Wizz Air Regulatory News (WIZZ)

WIZZ AIR HOLDINGS PLC - RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2023

RECORD NET PROFIT IN H1 AS CAPACITY CONTINUES TO GROW YOY AND OPERATIONAL IMPROVEMENTS DELIVER RESULTS

LSE: WIZZ

Geneva, 9 November 2023: Wizz Air Holdings Plc ("Wizz Air", "the Company" or "the Group"), the fastest-growing European low-cost airline, today issues unaudited results for the six months to 30 September 2023 ("first half", "H1" or "H1 F24").

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report should be read in conjunction with the 2023 Annual Report and Accounts, and any public announcements made by Wizz Air Holdings Plc during the interim reporting period.

1 n.m.: not meaningful as a variance is more than (-)100 per cent.

2 Total cash is a non-statutory financial performance measure and comprises cash and cash equivalents (30 September 2023: ?1,132.3 million; 31 March 2023: ?1,408.6 million), short-term cash deposits (30 September 2023: ?600.5 million; 31 March 2023: nil) and total current and non-current restricted cash (30 September 2023: ?105.0 million; 31 March 2023: ?120.4 million).

3 For further definition of non-financial measures presented refer to "Glossary of terms and alternative performance measures (APMS)" section of this document. These measures incorporate certain non-financial information that management believes is useful when assessing the performance of the Group.

HIGHLIGHTS

? Profit for the period of ?400.7 million, with Q2 five times higher year-on-year.

? Record high traffic of 33.0 million passengers in H1 (vs 26.5 million in H1 F23 and 22.1 million in H1 F20).

? 27.0 per cent higher ASK capacity in H1 vs H1 F23 (+63 per cent vs H1 F20).

? Unit revenue (RASK) was +9.6 per cent higher year on year; ticket RASK +17.4 per cent.

? Load factor recovered to an average of 92.6 per cent (vs 86.9 per cent in H1 F23 and 95 per cent in H1 F20).

? Unit cost (CASK) -12.3 per cent year-on-year; ex-fuel CASK -0.8 per cent (driven primarily by continued airport delays, a higher volume of past disruption claims and crew cost).

? Total cash balance at ?1.8 billion, reflecting larger selling volumes and strong cash management.

? Investment in operational strength delivering significant results:

? Improved flight completion rate to 99.2 per cent (vs 98.1 per cent F23).

? Utilisation in H1 increased to 12:18 hours (vs 11:49 in H1 F23); Q1 to 11:58 hours and Q2 to 12:37 hours (vs 11:50 in Q2 F23).

? Sustained robust demand environment throughout the period.

? On track to take delivery of 21 Airbus 321neo aircraft by end of F24 in line with projections for the year.

? Currently extending 13 CEO leases (including 4x A321s - 230 seats) with seven already completed and six in documentation stage.

? Based on a service bulletin in relation to GTF engine inspections (issued 3 November, 2023), and verification performed with Pratt & Whitney, we are projecting a grounding of 45 aircraft by the end of F24 (including aircraft previously grounded in September '23 and from mid-January '24). Overall impact to ASK capacity for H2 F24 expected to be c.20 per cent higher YoY (Q3 c.25 per cent, Q4 c.15 per cent). Near and longer-term operational and financial impact is mitigated by management actions and OEM compensation that has now been secured.

? Suspended Israel capacity until end of November '23 (redeploying it across the network), while observing security situation and maintaining a plan to redeploy capacity should things improve (in H1 F24 ASK capacity to/from Israel amounted to 5 - 6 per cent of total capacity).

"This summer we delivered significantly improved operational performance compared to last year. There were fewer flight cancellations, and overall fleet utilisation and productivity increased year on year. Our revenue and profit results reflect the higher volumes we now operate and the enormous amount of work and investment over the past three years.

In the first half, we saw very strong load factor recovery, as demand remained robust, including in new markets that are maturing steadily and where we continue to add frequencies and improve our schedule. The Middle East route network is tracking a similar maturity profile to the development of our CEE network, supporting our decision to continue to invest in, add to and evolve capacity there. Our wider fleet allocation programme remains active, and in addition to our expanded flying programme this winter, we have announced a summer 2024 expansion to Romania, Italy and Albania, operating new A321neo aircraft.

The security of our Airbus order book continues to be the backbone of our planned capacity growth and fleet renewal programme. The initial GTF powder metal engine inspection requirements had minimal impact on our operational capacity, and we are taking measures to mitigate the impact of further inspections, including higher utilisation from our existing fleet, aircraft lease extensions and continued new aircraft deliveries.

With respect to sustainability in our operations, we continue to make good progress, and we have made direct investments in new start-ups and signed a number of off-take agreements with SAF producers, thus securing a portion of our supply in the years to come." 

On current trading and the outlook, Mr Váradi said:

"We continue to see positive bookings in Q3, with selling load factors exceeding last year's levels by single digit percentage points. We estimate overall H2 ASK capacity will be circa 20 per cent higher year on year, despite the number of GTF engines needing off-wing inspection in the period. This figure still represents industry-leading capacity growth and is a further testament to the Company's ability to overcome adverse external factors.

Our plans to grow capacity next year are based on: combination of new aircraft deliveries, existing fleet lease extensions, securing additional aircraft capacity from the market and delivering improved utilisation. Based on current best knowledge we anticipate capacity for F25 to be at similar levels to F24. We have secured a comprehensive compensation support package from the OEM that will protect the Company's commercial and operational performance in the coming quarters, protecting us from the costs of grounding any aircraft while our GTF engines undergo inspections.

