Wizz wants higher vaccination rates

Travelling by air recently has meant turning up to the airport with two passports: one being the identity document and the other confirming the passenger has been vaccinated against Covid-19. This is a problem for Central and Eastern Europe-focused budget airline Wizz Air (WIZZ), as rates of vaccination in its key markets are lower than elsewhere in Europe. 

Wizz boss József Váradi said there was hope of a rapid turnaround in the coming months, citing a forecast that Romania would go from 30 per cent of the population being fully vaccinated against Covid-19 currently to 75 per cent in February. 

In its latest results, covering the six months to 30 September, Wizz reported a similar set of numbers to fellow budget airline Ryanair (RYA): improvements on last year but not a return to pre-pandemic performance yet. The company did make it back to a cash profit position of €164m (£140m), compared with an €81m cash loss last year, however. Like Ryanair, Wizz has decided to expand to secure market share from shuttered competitors. It took delivery of 13 new aircraft in the six-month period, taking its fleet to 144 planes, compared with 132 at the end of the first half in 2020. 

The growth won’t help much in the current financial year, however. Wizz said it would have an operating loss of around €200m in the current quarter, compared with Davy Research’s forecast of a €35m loss. 

Basing an investment case on Romanian vaccination rates is not a great starting point, but we think it is in a good position for the travel rebound next year. Move to buy. 

Last IC View: Hold, 4,811p, 2 Jun 2021