Wizz Air warns of further flight cancellations, but budget airline still forecasts Q2 profit
- Wizz Air expects to cancel another 5% of its scheduled flight schedule
- In the first quarter, the company reported a net loss of £381 million
- The airline is struggling with a major staff shortage this year
Wizz Air expects to make a profit in the current quarter, despite warning that it will cut even more flights in the summer.
The budget carrier plans to halt another 5 per cent of its scheduled flight schedule during the peak holiday period to try to avoid further cancellations amid major disruption at airports across the UK.
This is largely due to staff shortages occurring at the same time as the gradual easing of restrictions on international travel, leading to a recovery in demand for overseas travel.
Losses: Wizz Air today reported a net loss of €450m (£381m) in the first quarter of its financial year, covering the three months ended 30 June.
Countless travelers have seen their flights canceled or faced long check-in delays, hampering the airline’s recovery from the devastation caused by the coronavirus pandemic.
Wizz Air today said it made a net loss of €450m (£381m) in the first quarter of its financial year covering the three months ended 30 June.
The Hungarian firm blamed the losses on cheap ticket fares and the strengthening of the US dollar, which resulted in 136 million euros in foreign exchange losses.
It also attributed the loss to weak fleet utilisation, which was around 10 per cent below historical levels, while rising oil prices meant the group’s fuel costs were much higher.
After today’s bidding update, Wizz Air Holdings shares fell 3.2 percent to 1,799.5 pence late on Monday morning, meaning their value has fallen more than 61 percent in the past six months.
The company said: “To avoid cancellations and provide our customers with more punctual service, we have further improved the flexibility and resiliency of our network, including adjusting schedules when we have seen more frequent issues.
Outage: Countless travelers saw their flights canceled or experienced long check-in delays, hampering the airline’s recovery
“Overall, in the peak summer period, we expect usage to fall by a further 5 per cent compared to the plan set out in the full-year results to reduce the impact of ongoing external disruptions.”
However, the company predicts a return to “substantial operating profit” this quarter thanks to rising airfares and load factor – a measure of how many seats are being used.
Amid growing demand for flights and shrinking industry capacity, Wizz Air said its load factor exceeded 90 percent as of this month and forecast that non-fuel costs per available seat kilometer would return to historical levels.
AJ Bell chief investment officer Russ Mold said: “Wizz Air, ever the optimist, sees a much better performance in the second quarter, forecasting higher ticket prices, more people traveling and lower non-fuel costs.
“However, like many other airlines, Wizz Air is reducing its capacity this summer to ease pressure on airports.
“Wizz Air can do little other than enter into a price war to help fill its planes to maximum capacity. This seems unlikely given the upward trend in airfares across the sector.”
Heathrow separately warned on Monday that it would ask airlines to cancel more flights this summer unless it believes that previous schedule cuts are enough to reduce disruptions.
The Government and the Civil Aviation Authority last month ordered carriers to ensure their schedules were “deliverable” after the sector failed to cope with demand during the Platinum Jubilee school holidays.
Heathrow admitted that the level of service was “unacceptable”, with passengers suffering from long check-in and security queues, as well as problems with baggage handling in addition to flight delays and cancellations.