Wizz Air ups profit view; turns to promotional fares to sustain demand

(Alliance News) - Wizz Air Holdings PLC on Tuesday improved its profit guidance, as it reported it "proactively pivoted" capacity amid the Middle East conflict.

The Budapest-based budget carrier expects to report a "breakeven to slightly positive net profit result" for the year that ended March 31. Back in March, it said it expected net profit below guidance issued in January, where it put the range between a EUR25 million loss and a EUR25 million profit.

The airline said on Tuesday: "The net income improvement versus previous guidance resulted from stronger underlying revenue and a well-hedged macroeconomic mix. Wizz ended the financial year with a strong liquidity position, reporting a total cash position of EUR2.1 billion.

"Looking forward, the conflict in the Middle East has introduced near-term uncertainty around fuel costs and customer demand."

Wizz Air said it is 70% hedged for its summer fuel needs, at around USD720 per metric tonne. It also hailed its fuel efficient fleet. It said it benefits from a "significant fuel burn advantage, with A321neos comprising 75% of our current fleet consuming 18% less fuel relative to the legacy aircraft technology".

A321neos are manufactured by Airbus SE.

"Current scheduled capacity for the first half of the year stands at around 51 million seats, up 28% year-on-year. Against this, we see the forward bookings with 44% currently sold, up 2 percentage points year-on-year, reflecting a positive response to the continuing development of our network. This includes adding capacity across our existing markets and opening new operating bases within the Wizz Air European footprint with significant bias towards leisure demand," Wizz Air added.

In order to "maintain this booking momentum", Wizz Air has used promotional fares to stoke demand in the first half of the new financial year, it said.

Chief Executive Officer Jozsef Varadi said: "While the industry faces the challenges of the conflict in the Middle East, we have proactively pivoted the affected capacity to our core markets and are seeing strong demand trends through the peak summer period across our network.

"Wizz Air's financial strength, including cash liquidity, hedge positions and our highly fuel-efficient fleet, continues to underpin our ability to grow our business with structural competitive advantages. As such, while we are mindful of the near-term geopolitical challenges, we remain excited by the growth potential inherent in our core markets and the fact that Wizz Air is well placed to further strengthen its leadership in the faster growing CEE region.''

Wizz Air shares fell 0.4% to 1,009.00 pence each in London on Tuesday morning.

By Eric Cunha, Alliance News news editor

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