ii view: Wizz Air shares volatile despite passenger recovery

Shares for this European airline are down by 40% in 2022. We assess prospects. 

Monthly passenger number update

ii round-up:

Low-cost European airline Wizz Air (LSE:WIZZ) today announced that it had carried 4.12 million passengers in the month of May.

That’s almost 400% up from the pandemic hindered total of 0.84 million carried in May 2021, and up from last month’s 3.62 million passengers flown.

Wizz Air shares had a steady start to the session, fell 3% in the run up to lunchtime Monday, then staged a recovery. However, they have still fallen by around 40% in 2022. Shares for low-cost rival easyJet (LSE:EZJ) are down around 9% this year, while international carrier International Consolidated Airlines SA (LSE:IAG) has fallen by around 10%. 

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Wizz Air flies to over 150 airports in over 40 countries, including many destinations across Central Europe. It recently halted flights to Russia, Ukraine and Moldova following Russia’s invasion of Ukraine.  

In mid-April, Wizz Air announced that it expects to report a net loss of between €652 million and €632 million for the financial year to the end of March 2022. 

In May, Wizz announced both a potential expansion of operations into Saudi Arabia and an intention to establish a new airline subsidiary in Malta. 

Wizz Air’s load factor came in at 84.2% for May, up from 66.1% in May 2021. It also reiterated that it continues to operate among the lowest CO2 emissions per passenger/km across all competitor airlines. 

Full-year results are scheduled for 8 June. 

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 154 Airbus A320 and A321 aircraft. It is targeting a fleet of 500 aircraft by the end of the decade. 

For investors, an ongoing conflict in Ukraine and the suspension of operations to a series of airports across Ukraine, Russia and Moldova are a concern. The worry that the war could spread further across the region cannot be dismissed, while the West’s desire to avoid using Russian oil has helped push fuel prices comfortably higher year-to-date. 

On the upside, a recovery in passenger numbers from the depths of the pandemic is being seen. The young age and fuel efficiency of its aircraft fleet also provide Wizz with high environmental credentials, while some hedging of the fuel price is being undertaken between April and August this year. In all, and when balancing the recovery in passenger numbers against heightened geopolitical tensions in Eastern European, investors may wish to continue monitoring what is a volatile situation.

Positives: 

• Bearing down on costs
• Positive environmental credentials

Negatives:

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

The average rating of stock market analysts:

Hold