Member Info for B777CAPTAIN

Taut

It makes a big difference in terms of costs after the GTF issue is resolved. The D check can again ground an aircraft for 2-6 months and is very expensive. If it gets delayed in accordance with it's grounding time or if they do the check prior to return to service, it'll save a lot.

Lucas

Thanks again for your reply. I think that you're right. It'll be a C check unless the the Airframe is actually approaching the time for a scheduled D check.

Lucas

Will the Grounded Aircraft be given fresh D-Checks prior to the return to service?

Johnbri

That would be great if you could check if my concerns are valid.

There are 3 issues with the B737 Max that I am aware of, all causing delays.

1. The Leap 1A engine (issues regarding bird strike)

2. On the B737Max10 There's a very big issue regarding the EICAS (Engine instrumentation and crew alerting system). This is vital, anyone who's played with computer flight simulators will probably know what it is. The system on the Max10 is currently not fit for purpose. Even if the FAA certify it, it'll likely have a hard time going through other regulators.

3. As you said the Engine Anti-Ice system. This is in the public domain because it's proving to be a sticky issue which has been difficult to resolve.

Regarding the D-Check on the A321NEO's that have been grounded, I think that I said their D checks would be delayed until up to 12 years. That would be the latest point which they could do the check. My point was, having been grounded for possibly 520 days, the D-Check would not be due until a later date because the Aircraft would have done significantly fewer pressurisation cycles. I also imagine that the grounded Aircraft are protected from corrosion which would allow for longer service life. The point being that a fixed depreciation rate, as if they were still flying is not really valid.

You may see me as a ramper. I don't see myself as a ramper. I see myself as an enthusiastic investor in Wizz. Whether I'm correct or not will be seen in the coming years. Hopefully I am.

Taut

My opinion is that over the long term Wizz Air's capacity will grow much faster than Ryanairs.

I understand that Boeing are delivering 25 new 737max-8's in October but this is a one off to placate Michael O'Leary after he got in to a heated back and forth with the US Congress because he was threatening to buy Chinese (the C919). Infact Ryanair will never buy the C919. Deliveries of further B737Max Aircraft, especially the Max-10 are likely to be significantly delayed. The Max-10 has some big issues.

Ryanair need to start retiring 15 Aicraft a year from next year and probably 25-30 per year from 2030.

Michael O'Leary recently acknowledged that there was a high chance that the company would not grow in 2027. That's the first time he's said something like that. It's just the start.

Taut

Another point regarding that 20% costs. I thought that although some costs would have reduced because of the reduction in grounded Aircraft, there would be additional costs associated with the closure of the Abu Dhabi Base. Costs which we don't know about yet.

Taut

Yes you're totally right. If I could have deleted my post after I submitted it then I would have. I had in my mind 6.9% increase in passenger numbers and not 6.9m more passengers.

As for the 20% increase in costs over H1 last year. I'm making this assumption because it appeared that there was an increase of 20% in costs between the F25 Q3 report (February)and the Full year F25 report (June). This was the main area of concern the analysts had during the F25 earnings call. Indeed it was the reasoning behind some institutions reducing their holdings during June.

But it looks like the operating profit will be similar this year to last years.

If I've not understood something there correctly then please explain. The accounting is something that I'm struggling to understand on a daily basis.

This is my take on the current situation:

Firstly, the negative:

Yesterday we saw a 6% increase in passenger numbers, that goes hand in hand with probably an increase of 6% in yield (all over the previous year). If we take that to the November H1 report, year over year: we're expecting to see an increase of 13% in revenue but also an increase of 20% in costs. Therefore our operational profit will not yet be back to growth, it's coming but not yet.

Secondly the positive:

Lucas would know this better than me, I believe that he's involved with Aircraft maintenance.

As outlined by Varadi, our biggest cost factor is depreciation of grounded Aircraft. This is a fixed cost and occurs irrespective of whether the Aircraft flies or is grounded. This IMO is a totally fake piece of accounting. The most expensive and important maintenance Aircraft perform is the D check. If Aircraft have been flying a lot and doing many pressurisation cycles, these checks will occur every 6 years. With the aircraft we have that have been grounded and not subject to pressurisation cycles, the first expensive D check may not occur until 12 years. This will result in a substantial cost saving in the future. It means we're subjecting our balance sheet to a cost now that we'll largely take back in the future.

Our free cash flow will rapidly expand. That again allows for the financial debt repayment and for a share buy back post GTF issue resolution.

My summary is, don't expect a rapid increase in the share price this year. But November 2026 when we'll really start to see operational profit growth, expect our share price to be off to the races. £42 by summer 2028.

