Wizz Air predicts it will swing to a profit this year

Wizz Air’s losses narrowed modestly last year after the low-cost airline achieved record revenue and passenger numbers.

The Budapest-headquartered group posted a loss of €535.1 million (£460 million) for the 12 months ended March, compared to a loss of €642.5 million last year, as revenue improvements were offset by higher costs.

However, it told investors on Thursday that it now expects to post a net profit of €350 million to €450 million for the current fiscal year.

Rising oil prices following Russia’s full-scale invasion of Ukraine and the easing of pandemic curbs caused the airline’s fuel costs to triple to nearly €2 billion over that period.

Wizz was further hit last summer by a significant disruption from staff shortages that saw airlines struggle to cope with the resurgence in demand following the end of Covid-related travel restrictions.

Widespread industrial action and capacity restrictions by airports such as London Gatwick, one of Wizz Air’s two UK bases, further slowed the recovery of overseas travel.

As a result, Wizz ended much of its flight schedule during the busy holiday season, while many of its customers suffered long delays or cancellations.

Passenger numbers were still up 88.3 percent to 51 million as many families holidayed abroad for the first time since before the pandemic.

During the Covid crisis, the Hungarian airline embarked on a risky strategy to buy more planes and expand its route network in an attempt to take market share from rivals as the inevitable recovery in travel took place.

As a result, turnover increased by 134.2 percent to a record €3.9 billion, with sales also benefiting from higher ticket prices and a doubling of ancillary revenues.

Wizz expects an even stronger performance this year, given that the number of seats on its aircraft exceeded 90 percent in the first quarter and average passenger fares in the following three months surpassed last year’s level.

Chief executive József Váradi, however, said his annual performance would depend on the impact of events such as the war in Ukraine and trade in the summer period.

The FTSE 250 company has sought to better prepare for the busy travel season with ‘significant investments and improvements in operational processes’.

Váradi said: “We are now well placed to continue to drive profitable growth for the rest of the decade and beyond.

“The aviation industry remains exposed to external factors such as air traffic control disruptions and ongoing operational issues within the airport industry, but today we are a more resilient business and expect to post another set of operational and strong financial results this year.”

Wizz Air’s results come three days after the International Air Transport Association (IATA) forecast the global airline industry to more than double its profit forecasts this year to £8 billion.

Travel restrictions caused the industry to lose an estimated £145bn between 2020 and 2021 and caused the collapse of operators such as Flybe and Italy’s national carrier Alitalia.

In addition, IATA forecasts that revenue and passenger volumes will return almost to pre-pandemic levels, aided in part by China’s reopening.

Wizz Air Holdings Shares were up 2.3 per cent on Thursday morning at £28.42, meaning their value is up around 46 per cent year-to-date this year.

Mark Crouch, an analyst at eToro, said: “While Wizz Air is still loss-making on an operational basis, the recovery is well underway.

“Based on these numbers, this airline is in a very different position than it was a year ago – and given the rapid rise in share price this year, investors are clearly buying into that.”