Wizz Air Profit Falls 67% on Fuel

Wizz Air (LON: WIZZ), the ultra-low-cost airline focused on central and eastern Europe, reported a 66.6% fall in half-year net profit to €108.1m. Operating profit fell 39.8% to €264.5m, while revenue rose 13.8% to €3,801.8m in the six months to 30 September.

The results came at 7am, before the open. In a delayed quote at 8.45am the shares were 1137p, down 0.9% from yesterday’s close of 1147p, after dipping to 1097p earlier. That leaves them about 21% below February’s closing high of 1447p.

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The fall is largely a first-quarter story. Fuel costs rose 33.7% to €1,241.4m, and fuel cost per seat-kilometre flown rose 14.5%. In the first quarter, revenue per seat-kilometre flown (RASK) fell 8.1% on the Middle East conflict.

The cost base outside fuel held up. Unit costs excluding fuel were flat at 3.07 euro cents, against 3.08 a year earlier.

Six months to 30 September (€m)	H1 F27	H1 F26	Change
Revenue	3,801.8	3,342.1	+13.8%
Operating profit	264.5	439.2	-39.8%
Net profit	108.1	323.5	-66.6%
Fuel costs	1,241.4	928.3	+33.7%

The second quarter was better: operating profit rose 8.8% to €447.8m and RASK edged up 0.5%. Chief executive József Váradi pointed to fuel protection.

Fuel remains the main headwind, and our hedging, covering 82 per cent of second-half requirements, is doing what it was designed to do.

József Váradi, Chief Executive Officer, Wizz Air

The hedges are zero-cost collars, which fix a price range, with a ceiling of $860 a tonne. October RASK was up about 5% year on year.

Guidance is mixed. Wizz expects third-quarter RASK up by a low single-digit percentage, but load factor, the share of seats filled, down by a similar amount. Full-year unit costs excluding fuel are guided up mid single digits. Net debt is 4.1 times EBITDA, against 3.7 times a year earlier.

Management presents to analysts at 9.30am today, where the questions are likely to be whether October’s fare recovery lasts and whether costs stay contained.