Most of the financial impact from GTF removals will be mitigated by timely OEM compensation, while higher yield opportunities in our commercial programme will help protect revenue as market capacity remains constrained. We are narrowing our F24 net income guidance, initially set in June 2023, to a range of EUR 350-400 million. This guidance reflects our expectations for H2 F24 in the context of the ongoing macro environment uncertainty and continuing difficult operating conditions, from an infrastructure and security perspective.

We remain well protected against volatile fuel costs and FX movements via a systematic hedging programme, and our strengthened operations and a renewing fleet (tracking at 57 per cent at the end of September '23) continue to deliver efficiencies for the business while reducing unit costs.

Our continued ability to manage the impact of complicated issues gives us the confidence that Wizz Air has the strategy and expertise to achieve our profitable growth ambitions."

NEAR-TERM AND FULL-YEAR OUTLOOK

? Capacity (ASKs): H2 F24 c.20 per cent higher YoY (Q3 c.25 per cent, Q4 c.15 per cent).

? Load factor: F24 above 90 per cent.

? Cost: F24 ex-fuel CASK lower versus the prior year.

? Financial performance: narrow F24 net income outlook to the range of ?350-400 million.

? Above guidance remains subject to any adverse external events (including macro, security, infrastructure and/or supply chain developments), revenue performance, for which company has limited visibility at this point in time, especially for Q4 period, as well as any airworthiness directive in relation to GTF engine inspections and number of available spare engines.

REVENUE AND COST HIGHLIGHTS H1

Total revenue amounted to ?3,052.3 million, an increase of 39.1 per cent versus H1 F23:

? Passenger ticket revenue1 increased by 49.1 per cent to ?1,762.2 million.

? Ancillary revenue1 increased by 27.5 per cent to ?1,290.1 million.

? Total unit revenue increased by 9.6 per cent to 4.91 Euro cents per available seat kilometre (ASK).

? Ticket revenue per passenger increased by 19.7 per cent to ?53.4 and was also up by 23.8 per cent versus H1 F20. Ticket RASK improved by 17.4 per cent to 2.83 Euro cents year-on-year, supported by strong pricing momentum in the period.

? Ancillary revenue per passenger increased by 2.4 per cent to ?39.1 and was also up by 21.3 per cent versus H1 F20. Ancillary RASK stayed flat year-on-year at 2.07 Euro cents as more focus went to ticket pricing in the period, while ancillaries continued to be attractively priced to drive the demand.

Total operating costs increased 12.0 per cent to ?2,529.3 million versus H1 F23:

? Total unit costs (including net financing expense) decreased by 12.3 per cent to 4.15 Euro cents per ASK.

? Ex-fuel unit costs decreased by 0.8 per cent to 2.60 Euro cents per ASK, mainly driven by higher than expected flight disruption and compensation charges and higher crew cost reflecting pay adjustments made since summer of 2022.

? Fuel unit costs decreased by 26.5 per cent to 1.55 Euro cents per ASK.

Total cash increased by 20.2 per cent to ?1,837.8 million from ?1,529.0 million.

The unrealised foreign currency losses in H1 amounted to ?14.3 million (H1 F23: ?285.2 million), this favorable change from last year is largely attributed to the slower depreciation of the EUR against the USD, leading to a more favorable revaluation of our USD lease liabilities on the balance sheet.

1 For further definition of non-financial measures presented refer to "Glossary of terms and alternative performance measures (APMS)" section of this document.

NETWORK UPDATES

? Wizz Air announced significant growth in the Polish market during the period, adding an eleventh aircraft to its Warsaw base and further expanding the route network from other Polish bases.

? Wizz Air Abu Dhabi is growing the fleet this winter and is adding two more aircraft, taking the fleet to eleven in total, which is one extra aircraft compared to its initial plans.

? Bucharest, Romania, will grow in size as largest base in the network with addition of two A321neo from June 2024.

? Tirana, Albania, will receive two additional A321neo aircraft from next summer, adding two new routes and growing the number of frequencies on existing routes.

? Next summer, Italian bases in Rome and Milan will see the largest schedule deployed to date with the addition of four new A321neo aircraft, with three going to Rome and one to Milan. The expansion will support six new routes and grow frequencies on 17 existing routes.

? During the period, Wizz Air also announced that its entire fleet of aircraft at London Luton Airport will be comprised of Airbus A321neos by 2025.

? Catania, Italy: one additional aircraft, taking the base to four aircraft.

? Tirana, Albania: three additional aircraft, taking the base to thirteen aircraft.

? Warsaw, Poland: one additional aircraft, taking the base to eleven aircraft.

? Belgrade, Serbia: one additional aircraft, taking the base to four aircraft.

? Skopje, N. Macedonia: one additional aircraft, taking the base to six aircraft.

? London Luton, United Kingdom: one additional aircraft, taking the base to twelve aircraft.

? Bucharest, Romania: two additional aircraft, taking the base to nineteen aircraft.

? Rome, Fiumicino: three additional aircraft, taking the base to fourteen aircraft.

? Milan, Malpensa: one additional aircraft, taking the base to eight aircraft.

? Abu Dhabi, UAE: two additional aircraft, taking the base to eleven aircraft.

Base aircraft reductions

? Tuzla, Bosnia and Herzegovina: two aircraft

? Suceava, Romania: two aircraft

? In the six months ended 30 September 2023 Wizz Air took delivery of 18 new A321neo aircraft, and 10 A320ceo aircraft were redelivered, thus ending the first half with a total fleet of 187 aircraft: 40x A320ceo, 41x A321ceo, 6x A320neo and 100x A321neo.

