Wizz Air seeks to boost demand with cheap fares as it warns of long recovery
Wizz Air, one of Europe’s fastest growing low-cost airlines, warned it did not expect “a positive development” on available capacity or profit margins in 2021, but pledged to stimulate traffic with cut-price fares.
The group, one of the earliest to return to the air as coronavirus restrictions have been eased, on Wednesday announced a 128 per cent jump in pre-tax profit to €294.1m for the fiscal year ended on March 31, just as the full impact of coronavirus hit Europe’s airlines with a near universal grounding of aircraft fleets.
Revenues jumped by 19 per cent to €2.8bn.
József Váradi, chief executive, said it was too early to predict the outcome for 2021, due to the uncertainty caused by Covid-19. However, he said “we are confident that we can ramp up operations quickly, re-stimulate demand with our ultra-low fares and contribute to the vital recovery of travel and tourism in our markets.”
The group, which in April slashed a fifth of its workforce and cut the pay for Mr Váradi and its board, said it had €1.5bn in cash at the end of March 2020, while it had also raised £300m under the UK government’s emergency loan facility.
It intended to expand the number of available seats by 9 per cent in 2021, in line with the growth of the fleet to 131 aircraft by March 2021, but lower than the group’s target for average growth of 15 per cent.
Wizz Air carried 40m passengers in the year, a 15.8 per cent annual increase.
Mr Váradi said the group was not in a position to give guidance on net profit at this point. “Company performance in 2021 is largely dependent on the level of flying permitted throughout the summer period, as well as the revenue performance in the second half of the 2021 fiscal year, a period for which the company, like most airlines, currently has limited visibility,” he said.
Wizz Air expects to run about 70 per cent of its flights in July and August, subject to an easing of travel restrictions. It has already started flying about 10 per cent of its capacity in May.
Wizz Air grew capacity measured in terms of available seat kilometres (ASK) by 16.1 per cent and in terms of seats by 14.8 per cent. Underlying net profit rose by nearly 30 per cent to €344.8m, excluding a charge of €63.7m for discontinued fuel hedges.
There was no dividend. Basic earnings per share rose from 1.69p to 3.76.