To fly, planes need thrust and lift to offset gravity and drag. In the six months to September, low-cost airline Wizz Air (WIZZ) required a surge in passenger numbers and ancillary revenues to overcome a 21.1 per cent spike in costs. Looking ahead, this balance could face disruption from aircraft delivery delays.
Keen to maintain its position as Europe’s ‘greenest’ airline – defined as carbon dioxide emissions per passenger kilometre – Wizz is placing a big bet on Airbus’s A321neo model. By maximising seat and passenger numbers on the planes, the airline claims its operations will be increasingly “ultra-efficient” and should help reduce flyers’ carbon footprints by 30 per cent by 2030.
That is commendable, although the roll-out of the A321neo has been less than ultra-efficient. While Wizz’s regulatory announcement made no mention of it, an accompanying presentation showed that management now expects just eight of the planes to be delivered this financial year, rather than 12. In FY2021, 17 deliveries of the A321neo are now forecast, although 31 were mooted in July.
Undaunted, chief executive József Váradi sounded in high spirits as he lifted the lower end of the company’s full-year net profit guidance range from €320m to €335m (£274m to £287m).
Analysts at Berenberg argue the stock “offers the best multi-year outlook in its peer group” and expect diluted earnings of €2.75 a share for the year to March 2020, rising to €3.30 in FY2021.
| WIZZ AIR (WIZZ) | ||||
| ORD PRICE: | 3,789p | MARKET VALUE: | £2.76bn | |
| TOUCH: | 3,777-3,793p | 12-MONTH HIGH: | 3,960p | LOW: 2,667p |
| DIVIDEND YIELD: | nil | PE RATIO: | 7 | |
| NET ASSET VALUE: | 2,157¢ | NET DEBT: | 11% | |
| Half-year to 30 Sep | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 1.37 | 203 | 276 | nil |
| 2019 | 1.67 | 388 | 510 | nil |
| % change | +22 | +91 | +85 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=€1.17 | ||||
