Airlines are businesses influenced by the trajectory of global oil prices. But market newcomer - and European short-haul carrier - Wizz Air (WIZZ) says it doesn't expect a significant boost to earnings this year from lower fuel costs. Nonetheless, the group expects adjusted post-tax profit will fall in the range of €165m (£118m) to €175m in the year to March 2016 compared with €146m in 2015.
That said, the depressed oil price has still worked to Wizz Air's advantage. Fuel unit costs fell 8.4 per cent last year, while non-fuel overheads actually grew 0.5 per cent as a result of the stronger US dollar, rising crew costs and the return of four aircraft to lessors.
Wizz wants to pass the fuel cost savings onto passengers through lower fares. Management says higher aircraft utilisation and staff productivity rates give Wizz a competitive advantage and lower air fares will help grow its share of the air travel market. However, analysts at broker Goodbody predict an overall 2.7 per cent decline in total revenue per available seat in the current financial year.
Goodbody still expects post-tax profit of €171m for the year to March 2016, and prior to these results forecast EPS of 135ȼ, up from 119ȼ for the 2015 period-end.
| WIZZ AIR (WIZZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,475p | MARKET VALUE: | £771m | |
| TOUCH: | 1,465-1,475p | 12-MONTH HIGH: | 1,525p | LOW: 1,150p |
| DIVIDEND YIELD: | nil | PE RATIO: | 1 | |
| NET ASSET VALUE: | 879ȼ | NET CASH: | €444m | |
| Year to 31 Mar | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2012* | 0.77 | 41.9 | - | nil |
| 2013* | 0.85 | 33.7 | - | nil |
| 2014 (restated) | 1.01 | 95.4 | 1,004 | nil |
| 2015 | 1.23 | 192 | 1,443 | nil |
| % change | +21 | +101 | +44 | - |
*Pre-IPO figures £1=€1.41 | ||||
