Wizz Air (LON: WIZZ) (OTCPK: WZZAF) shares are down 2.5%. WIZZ shares seem to have greeted the Q1 results with something of a yawn rather than the excitement they might be worth. The reason being that most of this we pretty much knew already. The effects of lockdown are fading away, airline economics are getting better. We can see this in BA (or IAG) shares, in Easyjet. Buy the time we get to Wizz we pretty much know what the season is looking like. The same is true the other way around of course. The four airlines we’re likely to look at - the three plus Ryanair - are largely going to have their proifits determined by the state of the market itself. It’s only after that that we can start to differentiate between them given slightly different geographies and market approaches.
The Wizz Air results: “Record traffic high of 15.3 million passengers (vs 10.4m in F20 and 12.2m in F23), 27 per cent higher ASK capacity vs F23 (+64 per cent vs F20),Unit revenue ('RASK') was 20.8 per cent higher year-on-year; ticket RASK +38.7 per cent, Load factor recovered to an average 91 per cent for the quarter (vs 85 per cent in F23 and 94 per cent in F20)” All of those are moving definitively in the right direction.
But this is, obviously, only one quarter. It’s actually the next quarter - this one right now - that really matters to a leisure airline. High summer is what makes or breaks a financial year.
Wizz Air share price from Google Finance
The last full year results were not so good for Wizz Air: “Wizz Air (LON: WIZZ) has released its annual results and the shares are up 2%. That is, the results are well in line with expectations, there have been no surprises here. In more detail those results are: “Total revenue increased by 134 per cent to €3,895.7 million, compared to €1,663.4 million in F22. EBITDA was positive at €134.3 million, registering an increase by €157.6 million over a loss in F22. Operating loss was broadly flat at €466.8 million in F23 compared to €465.3 million in F22. Net loss for F23 was €535.1 million, an improvement of €107.4 million compared to the F22 net loss.” We might expect that Wizz could return to profit with such a rise in revenues but that's not quite how management are running the company. They are still trying to expand as fast and as far as they can financially afford to. So, increased revenues leads to more expansion, not profit. They are though suggesting that they'd like to get to an actual profit next year.”
So, the Q1 results are at least in line with that goal of making a profit this full year. But it’ll still be this quarter, the high summer, that really tells us. The winter quarters tend to be loss making, given the costs of maintaining the fleet over the slower business of the period.