? Four of the aircraft delivered were financed through Japanese Operating Leases with Call Options (JOLCO) and the rest through sale and leaseback transactions.

? Wizz Air is extending thirteen leases, of which seven have been signed and the other six are in the documentation stage. The lease extensions range between two and four years and have been secured at discounted or original lease rates.

? The average age of the fleet currently stands at 4.20 years, and remains one of the youngest fleets of any major European airline, while the average number of seats per aircraft has climbed to 223 as at September 2023.

? The share of new "neo" technology aircraft within Wizz Air's fleet increased to 57 per cent and is planned to reach 63 per cent by the end of F24.

? In the remainder of F24 we expect 21 new A321neo aircraft deliveries, while four A320ceo aircraft will be redelivered to lessors and will exit the fleet. We expect minimal impact from Airbus delivery delays in F25 and F26.

? As at 30 September 2023, Wizz Air's delivery backlog comprises a firm order for 13x A320neo, 287x A321neo and 47x A321XLR aircraft, a total of 347 aircraft.

? The table below provides expected number of aircraft for the current and next fiscal years, including current extensions:

Wizz Air's CO2 emissions amounted to 51.6 grams per passenger/km for the rolling twelve months to 30 September 2023 (4 per cent improvement compared to the F23 average which was 53.8 grams, and 9.6 per cent lower than H1 F23 results a year ago, 57.1 grams per passenger/km), continuing the decreasing trend in the Company's average carbon intensity performance in a twelve-month period. The most important sustainability developments during the six months ended September 2023 were:

Wizz Air, the fastest growing European ultra-low-cost airline, operates a fleet of 191 Airbus A320 and A321 aircraft. A team of dedicated aviation professionals delivers superior service and very low fares, making Wizz Air the preferred choice of 51.1 million passengers in the financial year F23 ended 31 March 2023. Wizz Air is listed on the London Stock Exchange under the ticker WIZZ. The Company was recently named one of the world's top ten safest airlines by airlineratings.com, the world's only safety and product rating agency, and named Airline of the Year by the Air Transport Awards in 2019 and in 2023. Wizz Air has also been recognised as the Most Sustainable Low-Cost Airline by the World Finance Sustainability Awards in 2021-2023 and as 'Airline Group of the Year for Global Environmental Sustainability' by CAPA-Centre for Aviation Awards for Excellence in 2022-2023.

For more information:

H1 financial review

In the first half of the financial year, Wizz Air carried 33.0 million passengers, a 24.6 per cent increase compared to the same period in the previous year, and generated revenues of ?3,052.3 million, 39.1 per cent higher than last period. These rates compare to capacity increase measured in terms of ASKs of 27.0 per cent and 16.9 per cent more seats. The load factor increased by 6.6 per cent to 92.6 per cent.

The profit for the first half was ?400.7 million, compared to a loss of ?384.3 million in the same period of F23.

For the six months ended 30 September

* This is an APM and subsequently explained in Note 7. 

Revenue

Passenger ticket revenue increased by 49.1 per cent to ?1,762.2 million and ancillary revenue (or "non-ticket" revenue) increased by 27.5 per cent to ?1,290.1 million, driven by strong demand for air travel in H1 F24. Total revenue per ASKs (RASK) increased by 9.6 per cent to 4.91 Euro cents from 4.48 Euro cents, driven by a 6.6 per cent higher load factor and a significantly increased net fare (total net revenue per passengers).

Average revenue per passenger (net fare) was ?92.6 during H1 F24, an increase of 11.7 per cent versus H1 F23. Average ticket revenue per passenger increased from ?44.6 in H1 F23 to ?53.4 in H1 F24, ?8.8 or 19.7 per cent higher than last year, while average ancillary revenue per passenger increased from ?38.2 in H1 F23 to ?39.1 in H1 F24, an increase of ?0.9 or 2.4 per cent.

Operating expenses for H1 F24 increased by 12.0 per cent to ?2,529.3 million from ?2,257.6 million in H1 F23. Key drivers being higher airport and handling costs and en-route charges driven by the increased capacity (27.0 per cent increase in ASKs), increased crew-related salary costs mainly driven by the salary adjustments, higher compensation costs in absolute terms due to the overall growth of the Company. Favorable impact on fuel costs on the back of the materially lower fuel prices explained below. The total cost per ASKs (CASK) (including impact of hedges) decreased by 12.3 per cent to 4.15 Euro cents in H1 F24 from 4.73 Euro cents in H1 F23. CASK excluding fuel expenses decreased by 0.8 per cent to 2.60 Euro cents in H1 F24 compared to 2.62 Euro cents in H1 F23.

The Group recorded an income tax charge of ?49.5 million in the period compared to an income tax credit of ?5.4 million in the same period in F23. The increase in tax charge is mainly attributable to the positive income of the period compared to a loss position in the prior period.

In the three months to 30 September 2023 ("Q2" or "the second quarter"), Wizz Air carried 17.7 million passengers including no-shows, a 23.9 per cent increase compared to the same period in the previous year, and generated revenues of ?1,815.7 million with capacity increased in terms of ASKs by 27.4 per cent. The load factor increased from 88.8 per cent to 93.8 per cent. The profit for the second quarter was ?339.6 million, compared to a profit of ?68.2 million in the same period of F23.

Other information

Total cash (including restricted cash and cash deposits with more than three months' maturity) at the end of the first half increased by 20.2 per cent to ?1,837.8 million versus 31 March 2023, of which ?1,732.8 million is non-restricted cash.

