tenth of its flights with sustainable aviation fuel by 2030. Flights to Israel have resumed, actions to hedge against volatile fuel and currency remain active, while an expansion of its aircraft numbers and its route network are ongoing. 

In all, the variety of factors which can hinder performance for travel related companies generally offer firm grounds for caution. That said, and with fleet expansion ongoing and the consensus analyst fair value estimate above £26 per share, fans of this low-cost airline are likely to remain seated. 

Positives: 

  • Focus on costs
  • Positive environmental credentials

Negatives:

  • Operations hit by challenges at engine maker Pratt & Witney
  • Many factors outside of management’s control 

The average rating of stock market analysts:

Strong hold

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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