Member Info for B777CAPTAIN

Robbren

The news regarding cutting some Abu Dhabi routes is not bad news. It's effectively the cost of doing business in a growing LCC. You try routes, if they work great, if they don't you cut them and put the aircraft elsewhere.

Abu Dhabi, as has been discussed, you have the "hot & harsh" conditions, routes have to have higher yields to justify them. Both engine and aircraft life is effected by the dust/sand in the air. This is well known among Middle Eastern operators.

If Wizz was able to expand at 20% per year then passenger numbers in East Europe would expand at 20% per year. The limitation is the numbers of aircraft delivered and operated, not the number of people wanting to travel.

David

In March the number of Airline passengers grew 8% year over year worldwide. The average load factor grew to just under 84%. There are 29,000 commercial aircraft operating worldwide. You'd expect Boeing and Airbus to be producing over 2000 aircraft per year to meet demand. In fact they're producing around 1200.

Load factors and yields will rise rapidly from here. We've only recovered from covid and 2019 levels this last year.

Forget ownership models

Baggage rules

Financial debt

ETC

Wizz have the correct aircraft in a niche market and they're getting 300 more of them.

East Europe grows at over 10% per year.

Let me reiterate, these A321 neo's are the best aircraft and you can't buy them unless you've already ordered them.

I enjoy it Robbren. It's the easiest way to put my thoughts on paper. I'm quite happy if nobody reads a word of what I say.

I think that we're all focused totally on the bad news. Bad news comes in quickly and without warning and the media love it. The good news however flows in slowly but surely and is not really reported. Last summer Wizz had 45 aircraft grounded and 30 fewer aircraft in the fleet. This summer Wizz will be below 40 grounded with an additional 30 aircraft. Next summer will be much, much better.

Keep believing, this is a great investment. No leverage, minimum 3 years timeline. Buy now and you'll do very, very well.

Just looked at those Luton-Tirana flights. Wizz must be doing really well with them this summer, 3 flights in a day, all over £200 and that's before extras.

Anything can happen to the share price in the short term as we saw after the last earnings report. I can't see how this is a different company now than it was in March when the shares were going for £18.

I don't think that it'll do a Petrofac. Wizz is a profitable company. Even RBC Capital who reduced their shareholding expect that F26 will deliver a €180m net profit (the only source of an F26 forecast I can find). That's an unofficial forward PE of just over 7.

D9Ber1

Well. I was foolish enough to say that I expected £30 by this Christmas, before the F25 earnings. I think now that you have to push that back to probably mid 2027.

I think that we're currently at an extreme low. This was caused by a number of the investment banks trimming their positions, the fall then triggered a large number of Margin Calls (too much leverage these days).

The trimming of position's I think was largely due to the debt downgrade earlier in the year. Presumably investment banks have rules on the amount of stock they can hold in a company which has a debt rating classified as junk.

Well you know that I think that you should stick it out for 3 years. Who knows where it'll be in 6 months.

Robbren

Don't sell. It'll be a mistake. Obviously the bigger investors are waiting now until the Q1 Earnings report is released.

In the F25 Presentation, Varadi explains the effect of depreciation on costs (he uses one full section to explain this, it's important). Depreciation cost is effectively 25% more as a result of the groundings. As the situation normalises, he says that it's a Mathematical certainty that this cost goes.

That depreciation charge represents €225m, add to that the current profit €213m and use a PE of 8. In a normalised situation that gives a share price of around £30.

If you extrapolate forward the fleet growth when normalisation is expected to occur, then you get a share price of around £50.

Wizz is currently very cheap. There maybe some downside, Panmure say £8. But don't bet on the downside.

My amateur view is that the big cost is depreciation on grounded aircraft and that will effectively go away as they come back to line.

Judging by what Panmure's analyst said - CASK is more important than RASK. His view seemed to be that however much Revenue the company generates, it would not be sufficient to cover the growing costs.

It looks good to me as well. Let's see how the rest of the market perceive them.

Another point is that P&W are not compensating for the depreciation on the grounded aircraft. That represents at least a €200m cost that will go as the aircraft come back to line.

Pogo

Given the following:

1. Wizz have a Duopoly on low cost travel in Eastern Europe

2. They have 300+ of the best aircraft ordered (competitors would have to wait 10 years to receive an order for the same aircraft)

3. Eastern Europe's Airline Passenger demand is growing fast; Poland, Romania and Serbia at about 15%/Yr.

4. Debt associated with ownership model planned.

5. Financial debt to be eliminated by 2027.

6. GTF Engine related problems to be resolved during 2027.

7. Operating costs in comparison with Ryanair, Easyjet and Jet2 will be less due to a significantly newer fleet. Both lower maintenance and better fuel burn.

8. The company is currently profitable.

9. The company has €1.7B in cash.

Pogo: ignore the short term negativity. Where will Wizz Air be in 3 years time?

OK Pogo.

That's enough for me. Good luck.

Garydav

I don't think there'll be a major jump until Varadi gives some guidance. That was a big mistake, just some conservative guidance would have placated the banks.

Frank

The share price has already been at £53 in 2021. IMHO it can do it again very easily. It's simple arithmetic. F28 there'll be 300 operational aircraft. It's absolutely not impossible for them to make £2m per aircraft. That's £600m. A PE of 8 is fair that would be £48. Then a share buy back will bring it to £50-£60.

I don't understand people suggesting that this is too long out, or too hopeful. I think that it's very likely.

Pogo

What makes £9 a buy and £10 not a buy?

There is no current reason for your assumption that they'll need to dilute shares to raise money. Right now they have €1.7B in cash and the company is profitable.

I'm trying to understand if you are making a reasoned argument or if you're just winding us up.