Wizz Air Q1 operating loss expands to $290 mln euros, hit by higher costs

Budget airline Wizz Air said its first-quarter operating loss had jumped to $290 million (285 million euros) from $110.8 million (109 million euros) the year before, as the group was hit by higher costs.

The airline said it expected to deliver a material operating profit as revenue and pricing momentum continue to improve, and said levels of disruption at airports had started to normalize.

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Wizz Air will deepen cuts to its summer schedule, doubling down on efforts to combat disruption from a staffing squeeze that’s upended Europe’s transport industry.

After announcing a 5 percent reduction in peak-season seating on July 11, Wizz, the region’s third-biggest discount carrier, will extend the cuts to about 10 percent, Chief Executive Officer Jozsef Varadi said in an interview on Wednesday.

“We’ve been going through some real pain in terms of staff shortages at airports and air traffic control,” Varadi said. “We decided to trim capacity further to create more contingency and more of a buffer.”

Wizz, the leading discounter in Eastern Europe, had initially held back from slashing capacity as much as some rivals since the airports from which it operates have generally faced less of a staffing squeeze than the biggest hubs. Even after the more severe cuts the airline is still lifting summer seating 30 percent compared with 2019, one of the biggest hikes in the industry.

Varadi said demand for flights remains strong and confirmed Wizz expects to post “a material operating profit for the fiscal second quarter through September as revenue and pricing momentum continues to improve.”

Fleet growth

Varadi said there are no plans to curtail fleet expansion and Wizz is keen to maintain new jetliner deliveries from Airbus SE on schedule in anticipation that a tougher economic climate will push more customers in its direction.

“We’ve seen this a number of times and we know the cookbook, he said. “When there’s inflation and pressure on household spending there is a significant shift towards low-cost carriers and we will be ready for that.”

Bernstein analyst Alex Irving said revenue trends at Wizz are strengthening, with occupancy levels climbing above 90 percent this month. More capacity is also going into the existing network rather than new markets, something that should bolster unit revenue.

UK-based rival EasyJet Plc, Europe’s second-biggest low-cost airline, on Tuesday booked a charge of £133 million for the June quarter amid travel disruption driven by staff shortages and capacity caps. Discount leader Ryanair Holdings Plc said on Monday that passengers remain cautious about booking, clouding its prospects beyond the summer.

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