2. Ownership and control

To protect the EU airline operating license of Wizz Air Hungary Ltd and Wizz Air Malta Ltd (subsidiaries of the Company), the Board has resolved to continue to apply a disenfranchisement of Ordinary Shares held by non-EEA Shareholders in the capital of the Company. This will continue to be done on the basis of a "Permitted Maximum" of 45 per cent pursuant to the Company's articles of association ("the Permitted Maximum"). In preparation for the 2023 Annual General Meeting (AGM), on 2 August 2023 the Company sent a Restricted Share Notice to Non-Qualifying registered Shareholders, informing them of the number of Ordinary Shares that will be treated as Restricted Shares:

? a "Qualifying National" includes: (i) EEA nationals, (ii) nationals of Switzerland and (iii) in respect of any undertaking, an undertaking which satisfies the conditions as to nationality of ownership and control of undertakings granted an operating licence contained in Article 4(f) of Regulation (EC) No. 1008/2008 of the European Commission, as such conditions may be amended, varied, supplemented or replaced from time to time, or as provided for in any agreement between the EU and any third country (whether or not such undertaking is itself granted an operating licence); and

? a "Non-Qualifying National" includes any person who is not a Qualifying National in accordance with the definition above.

Wizz Air operates under a clear set of treasury policies approved by the Board and supervised by the Audit and Risk Committee. The hedges under the hedge policy will be rolled forward quarterly, 18 months out, with coverage levels over time reaching indicatively between 65 per cent for the first quarter of the hedging horizon and 15 per cent for the last quarter of the hedging horizon. The hedging policy covers jet fuel and jet fuel-related EUR/USD exposure. Jet fuel hedge coverages at 30 September 2023 are as follows assuming no impact of PW engine recalls:

Pre-hedging, a $10 (per metric tonne) movement in the price of jet fuel will impact the H2 F24 fuel costs by $9.4 million.

A one cent movement in the EUR/USD exchange rate impacts the H2 F24 operating expenses by ?14.3 million.

Key statistics

Cost per available seat kilometers

The Company has a policy of rounding each amount and percentage individually from the fully accurate number to the figure disclosed in the condensed consolidated interim financial statements. As a result, some amounts and percentages do not total - though such differences are all trivial.

Forward-looking statements

The information in this announcement includes forward-looking statements which are based on the Company's or, as appropriate, the Company's Directors' current expectations and projections about future events. These forward-looking statements may be identified by the use of forward-looking terminology including, but not limited to, the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussion of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements are subject to risks, uncertainties and assumptions about the Company and its subsidiaries and investments, including, among other things, the development of its business, trends in its operating industry and future capital expenditures. In light of these risks, uncertainties and assumptions, the events or circumstances referred to in the forward-looking statements may differ materially from those indicated in these statements. Forward-looking statements may, and often do, materially differ from actual results.

None of the future projections, expectations, estimates or prospects or any other statements contained in this announcement should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the announcement. Forward-looking statements speak only as of the date of this announcement. Subject to obligations under the Listing Rules and Disclosure and Transparency Rules made by the Financial Conduct Authority under Part VI of the Financial Services and Markets Act 2000 (as amended from time to time), neither the Company nor any of its affiliates, or individuals acting on its behalf, undertakes to publicly update or revise any such forward-looking statement, or any other statements contained in this announcement, whether as a result of new information, future events or otherwise.

As a result of these risks, uncertainties and assumptions, one should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise. The information and opinions contained in this announcement are provided as at the date of this announcement and are subject to change without notice.

The aviation industry is subject to many risks and Wizz Air's business is no exception. A number of risks, as described in our 2023 Annual Report and Accounts, have the potential to adversely affect Wizz Air's expected results for the remainder of the current financial year, as well as newly emerging risks that we have included into our summary. These include external factors related to conflicts between countries such as prolonged war between Russia and Ukraine and the renewed Israeli-Palestinian armed conflict, as well as fleet development-related difficulties like the unplanned maintenance of Pratt & Whitney GTF engines.

The full list of risks considered is set out below:

? information technology and cyber risk, including website availability, protection of our own and our customers' data, and ensuring the availability of operations-critical systems in a significantly escalating threat landscape;

? external factors, ensuring the Company has capabilities and resilience to deal with risks such as geopolitical risks (including the ongoing war between Ukraine and Russia, and the renewed Israeli-Palestinian armed conflict), fuel cost, foreign exchange rates, risk of higher cost of doing business, competition, general economic trends, and the default of a partner financial institution;

? network development, making sure that we are making the best use of our capacity, driving maximum utilisation and ensuring that we have access to the right airport infrastructure at the right price so that we can keep on delivering the superior Wizz Air service at low fares across an expanding network;

? fleet development, ensuring the Company has the right number of aircraft and engines available at the right time to take advantage of commercial opportunities and grow in a disciplined way without any supply chain disruption;

? regulatory risk, making sure that we remain compliant with regulations affecting our business and operations and we remain agile to react to the changing governmental actions due to slowing economic landscape, ownership and control, loss of traffic rights, and changing policies due to sustainability (taxation, etc.);

? operations, including safety events and terrorist incidents and employee and passenger security;

? human resources, ensuring we are able to recruit the right quality and the right number of colleagues to support our ambition to grow and, once recruited, that they remain engaged and motivated and that the Company has appropriate succession management in place for key colleagues;

? social and governance risks, making sure we operate in accordance with our core values and our value of integrity, are respected throughout our business processes and deals, and provide transparency to all our stakeholders through responsible reporting and disclosure; and

? environmental risk, ensuring that we are able to answer the growing need of environmental protection and consciousness, mitigate the emerging transition and physical risks and create a sustainable, climate-friendly service for our customers, at all times respecting the planet.

