ii view: Wizz Air passenger numbers climb higher

With the pandemic now behind it, this FTSE 250 budget airline's share price has risen sharply in 2023. Buy, sell, or hold?

Passenger number update

ii round-up:

Low-cost European airline Wizz Air Holdings (LSE:WIZZ) today announced it had carried 5.31 million passengers over the month of June. That’s an increase of 22.5% from June last year and comes as pandemic restrictions have disappeared and airlines have ramped-up flights, or capacity.

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Shares in the FTSE 250 airline rose by more than 1% in UK trading having come into this latest news up by almost 50% year-to-date. That’s similar to easyJet (LSE:EZJ) in 2023, while the mid-cap index itself is down by nearly 2%. 

Wizz Air flies to over 190 airports in more than 50 countries, including many destinations across Central Europe. It previously halted flights to Russia, Ukraine and Moldova following Russia’s invasion of Ukraine.  

Wizz Air’s load factor, or the proportion of available seats filled with passengers, came in at 92.2% for the month, up from 86.1% in June last year. 

The airline which competes against rivals like Ryanair announced the addition of ten new routes in and out of Albania. These include new flights from Tirana to Birmingham, Edinburgh, Liverpool in the UK and routes from Prague in the Czech Republic and Krakow in Poland. All will commence in the winter season.

First-quarter results are scheduled for 3 August. 

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 184 Airbus A320 and A321 aircraft, carrying 51 million passengers over its last financial year to the end of March across more than 1,100 different routes. 

For investors, both geopolitical and economic uncertainties cannot be ignored. Tensions between the West and Russia are high, costs for businesses generally remain elevated, while rising interest rates could add more pressure on companies to cut costs by switching from face-to-face to virtual business meetings. The many factors outside of management’s control such as the weather, air traffic control strikes, and the price of oil also warrant consideration.  

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More favourably, consumer appetite to travel following the global pandemic remains high, the youth and fuel efficiency of its aircraft fleet provides Wizz with high environmental credentials, while an expansion of its route network and aircraft numbers continues. 

On balance, and while some caution looks sensible, a consensus analyst estimate of fair value of over £35 per share is likely to keep long-term fans of the airline onboard. 

Positives: 

• Focus on costs
• Positive environmental credentials

Negatives:

• Operations hit by Ukraine conflict
• Many factors outside of management’s control 

The average rating of stock market analysts:

Strong hold