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Wizz profit jumps on firmer margins

Budapest-based low-cost carrier Wizz Air has posted sharply higher first-half profits as it continues to cut unit cost and increase passenger numbers.

Across the first six months of 2019, the airline carried 22 million people – 18% more than in the same period last year – helped by aggressive expansion in its core market.

This pushed profits for the period up to €372 million, an 85% increase on the first half of 2018.

Operating expenses increased roughly in line with the growth in passenger numbers. Although the airline's fuel bill rose by 5.2% year on year, cost per available seat-kilometre continued to tick lower.

Safety issues that have grounded the Beoing 737 Max aircraft type have led to capacity problems at airlines across Europe, but as Wizz operates an Airbus-only fleet it has been able to maintain rapid expansion. It launched 76 new routes in the first half.

Wizz also tends to operate slightly larger aircraft types compared with its peers, such as the Airbus A321, which Wizz fits with 230 seats, against a capacity of 189 passengers on a Ryanair Boeing 737-800.

The airline credits these aircraft with helping to drive its cost base down against its competitors, and expects its cost advantages to widen as it takes on more of these larger aircraft. Wizz has 268 aircraft on order, it says, including 20 medium-range A321XLR jets ordered during the first half.

"Wizz Air again reports all-time high financial results for the first half of our current financial year as our low-fare/low-cost business model delivered an 18% increase in passenger numbers, higher load factors, strong cost and yield performance, ex-fuel unit cost down 3%, and unit revenue up 3% year-on-year,” states chief executive Jozsef Varadi.

He asserts that Wizz is "the lowest cost producer in the industry in Europe and the largest airline in the growing CEE [central and eastern Europe] market, making us a long-term structural winner in the aviation sector".

Wiizz expects that second-half growth will accelerate 22% and has adjusted its full-year guidance from €320-€350 million to €335-350 million.

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