The Directors consider that the principal risks to the Company's business during the second half of the financial year remain those summarised above and set out on pages 86 to 93 of our 2023 Annual Report and Accounts, available at corporate.wizzair.com.

For the six months ended 30 September 2023 (unaudited)

Condensed consolidated interim statement of financial position

As at 30 September 2023

Condensed consolidated interim statement of changes in equity

For the six months ended 30 September 2023 (unaudited)

Condensed consolidated interim statement of changes in equity

For the six months ended 30 September 2022 (unaudited)

* In the prior period items within other comprehensive income were presented separately in the condensed consolidated interim statement of changes in equity. See the details in the condensed consolidated interim statement of comprehensive income.

Condensed consolidated interim statement of cash flows

For the six months ended 30 September 2023 (unaudited)

* Mostly JOLCO and IFRS 16 leases.

** Cash and cash equivalents at 30 September 2023 include ?274.1 million (?197.3 million at 31 March 2023; ?235.6 million at 31 March 2022) of cash at bank and ?858.2 million (?1,211.3 million at 31 March 2023; ?531.0 million at 31 March 2022) of cash deposits maturing within three months of inception and overdrafts (repayable on demand) of ?0.8 million (?6.0 million at 31 March 2023; ?nil at 31 March 2022), which are an integral part of the Group's cash management activities.

Wizz Air Holdings Plc ("the Company") is a limited liability company incorporated in Jersey, registered under the address 44 Esplanade, St Helier JE4 9WG, Jersey. The Company is managed from Switzerland, under the address Route François-Peyrot 12, 1218 Le Grand-Saconnex, Geneve. The Company and its subsidiaries (together referred to as "the Group" or "Wizz Air") provide low-cost, low-fare passenger air transportation services on scheduled short-haul and medium-haul point-to-point routes across Europe and the Middle East. The Company's Ordinary Shares are listed in the premium segment of the Official List of the Financial Conduct Authority and admitted to the Main Market of the London Stock Exchange.

2. Basis of preparation

These unaudited condensed consolidated interim financial statements present the financial results of the Group for the six-month period ended 30 September 2023. These condensed consolidated interim financial statements have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, IAS 34, 'Interim Financial Reporting' as adopted by the European Union and those parts of the Companies (Jersey) Law 1991 applicable to companies reporting under IFRS. The unaudited condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 March 2023, which have been prepared in accordance with IFRSs and IFRICs as adopted by the European Union and with those parts of the Companies (Jersey) Law 1991 applicable to companies reporting under IFRS.

The comparative figures included for the year ended 31 March 2023 do not constitute statutory financial statements of the Group based on Article 105 (11) of the Companies (Jersey) Law 1991. The consolidated financial statements of the Group for the year ended 31 March 2023, together with the Independent Auditors' Report, have been filed with the Jersey Financial Services Commission and are also available on the Company's website (wizzair.com). The Independent Auditors' Report on those financial statements was unqualified.

The Company has a policy of rounding each amount and percentage individually from the fully accurate number to the figure disclosed in the condensed consolidated interim financial statements. As a result, some amounts and percentages do not total - though such differences are all trivial.

Wizz Air's business activities, financial performance and financial position, together with external factors and principal risks likely to affect its future development and performance as described in our 2023 Annual Report and Accounts, including the plans to finance a growing number of future aircraft deliveries, where sale and leaseback financing is typically secured shortly before the scheduled delivery date of the aircraft and our judgment that there will continue to be demand in the leasing market to finance our aircraft prior to their delivery dates, have been reviewed by the Directors and are considered to be unchanged.

At 30 September 2023, the Group held total cash of ?1,837.8 million (including cash and cash equivalents of ?1,132.3 million, ?105.0 million of restricted cash and ?600.5 million of short-term cash deposits), while net current liabilities were ?308.1 million and net assets were ?225.5 million. The Group's contractual undiscounted external borrowings include: ?500.0 million of bonds maturing in January 2024, ?500.0 million of bonds maturing in January 2026, ?117.9 million of PDP financing from Carlyle Aviation Partners that is repayable over twelve months but may be re-borrowed and convertible debt of ?25.8 million. A further ?4,457.5 million in relation to future liabilities from lease, JOLCO and FTL contracts are presented as borrowings. None of these borrowings contain any financial covenants.

The Group operates using a three-year planning cycle. The Directors have reviewed their latest financial forecasts for a period of 18 months from the date of signing these interim financial statements including plans to finance committed future aircraft deliveries (see Note 18) due within this period. After making enquiries and testing the assumptions against different forecast scenarios including a severe but plausible (downside) scenario (see below), the Directors have satisfied themselves that the Group is expected to be able to meet its commitments and obligations as they fall due for a period of at least the next twelve months from the date of signing this interim report.

These enquiries and the testing performed in reaching this conclusion included the review of a base case model of how the operations of the business would develop against a backdrop of persistent inflation, an adverse fuel and exchange rate environment and continued aircraft delivery delays that have been notified by Airbus. Notably, as part of this base case, the expected consequences of the metallurgy inspections announced by Pratt & Whitney (RTX) and grounding of 45 aircraft, on average, commencing 15 January 2024 and spanning 18 months, have been mitigated by management actions and original equipment manufacturer ("OEM") compensation that has now been secured. In the absence of detailed information and instructions from the involved regulatory organisations and the OEM, the Directors believe this scenario to be a realistic assumption. This base case was then flexed to produce a downside forecast that reflects the potential impact of trading scenarios such as a lower RASK, higher fuel price, stronger USD and exclusion of uncommitted lease financing for future aircraft deliveries (see Note 18). Both the base and downside forecasts reflect the repayment of ?500 million of bonds in January 2024.

