Wizz Q3
Revenue (€ million) 911.7 408.4 123.2%
EBITDA (€ million) (2.8) (87.5) 96.8%EBITDA margin (%)(0.3) (21.4) +21.1pp
Operating loss for the period (€ million) (155.5) (213.6) 27.2%
[/QUOTE]József Váradi, Wizz Air Group Chief Executive Officer commented on the results:
"Wizz Air continued to deliver industry-leading growth during the third quarter by operating 49 per cent more ASKs versus the same period last year (and +38 per cent vs 2019), while continuing to deliver unit revenue growth and a second consecutive quarter of net profit. Throughout the period, we witnessed a solid pricing environment, supported by robust demand across our broader and more diversified Wizz Air network.
As a result, revenue in the quarter grew significantly at +123 per cent versus same period last year, while revenue per ASK was 50 per cent higher versus the same period last year (and +4 per cent vs 2019).
On the cost side, operational adjustments contributed to a significantly lower flight disruption cost compared to prior quarters. The strengthening Euro currency helped to reduce overall fuel and certain maintenance costs; however, its biggest impact was on revaluation of US dollar leasing liabilities, reversing most of the prior two quarters' losses and helping to deliver a net profit of €33.5 million for the quarter.
Wizz Air's total cash was €1.37b at the end of the calendar year, approximately the same level of total cash as at the end of 2021."
Commenting on business developments in the period, Mr Váradi said:
"We are proud to have been awarded Global Environmental Sustainability Airline Group of the Year by CAPA (Centre for Aviation), naming Wizz Air as the most environmentally sustainable airline not just in Europe but globally. This is a further validation of our commitment towards becoming the most environmentally responsible choice for air travel. Furthering that commitment, we have also signed a memorandum of understanding (MoU) for the supply of sustainable aviation fuel (SAF) between 2023 and 2030.
Operationally, during the period we announced base expansions across Cyprus, Italy, Austria, Poland, Albania, Georgia, Bulgaria and Serbia, while opening a new base in Romania and strengthening our leadership in this core Wizz Air CEE market.
We have started operating further routes to Saudi Arabia as part of an initial phase of serving that important growth market and are pleased with initial performance of these routes. Wizz Air Abu Dhabi has received eight aircraft and is set to more than quadruple its revenue in the present quartercompared to same period last year. In CEE we retained our market leadership position, grew our market share by four per cent over prior quarter and nine per cent over same period 2019."
On current trading and the outlook, Mr Váradi added:
"Our continued cost management is driving our ex-fuel CASK towards the guidance given during last interim report (single digit increase vs H2 F20) and we have caught up with peers in terms of systematic jet fuel hedging impact through F24. We expect our ex-fuel CASK in F24 to be back at pre-COVID levels.
More generally, we continue to see evidence of solid fare environment as average fares (combined ticket and ancillaries) are trading above 2019 and 2022 levels. As we reach the end of January, we are seeing booking volumes coming in ahead of 2022, which is in line with expectations. We remain optimistic and maintain our RASK guidance for H2 F23 at mid-single digits above the same period in 2019.
We remain on track to operate +35 per cent higher capacity versus H2 F20 (normalized for the COVID-19 impact in Feb-March 2020). For H1 F24 the planned ASK growth is +30 per cent versus 2023 (and +65 per cent vs 2019). As with the third quarter, we expect to see slightly more ASK contribution from longer routes, connecting locations in Middle and Near East, as this region continues to attract a higher volume of passengers in the months to come. This should also bode well for better pricing opportunities.
Recently, we have also seen load factors improve, particularly November, but also during December, despite the impact of skewed directional traffic, which is characteristic in this period. We expect to see load factor gap continue to close vs 2019 in the coming quarters as our recent network investments start to mature.
We continue to expect an overall net loss in F23, but remain confident that F24 will be profitable (subject to no adverse pandemic or geopolitical events). We are set to return to pre-COVID-19 utilisation levels and to deploy a fleet of c.185+ of the most efficient narrowbody aircraft this Summer, across a more diversified network and with a highly engaged workforce of more than 7,000 aviation professionals, without whom this would not be possible."
Q3 F23 REVENUE AND COST HIGHLIGHTS
Total revenue amounted to €911.7 million. Compared to Q3 F22:
· Ticket revenues increased by 186.3 per cent to €464.7 million.
· Ancillary revenues increased by 81.7 per cent to €447.0 million.