That's really good information Lucas. Thanks a lot.

I remain very optimistic for the time beyond summer 2027. You have made it clear though that it won't be easy.

Lucas

Yes. It would be really good if you could clarify for us:

Is the Airport that you're familiar with the airport which is storing all of the grounded aircraft or only some?

When you say that one aircraft is now preparing for a return to service, is that the only one at your Airport or the only one in Wizz Air's fleet?

Thanks Again. I know that you're giving us what you know. 👍

Lucas

That's Great! Keep us updated.

All your information is greatly appreciated on this forum.

KPA1

I am not a Ramper. I just put my thoughts here. Fair enough I put my expectations here for the future. Yeslam and Lucas don't do that, they just provide good iinformation. Fair Play to them as they say.

My high average though is not a 1 year price target. My first target is £42 in summer 2028. I have explained why I think that is likely. I absolutely acknowledge that I'll be wrong but I think that it's a sensible target.

Obviously we all know that we're not going to have any effect on raising the share price from posting our thoughts on this forum.

The only thing now in my view that will significantly grow the share price is ACTUAL Operational Profit Growth indicated in a quarterly report.

Great Posts from Taut and Yeslam. Thanks for that.

Regarding the competition on given routes between Wizz and Ryanair. My view on that is going forward, neither Airline will receive sufficient new Aircraft to match the passenger demand, so yields will grow. I understand that this is really a long term holder view.

Goldman Sees Oil Falling Below $55 in 2026 | OilPrice.com https://share.google/a5eHeGHAX2FoRMbNo

I hope that this link works. I'm sorry if it doesn't.

Yeslam

Keep up your good information. Thanks.

Presumably the ex-Abu Dhabi Neo's will be parked temporarily for re-registration.

I'm at work at the moment. So a little busy. And I'm not an accountant but what I understand is that:

- when the Aircraft were ordered, it was Indigo that made the order.

- Then when the Aircraft are received, Wizz pays for them.

- Then they are immediately sold at a profit to a leasing company (I have to research the name)

- Then they're leased back at a competitive rate.

Obviously this route to operating Aircraft is more expensive than the company simply buying the Aircraft, as Ryanair do. But as I've explained before, Ryanair's old B737-800's are not cost effective. Therefore the actual difference in ex fuel CASK between Ryanair and Wizz (after Wizz normalisation) is very small.

I bought some more this morning at £13.70.

Johnbri

Wizz was expensive. Certainly in 2021, when it was around the £50 mark, I was looking at it. I thought 150 Aircraft with a Market Capitalisation of over £5b. If Wizz had been profitable, it would have been a PE of around 18. I wasn't interest.

I started buying Wizz when the share price was £28 (September 2023) because I thought that the GTF engine issue would be resolved fairly quickly. I have been averaging in since, my average price is now about £19. So I am down about 25%.

Panclater

I think that we're currently in a very unique situation at the moment. Covid may seem like a long time ago but it's still having a significant effect on supply chains. They always tell me that a Boeing 777 has 4,000,000 components which have to be supplied to the manufacturer, and each component manufacturer has it's own supply chain. These chains were very seriously disrupted by covid, mostly due to the termination of skilled people. The full recovery is still years away. This is effecting both Boeing and Airbus. The combined total of Aircraft being produced is around 1300.

If you consider that there are currently around 29,000 commercial Aircraft operating and industry growth is about 8% (passenger numbers)/Yr then you need about 2300 new Aircraft every year. That's without considering Aircraft retirements.

Throw into the mix the additional issues that you have at Boeing and you can see that this is creating a major long term Aircraft shortage for the industry. As I'm sure you're aware, Boeing had two of it's 737 max Aircraft crash just before covid, this brought the FAA back as a very strict regulator. Now due to a recent window blow out, Boeing quality control is in question. As a result the FAA have limited the number of B737Max Aircraft which can be built each year. It's around 400/Yr, the order book is around 6,200 Aircraft. So at the current rate Boeing will take 14 years to fill it's backlog of orders.

So when we're now talking cylicality. It's somewhat irrelevant because going forward, we have far too many passengers for the number of Aircraft that can be manufactured.

Summary: Airlines that are in possession of new Aircraft are in a very good position.

Stille

You're right but it would have been very hard to predict that in 2015. Unless if course you had really good inside knowledge of the company.

This bet on Wizz, to me is a no brainer. I know that there'll be technology companies out there that will do 100x better than Wizz. But I don't have any clue which ones. If I did, I still wouldn't trust them.