The Directors also considered the impact of climate change over the time period and concluded that it is unlikely that material physical or transition risks that are described in our Sustainability Report, on pages 29 to 40 of the 2023 Annual Report and Accounts, will arise over this period.

In preparing the base and downside forecasts the Directors also considered the requirements of security levels in its card acquirer contracts and took into account the impact of the war in Ukraine, the three aircraft stranded in Ukraine (see Note 5 and Note 12) and the war in Palestine. The Directors concluded that no material adverse impact on future cash flows is likely to result from these matters.

In this downside scenario the Group is still forecasting significant liquidity (or access to liquidity) throughout this period. Accordingly, the Directors concluded it is appropriate to retain the going concern basis of accounting in preparing the financial statements.

3. Accounting policies

These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies, methods of computation and presentation applied in the Group's most recently published consolidated financial statements for the year ended 31 March 2023, except for the changes explained below.

The Group's interests in equity investments are presented as financial assets at fair value through other comprehensive income.

The useful life of aircraft assets that were first leased and then purchased by the Group is estimated based on the date of the major overhaul events that are no longer economical to perform. Within the current aircraft fleet the maximum estimated useful life of A320ceo aircraft is 20 years.

The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2023, with the exception of changes in estimates that are required in determining the provision for income taxes. Taxes on income in the interim periods are accrued using the effective rate that would be applicable to expected total annual profit or loss.

In preparing the condensed consolidated interim financial statements, the Directors have considered the impact of climate change, particularly in the context of the disclosures included in the Strategic Report in the 2023 Annual Report and Accounts, the stated emission targets and the update provided on pages 5 and 6 of this Interim Report. These considerations did not have a material impact on the Group's going concern assessment, nor on the financial reporting judgments and estimates used in the preparation of these interim financial statements.

New standards, amendments and interpretations issued and effective

The following amendments and interpretations apply for the first time in the six months to 30 September 2023, but do not have a material impact, or any impact (except the for disclosure of gross deferred tax balances in relation to leases under Amendment to IAS 12, see Note 10), on the condensed consolidated interim financial statements of the Group:

? IFRS 17, 'Insurance Contracts' including Amendments to IFRS 17

? Amendments to IFRS 17, 'Insurance Contracts': Initial Application of IFRS 17 and IFRS 9 - Comparative Information

? Amendments to IAS 1, 'Presentation of Financial Statements' and IFRS Practice Statement 2: Disclosure of Accounting Policies

? Amendments to IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors': Definition of Accounting Estimates

? Amendments to IAS 12, 'Income Taxes': Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction

New standards, amendments and interpretations issued but not yet effective

The following new accounting standards and interpretations have been published by the IASB that are not yet effective and have not been early adopted by the Group. These standards are either not relevant or not expected to have a material impact on the Group in the current or future reporting periods or on foreseeable future transactions.

Endorsed by the EU but not yet effective or not yet endorsed by the EU:

? Amendments to IAS 1, 'Presentation of Financial Statements': Classification of Liabilities as Current or Non-current

? Amendments to IAS 1, 'Presentation of Financial Statements': Non-current Liabilities with Covenants

? Amendments to IFRS 16, 'Leases': Lease Liability in a Sale and Leaseback

? Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements: these amendments require disclosures to enhance the transparency of supplier finance arrangements and their effects on a company's liabilities, cash flows and exposure to liquidity risk. The disclosure requirements are the IASB's response to investors' concerns that some companies' supplier finance arrangements are not sufficiently visible, hindering investors' analysis.

? Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability: an entity is impacted by the amendments when it has a transaction or an operation in a foreign currency that is not exchangeable into another currency at a measurement date for a specified purpose. A currency is exchangeable when there is an ability to obtain the other currency (with a normal administrative delay), and the transaction would take place through a market or exchange mechanism that creates enforceable rights and obligations.

Not endorsed by the EU but will become immediately effective once endorsed:

? Amendment to IAS 12: International Tax Reform - Pillar Two Model Rules

This amendment gives companies temporary relief from accounting for deferred taxes arising from the Organization for Economic Co-operation and Development's (OECD) international tax reform. The amendments also introduce targeted disclosure requirements for affected companies. For more details refer to Note 10.

As a result of interest rate benchmark reform, many benchmark interest rates are not published anymore. In connection with floating rate leases, the Group had exposures to LIBOR rates, which were published until 30 June 2023. This had no material impact on the H1 F24 condensed consolidated interim financial statements.

Hedging

In F23 the Company reinstated its Board approved systematic hedging policy with the following coverage and time horizon.

The hedges under the hedge policy will be rolled forward quarterly, 18 months out, with coverage levels over time reaching a minimum of 65 per cent for the first quarter of the hedging horizon and 15 per cent for the last quarter of the hedging horizon. In line with the hedging policy, Wizz Air also hedges its US Dollar exposure related to fuel consumption.

Hedge transactions during the period

The Group uses zero-cost collar instruments to hedge its jet fuel-related foreign exchange exposures and jet fuel price exposures. In order to ensure economic relationship, the Group enters into hedge relationships where critical terms of the hedging instrument match exactly with that of the hedged item.

The gains and losses arising from hedge transactions during the period were as follows:

Foreign exchange hedge:

Fuel hedge:

Hedge period and open positions

The Group measures its derivative financial instruments at fair value, as calculated by the banks involved in the hedging transactions. As required, the fair values ascribed to those instruments are verified also by management using high-level models. These estimations are performed based on market prices observed at period end and therefore, according to paragraph 128 of IAS 1, do not require further disclosure. Such fair values might change materially within the near future but these changes would not arise from assumptions made by management or other sources of estimation uncertainty at the end of the period but from the movement of market prices. The fair value calculation is most sensitive to movements in the jet fuel and foreign currency spot prices, their implied volatility and respective yields.

