ii view: Wizz Air share price follows passenger numbers higher

This Central European airline has underperformed rivals such as easyJet in the wake of the Ukraine conflict. We assess prospects. 

Passenger number update

ii round-up:

Low-cost European airline Wizz Air Holdings (LSE:WIZZ) today announced it carried 3.68 million passengers during November. 

That’s up almost 70% from November 2021 as Covid restrictions eased and airlines have ramped-up their flights or capacity. Wizz, which takes pride in its environmental credentials, also announced an agreement with Austria’s oil and gas company OMV for the supply of sustainable aviation fuel between 2023 and 2030.

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Wizz Air shares rose by more than 1% in UK trading having come into this latest update down by just over two-fifths year-to-date. Fellow FTSE 250 company easyJet (LSE:EZJ) is down by almost a third during 2022 while the mid-cap index itself has fallen by close to a fifth.  

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

The airline’s load factor or the proportion of available seats filled with passengers, came in at 88.1% for the month, up from 76.1% in November last year. 

The Budapest headquartered company also announced a further expansion of its Larnaca base in Cyprus, doubling its total aircraft to four and growing flight frequencies to airports including Luton. 

Third-quarter results are scheduled for 26 January. 

ii view:

Wizz Air made its maiden flight in May 2004, flying from Katowice in Poland to Luton. Today it operates a fleet of 174 Airbus A320 and A321 aircraft, carrying over 27 million passengers during its last full financial year to the end of March. 

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For investors, both geopolitical and economic factors need to be remembered, and potential for the war in Ukraine to spill over into other countries persists. A cocktail of high inflation, rising interest rates and a cost-of-living crisis for consumers could also see travel plans cancelled, with businesses reverting to virtual meetings as in the pandemic to save costs. 

More favourably, a return to travel from the depths of the pandemic and the start of the war in Ukraine have been seen. An expansion of its network and aircraft numbers is ongoing, while the young age and fuel efficiency of its aircraft fleet provide it with high environmental credentials. 

There are still clear risks for the airline sector given ongoing geopolitical and economic uncertainty, but some momentum has built in recent weeks and investors see long-term value. Much will depend on how a recession develops. 

Positives: 

• Strong focus on costs
• Positive environmental credentials

Negatives:

• Operations hit by Ukraine conflict
• Uncertain economic and geopolitical outlook

The average rating of stock market analysts:

Strong hold