Wizz Air has recorded its most profitable six months to 30 September 2023 with revenues up 39.1% to €3.053bn and earnings before interest, depreciation and amortisation (EBITDA) up three fold to €878.1million. Wizz Air secured a profit of €400.7 million reversing a loss of €384.3million in the six months to end September 2022.
The low-cost carrier also reported a record high traffic of 33.0 million passengers in the half year period compared to 26.5 million in H1 F23 and 22.1 million in H1 F20.
Capacity was also up 27% over the prior year with load factors tracking up to an average of 92.6% from 86.9% in the same period in 2022. The airline stated that it remained on track to take delivery of 21 Airbus 321neo aircraft by end of F24 in line with projections for the year.
Wizz Air had a total cash balance of €1.8bn at the end of September, reflecting the airline said “larger selling volumes and strong cash management”.
Given the GTF engine inspection and verification of its GTF engines, Wizz Air said that it was currently extending 13 CEO leases (including four A321s - 230 seats) with seven already completed and six in documentation stage.
The airline is projecting a grounding of 45 aircraft by the end it financial year 2024, which includes aircraft previously grounded in September 2023 and from mid-January 2024). The overall impact to ASK capacity for the second half of the 2024 financial year “is expected to be c.20 per cent higher year-on-year”. Wizz confirmed that the “near and longer-term operational and financial impact is mitigated by management actions and OEM compensation that has now been secured”.
The airline has also suspended Israel capacity until end of November 2023, which has been redeployed across the network, while “observing security situation and maintaining a plan to redeploy capacity should things improve”. In the first half of the year, capacity to and from Israel amounted 5 - 6 per cent of total capacity, confirmed the airline.
"This summer we delivered significantly improved operational performance compared to last year,” said József Váradi, Wizz Air chief executive. “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.”
Váradi stressed that the initial GTF powder metal engine inspection requirements “had minimal impact on our operational capacity”, adding that the airline was “taking measures to mitigate the impact of further inspections, including higher utilisation from our existing fleet, aircraft lease extensions and continued new aircraft deliveries”.
Looking ahead, Váradi said that bookings were positive for the third quarter 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,” he said. “This figure still represents industry-leading capacity growth and is a further testament to the Company's ability to overcome adverse external factors.”
Váradi reiterated that the airline’s plans to grow capacity next year remain in place with a 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,” he said. “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.”
Explaining further, Váradi said that “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”.
Nevertheless, Wizz Air has narrowed its full financial year 2024 net income guidance, initially set in June 2023, to a range of €350-400 million, which Váradi said reflects “context of the ongoing macro environment uncertainty and continuing difficult operating conditions, from an infrastructure and security perspective”.
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. The average age of the fleet currently stands at 4.20 years, while the average number of seats per aircraft has climbed to 223 as at September 2023.
Four of the aircraft delivered were financed through Japanese Operating Leases with Call Options (JOLCO) and the rest through sale and leaseback transactions, confirmed Wizz.
In the remainder of F24 Wizz expects 21 new A321neo aircraft deliveries, while four A320ceo aircraft will be redelivered to lessors and will exit the fleet. The airline says it expects “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.
From a financing perspective, Wizz plans to repay its initial €500 million bond, issued under the €3 billion EMTN programme, which matures in January 2024, with cash. The airline has extended its PDP facility – currently at €117.9 million – to enable additional draw-downs, with the objective of maximizing capacity utilization throughout the F24-F25 period.
Wiz Air’s net debt at the end of 30 September 2023 was flat at €3,889.5 million vs €3,892.8 million at the end of 31 March 2023, while the Company's leverage ratio (net debt to EBITDA) decreased from the F23 year-end 29.0x to 4.9x. Over the same period, liquidity reduced to c.36 per cent.