Shares in European budget carrier Wizz Air (WIZZ) were up over 1% to £28.13 in morning trading as it reported a 134% rise in total revenue to €3.89 billion for the full year ending 31 March 2023 compared to €1.63 billion in the same year-ago period.

Wizz said that passenger numbers experienced an 88% increase from 27,128,160 in 2022 to 51,071,836 in 2023 benefiting from strong summer demand.

József Váradi, Wizz Air CEO said: ‘Full year 2023 was a year of significant growth for the business, with our key operational and financial performance metrics moving in the right direction as we transition into the post-COVID era.

‘During the year Wizz Air delivered industry-leading capacity increases by operating 76% more ASKs (Available seat kilometres) versus last year (and +40% versus full-year 2020). The effects of fuel price increases and structural capacity issues at airports remained features throughout the year, but we are mitigating these through decisive actions which helped to improve ex-fuel cost performance.’

NEW ROUTES ANNOUNCED

Wizz said it will continue to expand its network coverage and new routes in the Middle East with ‘nine aircraft deployed to date’ and ’16 over the next 12 months.’

Russ Mould, investment director at AJ Bell said: ‘Significantly expanding one’s fleet of aircraft while also being loss-making is a calculated risk for Wizz Air – aggressively grow while rivals are trying to recover from the pandemic.

‘To some extent, the risk has paid off with a big jump in the number of passengers as it had much greater capacity to capitalise on the surge in travel demand post-pandemic. The big challenge is to now turn a profit which is no easy task given ongoing cost pressures.

‘It needs to have more bums on seats per flight, find additional ways to generate revenue beyond the cost of a ticket, and to keep a lid on costs. It says that average fares across both the ticket and add-ons such as baggage fees are already trending higher.’

‘Even though it is still losing money, the company’s performance during and post-pandemic is probably strong enough to convince shareholders that its growth plans are working, and so it might have enough support to raise a significant amount of money to turbocharge that growth through a corporate deal.’

YEAR AHEAD

CEO Váradi remains optimistic for 2024 but is mindful of air traffic control disruptions and continuing operational issues within the airports sector: ‘The company’s net profit is expected to be in a range of €350 million and €450 million in full year 2024, subject to the absence of adverse exogenous events such as an incremental impact from the war in Ukraine, delivery delays or similar.

‘This guidance is dependent on the revenue performance for the all-important summer period as well as the second half of full year 2024, a period for which the company, like most airlines, currently has limited visibility.’

Year-to-date Wizz Air shares are up 48%.

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The editor of the article (Martin Gamble) owns shares in AJ Bell.

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