ii view: Wizz Air carried even more passengers last month

Passenger traffic update

ii round-up:

Eastern Europe focused airline Wizz Air Holdings (LSE:WIZZ) today announced that it had carried 4.84 million passengers in November. That’s an increase of 1.7% from 4.76 million in November last year. The airline’s load factor (the percentage of available seating capacity filled with passengers) rose to 91.5% from 88.4% a year ago. 

Shares in the FTSE 250 company climbed 0.5% in UK trading having come into this latest news down around 43% year-to-date. That’s similar to former national airline Air France-KLM (EURONEXT:AF). easyJet (LSE:EZJ) has risen 7% in 2024, broadly matching the FTSE 250 index itself. 

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Wizz flies to over 190 airports in more than 50 countries. The Hungary headquartered company recently celebrated carrying its 100 millionth passenger through its UK network.  

The airline pointed to a ‘positive’ booking profile seen in November and into December. In early November, Wizz reported first-half revenue to late September up 0.5% to 3.06 billion, although adjusted profit (EBITDA) retreated 6% to €826 million, hindered by ongoing Pratt & Whitney engine problems and grounded aircraft.

Wizz, which prides itself on being one of Europe’s most sustainable airlines, reported a 2.2% fall CO2 emissions for the month of November compared to a year ago. 

However, emissions for the 12 months to November had risen 2.4%. Wizz has been forced to use older less efficient aircraft under ongoing problems for engine provider Pratt & Whitney. 

A third-quarter trading update is scheduled for 30 January. 

ii view:

Wizz Air made its maiden flight in May 2004, flying from Katowice in Poland to London Luton. Today it operates a fleet of just over 220 Airbus SE (EURONEXT:AIR) aircraft, flying more than 750 routes. Employing around 8,000 people, Wizz flew a record 62 million passengers during its last financial year to late March, up from 51 million the previous year. Management continues to target powering a tenth of its flights with sustainable aviation fuel by 2030. Competitors include easyJet, Ryanair, Jet2 Ordinary Shares (LSE:JET2) and flights operated by travel company TUI AG (XETRA:TUI1). 

For investors, heightened geopolitical tensions and including potential for a wider conflict with Russia given its invasion of Ukraine, cannot be ignored. Challenges for industry suppliers such as Pratt & Whitney and Boeing Co (NYSE:BA) have created operational difficulties for airlines. Group net debt of €4.76 billion in late September compares to a current stock market value of £1.3 billion, while the many factors outside of management’s control such as the weather, air traffic control strikes, and the price of oil all deserve consideration. 

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More favourably, consumer demand for travel remains robust, with year-over-year passenger numbers rising. A high focus on environmental credentials persists. Compensation continues to be received from Pratt & Whitney, with a new scheme negotiated for 2025, while actions to hedge against volatile fuel and currencies remain active.  

For now, robust passenger demand and a focus on environmental credentials offer positives. However, raised geopolitical tensions, high group net debt and a struggle to bring non-fuel costs under control is keeping a lid on any share price recovery from what are near record lows.   

Positives: 

• Focus on costs
• Positive environmental credentials

Negatives:

• Operations hit by challenges at engine maker Pratt & Witney
• Many factors outside of management’s control 

The average rating of stock market analysts:

Hold