· Total unit revenue increased by 50.2 per cent to 3.73 euro cents per available seat kilometre (ASK).
· Ticket revenue per passenger increased by 79.9 per cent to €37.5 and was also up by 11.6 per cent versus Q3 F20.
· Ancillary revenue per passenger increased by 14.4 per cent to €36.1 and was also up by 19.8 per cent versus Q3 F20.
Total operating costs increased 71.6 per cent to €1,067.2 million. Compared to Q3 F22:
· Total unit costs (including net financing expense) increased by 15 per cent to 4.50 Euro cents per ASK.
· Ex-fuel unit costs decreased by 6.7 per cent to 2.49 euro cents per ASK.
· Fuel unit costs increased by 61.6 per cent to 2.01 euro cents per ASK.
Total cash reduced by 2.4 per cent to €1,367.1 from €1,400.3 million. Net FX gain amounted to €224.1 million (Q3 F22: (€31.1) million) of which €220.9 million was unrealized (Q3 F22: (€43.7) million), as the EUR strengthened during the quarter versus USD and USD liabilities were revalued at the end of period.
Wizz Air will continue to operate inbound flights to Bari and Bacau.
As part of our initial phase of serving the Saudi Arabia market, we have commenced flying more routes to Jeddah and Riyadh from Italy and Austria. From January and April, we will have a further 14 routes active (including from Budapest, Bucharest, Rome, Catania, Larnaca, Milan, Naples, Sofia, Tirana and Venice). There are also daily flights from Abu Dhabi to Dammam and soon we will have daily flights from Abu Dhabi to Medina. The initial phase of our Saudi Arabian operations includes a planned network of 24 inbound routes.
Abu Dhabi has taken delivery of another four aircraft during the quarter, in time to serve peak regional demand, which falls counter-season to Europe. Its network has grown parallel to its fleet, adding 20 more destinations and circa 474,000 more seats to/from Abu Dhabi vs same period last year.
In Tel Aviv, a destination which has been in high demand, we have deployed more than twice the amount of inbound/outbound capacity versus same period last year and today it can be reached from 30 bases and stations across our network.
Despite closure of the Bari base, the adjustments in the network and further expansion in Italy further reinforces Wizz Air's position as the third largest airline there.
Wizz Air retains its market leadership position in CEE. It grew its market share to 27 per cent (+4 per cent vs previous quarter and +9 per cent vs Q3 F20) and is the top airline in three of its core CEE markets (Romania, Hungary and Bulgaria).
As another milestone for the company, Wizz Air flew 45 million passengers in the calendar year 2022, setting a new record for the highest number of passengers flown in any twelve-month period during the company's eighteen-year history.
FLEET UPDATE
· In the three months ended 31 December 2022 Wizz Air took delivery of nine new A321neo aircraft, while there were no redeliveries of A320ceo, thus ending the third quarter with a total fleet of 177 aircraft: 53x A320ceo, 41x A321ceo, 6x A320neo, 77x A321neo.
· Delivered aircraft were financed through sale and leaseback transactions.
· The average age of the fleet currently stands at 4.64 years, one of the youngest fleets of any major European airline, while the average number of seats per aircraft has climbed to 217 as at December 2022.
· The share of new "neo" technology aircraft within Wizz Air's fleet increased to 47 per cent by the end of Q3 F23 and is planned to surpass 50per cent by the end of F23.
· For the remainder of F23 we expect four new A321neo aircraft delivery, while nine A320ceo aircraft will be redelivered to lessors and will exit the fleet.
· As at 31 December 2022, Wizz Air's delivery backlog comprises a firm order for 13 x A320neo, 313 x A321neo and 47 x A321XLR aircraft, plus the additional order for 15 x A321neo, a total of 388 aircraft.
FINANCIAL UPDATE
· Two rating agencies, Fitch and Moody's, have issued updates during the third quarter with Fitch maintaining Wizz Air's BBB- investment grade profile with negative outlook, while Moody's issued a Ba1 rating with stable outlook.
· The Company has selected a lender for a $300m PDP (predelivery payments)-backed facility as a standby source of additional liquidity. The facility has a three-year term and can be used for any operational or financing purpose. At time of publishing this report the facility has not been drawn upon.
· Jet fuel hedging for F23 coverage is at 59 per cent of planned consumption with F24 at 45 per cent.
· Jet fuel related EUR/USD FX hedge coverage for F24 is 20 per cent.
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