Wizz Air Q1 operating loss stretches to 290 million euros, hit by higher costs
Low-cost airline Wizz Air said its first-quarter operating loss jumped to $290 million (€285 million) from $110.8 million (€109 million) the year previous year, as the group was hit by higher costs.
The airline said it expected to make a strong operating profit as revenue and pricing dynamics continued to improve, and said levels of disruption at airports had started to normalize .
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Wizz Air will deepen cuts to its summer schedule, doubling down on efforts to tackle the disruption caused by a staff shortage that has upended the transport industry in Europe.
After announcing a 5% reduction in peak season seats on July 11, Wizz, the region’s third-largest discount carrier, will extend the reductions to around 10%, chief executive Jozsef Varadi said in an interview on Wednesday. .
“We have had real difficulties in terms of staff shortages at airports and air traffic control,” Varadi said. “We decided to reduce the capacity further to create more urgency and more buffer.”
Wizz, Eastern Europe’s leading discounter, had initially been reluctant to cut capacity as much as some rivals because the airports it operates from have generally faced less staff shortages than larger hubs . Even after the harshest cuts, the airline is still increasing summer seating by 30% from 2019, one of the biggest increases in the industry.
Varadi said flight demand remains strong and confirmed that Wizz expects to post “strong fiscal second quarter operating profit through September as revenue and pricing momentum continues to improve.” to improve”.
Varadi said there were no plans to scale back fleet expansion and that Wizz is keen to keep deliveries of new Airbus SE jetliners on schedule in anticipation that a tougher economic climate will push more customers in his direction.
“We’ve seen this many times and we know the cookbook,” he says. “When there’s inflation and pressure on household spending, there’s a significant shift to low-cost carriers and we’ll be ready for that.”
Bernstein analyst Alex Irving said revenue trends at Wizz are strengthening, with occupancy levels exceeding 90% this month. More capacity is also going into the existing network rather than into new markets, which should strengthen unit revenue.
UK-based rival EasyJet Plc, Europe’s second-largest low-cost airline, took a charge of £133million for the June quarter on Tuesday amid travel disruption due to shortages of personnel and capacity limits. Discount leader Ryanair Holdings Plc said on Monday passengers remained cautious about rebooking, clouding its outlook beyond the summer.
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