European budget carrier Wizz Air swung to a net loss in the October-December 2023 quarter, as geopolitical and supply chain challenges weighed on its financial performance.
Its net loss for the period of €105.4 million ($115 million) compares with a profit of €33.4 million in the year-ago period. Revenue of €1.1 billion was up 17% year on year on a 22% rise in passenger numbers, but its operating loss deepened by 16% to €180 million.
Unit costs fell by 8.9% year on year, driven by lower fuel cost, Wizz says, while unit revenue fell 8%.
Speaking during an earnings call on 25 January, Wizz Air chief executive Jozsef Varadi describes the three months as “tricky”, citing cancellations and capacity reassignments relating to the war in Israel and challenges such as the grounding of A320neo-family aircraft because of issues with their Pratt & Whitney PW1100G engines.
“Significant cost penalties have been hitting the business throughout the year,” Varadi says.
Still, he argues that Wizz’s underlying “cost advantage” against rivals is improving versus pre-Covid levels and will become more apparent in the current quarter.
And despite the challenges, Wizz is guiding for a profit of €350-400 million for the full fiscal year, which ends on 31 March 2024.
That forecast comes amid “positive trading at the start of Q4, reduced capacity in the same period, and OEM compensation for the grounded aircraft”, Wizz says.
In the fiscal year that follows, it expects to operate capacity in the key March-September period that is flat year on year despite the A320neo-family groundings continuing into the period, thanks to “new aircraft deliveries, lease extensions, third-party aircraft and driving higher utilisation”.
Wizz had 13 aircraft on ground (AOG) at 31 December 2023 relating to the PW1100G issue and expects that to rise to 40 by 31 March. It confirms that engines are requiring around 300 days in the shop for each inspection and fix.
It had 195 aircraft in its fleet on 31 December.
Wizz says it is restarting some flights into Israel from the beginning of March. It declines to share specific figures on the financial impact of Israel and Jordan flights being suspended since October.
