(Alliance News) - Wizz Air Holdings PLC on Thursday said its swung to a loss in the first half of its financial year as revenue plummeted amid Covid-19 measures.
The budget airline's pretax loss for the six months ended September 30 was EUR237.4 million, a swing from its GBP385.2 million profit the year before.
Revenue dwindled to just GBP471.2 million from GBP1.67 billion the year before, which included a drop in passenger ticket revenue to EUR201.8 million from EUR956.6 million as well as a fall in ancillary revenue to EUR269.4 million from EUR714.2 million.
The company carried 6.5 million passengers, a startling 71% drop from the year before as countries imposed measures to contain the spread of Covid-19, including travel restrictions.
More positively, average ancillary revenue per passenger was up at EUR36.1 from EUR32.3. This normalised figure excludes cargo revenue and accounting distortion due to low number of passengers.
"The decrease in ticket revenue was driven by the passenger demand environment which was strongly impacted by the travel restrictions due to Covid-19, while the increase in ancillary revenue per passenger was driven by strong conversion, especially on the core and flexibility products," said Wizz Air.
The company is guiding for a cash urn of EUR70 million per month in the case of a full grounding until the end of its 2021 financial year, including costs of the operation, cost of leases, and cash payments linked to hedges.
"Should current restrictions and lockdowns persist over winter, we believe that cash positive flying could be minimal. We will continue to invest in the renewal of our fleet during H2 2020 and CY2021 in order to further increase our competitive position and our edge on cost and sustainability," the company said.
No net profit guidance was provided, as Covid-19 uncertainty persists.
Chief Executive Jozsef Varadi said: "During the winter period, we expect conditions to be particularly challenging with ongoing travel restrictions due to Covid-19 as well as the seasonal drop in demand for travel. We will continue to focus on cost management and strive to maintain cash-positive flying with a disciplined approach towards capacity.
"Notwithstanding the challenges that lie ahead of us during the remainder of this fiscal year, we have laid the foundation for a swift recovery: in addition to expanding into new markets, we intend to retain all our current staff base and thereby generate a head start for when demand returns.
"We are confident we will emerge as a structural winner, enabling Wizz Air to grow profitably in the years to come."
Additionally, Wizz Air announced the appointment of two independent non-executive directors, Dupuy de Lome Chavarri and Charlotte Andsager, both effective immediately.
Chavarri was chief financial officer at Spain's national carrier, Iberia, and played a key roles in its 2022 merger with British Airways, as well as the creation of International Airlines Group SA. He retired as CFO of IAG in June 2019.
Andsager was recruited as SAS Groups vice president of European & US Public Affairs in 2005 and then as EU Affairs VP of Rolls-Royce PLC in 2010.
Shares in Wizz Air were up 3.0% at 3,598.00 pence in London on Thursday.
By Anna Farley; annafarley@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Wizz Air (WIZZ)
International Airlines (IAG)