At the end of the period the Group had the following open hedge positions:

Foreign exchange hedges with derivatives:

For the movements in other comprehensive income refer to the condensed consolidated interim statements of changes in equity and comprehensive income.

The open foreign currency cash flow hedge positions at year end can be analysed according to the maturity periods and price ranges of the underlying hedge instruments as follows:

EUR/USD foreign exchange hedge:

Fuel hedge with derivatives:

For the movements in other comprehensive income refer to the condensed consolidated interim statements of changes in equity and comprehensive income.

The fuel hedge positions at period end can be analysed according to the maturity periods and price ranges of the underlying hedge instruments as follows:

Effects of hedge accounting on the financial position and performance

The effects of the foreign exchange hedges on the Group's financial position and performance are as follows:

The effects of the fuel hedges on the Group's financial position and performance are as follows:

The effectiveness of hedges is tested both prospectively and retrospectively to determine the appropriate accounting treatment of hedge gains and losses. Prospective testing of open hedges requires making certain estimates, the most significant one being for the future expected level of the business activity (primarily the utilisation of fleet capacity) of the Group. Building on these estimations of the future, management makes a judgment on the accounting treatment of open hedging instruments. Hedge accounting for jet fuel and foreign currency cash flow hedges is discontinued where the "highly probable" forecast criterion is not met in accordance with the requirements of IFRS 9.

There was no discontinued hedging relationship during the six months ended 30 September 2022 or the six months ended 30 September 2023.

None of the hedge counterparties had a material change in their credit status that would have influenced the effectiveness of the hedging transactions.

The Group measures its derivative financial instruments at fair value, as calculated by the banks involved in the hedging transactions. These instruments fall into the Level 2 category. Fair values are determined based on inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. The banks are using generally accepted valuation techniques, principally the Black-Scholes model and discounted cash flow models. Equity investments are measured at fair value through profit or loss. All the other financial assets and financial liabilities of the Group are measured at amortised cost. For the majority of these instruments, the fair values are not materially different from their carrying amounts. Fair value of unsecured debt amounted to ?935.1 million as at 30 September 2023 (31 March 2023: ?927.1 million) as estimated using quoted prices (Level 1). Fair value of secured debt amounted to ?117.9 million as at 30 September 2023 (31 March 2023: ?250.0 million) as estimated using Level 3 methodology. Fair value of convertible debt amounted to ?25.8 million as at 30 September 2023 (31 March 2023: ?26.0 million) as estimated using Level 3 methodology. Fair value of borrowings amounted to ?3,729.8 million as at 30 September 2023 (31 March 2023: ?3,408.8 million) as estimated using Level 2 methodology. For the carrying amount of borrowings please see Note 16.

The following table presents the Group's financial assets and liabilities that are measured at fair value at 30 September 2023.

The following table presents the Group's financial assets and liabilities that are measured at fair value at 31 March 2023.

For critical estimates and judgments refer to Note 4 in the 2023 Annual Report and Accounts of the Group. No significant changes to such estimates and judgments occurred for the six months ended 30 September 2023, except for the below.

During F23 and F24 the Group had only one reportable segment, being its entire route network, resulting in a net profit of ?400.7 million during the six months ended 30 September 2023 (for the six months ended 30 September 2022: ?384.3 million loss). All segment revenue was derived wholly from external customers and, as the Group had a single reportable segment, inter-segment revenue was zero.

Products and services

Revenue from external customers can be analysed by groups of similar services as follows:

These categories are non-IFRS categories meaning that they are not necessarily distinct from a nature, timing and risk point of view; however, management believes that these categories provide clarity over the revenue profile of the Group to the readers of the financial statements and are in line with airline industry practice. The categories as per the definition of IFRS 15 are disclosed in Note 7.

Ancillary revenue arises mainly from baggage charges, booking/payment currency conversion charges, airport check-in fees, fees for various convenience services (e.g. priority boarding, extended legroom and reserved seats), loyalty programme membership fees, commission on the sale of on-board catering, accommodation, car rental, travel insurance, bus transfers, premium calls, co-branded cards and repatriation.

Geographic areas

Revenue from external customers can be analysed by geographic areas as follows:

In the table above, other (non-EU) comprises a number of non-EU geographic areas that are all individually less than 10 per cent of the total revenue.

Revenue was allocated to geographic areas based on the location of the first departure airport on each ticket booking.

The Company's revenue from external customers within the EU is mainly generated by Italy of ?384.9 million for the six months ended 30 September 2023 (the six months ended 30 September 2022: ?305.7 million), Romania of ?329.8 million (the six months ended 30 September 2022: ?236.8 million) and Poland of ?255.0 million (the six months ended 30 September 2022: ?178.9 million).

The physical location of non-current assets is not disclosed by geographic area. This is because: (i) by value most assets are associated either with aircraft not yet received (pre-delivery payments) or with existing leased aircraft and spare engines (RoU and maintenance assets), the location of which changes regularly following aircraft capacity allocation decisions; and (ii) the value of the remaining asset categories (land and buildings, and fixtures and fittings) is not a material part of total non-current assets.

The distribution of the non-current assets between the key operating entities of the Group is as follows:

No revenue or non-current assets of the Group were recognised in Jersey, the Company's country of domicile for the six months ended 30 September 2023 (for the six months ended 30 September 2022: ?nil).

Wizz Air Malta Limited and WAM Ventures Holding Limited were successfully established in 2022 to reinforce Wizz Air's position and support its expansion plans in Europe. From 1 April 2023, Wizz Air Malta Limited commenced commercial operations and started to sell tickets for its own flights in addition to its wet-lease operations.

AOG Jet Limited, a wholly owned subsidiary of the Group, was successfully established in July 2023.

Major customers

The Group derives the vast majority of its revenues from its passengers and sells most of its tickets directly to the passengers as final customers rather than through corporate intermediaries (tour operators, travel agents or similar).

The split of total revenue presented in the condensed consolidated interim statement of comprehensive income, being passenger ticket revenue and ancillary revenue, is a non-IFRS measure (or alternative performance measure). The existing presentation is considered relevant for the users of the financial statements because: (i) it mirrors disclosures presented outside of the financial statements; and (ii) it is regularly reviewed by the Chief Operating Decision Maker for evaluating the financial performance of its single operating segment.

Revenue from contracts with customers can be disaggregated as follows based on IFRS 15:

These two categories represent revenues that are distinct from a nature, timing and risks point of view. Revenue from contracts with other partners relates to commissions on the sale of on-board catering, accommodation, car rental, travel insurance, bus transfers, premium calls and co-branded cards, where the Group acts as an agent.

The contract assets reported on 30 September 2023 as part of trade and other receivables amounted to ?5.0 million (31 March 2023: ?5.9 million) and the contract liabilities (unearned revenues) reported as part of deferred income were ?576.3 million as at 30 September 2023 (31 March 2023: ?761.1 million). Out of the ?3,012.3 million revenue recognised for the six months ended 30 September 2023 (for the six months ended 30 September 2022: ?2,159.4 million), ?761.1 million (the six months ended 30 September 2022: ?326.6 million) was included in the contract liability balance at the beginning of the period.

The following charges less gains are included in net other expenses:

Overhead-related expenses include fees for legal support, professional services, consulting and IT-related services.

Net other income is mainly related to credits received from suppliers and to income and expenses from cargo operations.

Inventories totaling ?12.9 million were recognised as maintenance materials and repairs expenses in the period (the six months ended 30 September 2022: ?7.0 million).

Emission Trade Schemes amounted to ?185.5 million at 30 September 2023 (31 March 2023: ?262.5 million). The decrease is due to the ETS settlement in April 2023.

Interest income and expense include interest on financial instruments. Interest income is earned on cash and cash equivalents and short-term deposits.

Net foreign exchange loss in amount of ?52.4 million for the six months ended 30 September 2023 (the six months ended 30 September 2022: ?274.7 million) relates to remeasurement of lease liabilities denominated in currencies different from EUR, predominantly in USD which is offset by a net foreign exchange gain of ?25.4 million on cash and cash equivalents denominated in foreign currency. During H1 F24 the USD/EUR exchange rate decreased from 1.09 USD/EUR at 31 March 2023 to 1.06 USD/EUR at 30 September 2023 which resulted in an increase in lease liability and related recognition of foreign exchange loss.

The income tax charge for the six months ended 30 September 2023 was ?49.5 million (the six months ended 30 September 2022: ?5.4 million tax credit). The increase in tax charge is mainly attributable to the positive income of the period compared to the loss position in the prior period.

The effective income tax rate for the six months ended 30 September 2023 is 11.0 per cent (the six months ended 30 September 2022: 1.4 per cent). The tax charge or credit for the period was calculated based on the estimated annual effective income tax rate of the Group.

Deferred tax positions

Deferred tax assets decreased from ?50.6 million to ?18.6 million and deferred tax liabilities increased from ?3.2 million to ?12.4 million in the current period (between 31 March and 30 September 2023). The changes in the deferred tax position are mainly caused by changes in the balances related to hedging, ETS liability and JOLCO-financed assets, which are sources of temporary differences.

The amendments of IAS 12 have no material impact on the net deferred tax balances of the Group, as the exemption for deferred tax recognition in relation to leases was not applied at initial recognition.

Deferred tax related to leases:

Tax residency change

Wizz Air Hungary Ltd. moved its place of effective management from Switzerland to Hungary with an effective date of 1 April 2023. As a consequence, the tax residency of Wizz Air Hungary Ltd. changed from Swiss to Hungarian from F24 onwards.

Global minimum tax

On 20 December 2021, the OECD released a framework for Pillar Two Model Rules which aims to introduce a global minimum corporate tax rate of 15 per cent applicable to multinational enterprise groups with global revenue over ?750 million. On 15 December 2022, the EU Council formally adopted the EU minimum tax directive by written procedure and rules are expected to apply for accounting periods starting on or after 31 December 2023 (i.e. the year ending 31 March 2025 for the Group). Management is monitoring the status of implementation to understand the potential impact on the Group's future tax position. The Group does not account for deferred tax on Pillar Two top-up taxes and, therefore, there was no impact on the recognition and measurement of deferred tax balances.

Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Group by the weighted average number of Ordinary Shares in issue during each period.

There were no Convertible Shares in issue at 30 September 2023 (30 September 2022: nil).

Diluted earnings and loss per share

Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary Shares in issue with the weighted average number of Ordinary Shares that could have been issued in the respective period as a result of the conversion of the following convertible instruments of the Group:

? Convertible Shares;

? Convertible Notes; and

? employee share options (vested share options are included in the calculation).

The profit for the period has been adjusted for the purposes of calculating diluted earnings per share in respect of the interest charge relating to the debt which could have been converted into shares.

There is no difference between the basic and diluted loss per share for H1 F23 as potential Ordinary Shares are anti-dilutive due to incurred loss.

12. Property, plant and equipment