Low-cost European airline Wizz Air (WIZZ) is giving back earlier gains despite reporting a 9.8% increase in first quarter revenue to €364.9 million.

Having earlier been up as much as 4.5% the stock is now down 0.2% at £15.40 as market attention switches back to Brexit-related turbulence.

The company has improved ticket revenue by 3% to €212 million in the the first three months of 2016, while reported net profit stands at a record €50.7 million, a year on year increase of  more than 50%.

Wizz Air says the number of passengers carried rose to 5.8 million and its load factors advanced 0.7 percentage points to 89.5%, which is one of the highest in the industry.

However, the company says the EU referendum led to a notable weakness in euro-priced fares on routes to and from the UK, as a result of a weaker British pound.

To tackle this weakness, Wizz Air has started re-adjusting its network and halving its intended second half growth to the UK by re-deploying this capacity to other non-UK routes.

Davy Research is cautiously optimistic about the company’s outlook, noting its continued ancillary growth as a standout feature in its interim statement.

The broker highlights the 23% pullback in the stock since Brexit and is unlikely to change its full-year forecasts with underlying net income at €251 million.

Wizz Air’s total cash at the end of June 2016 was €827.7 million, of which €707.1 million is classified as free cash.

The airline has reduced its total unit costs by 10% to €3.19 euro cents per ASK and added three A321 aircraft  during the quarter, increasing the fleet to 70 aircraft.

In addition, year-on-year growth of nearly 50% of the Wizz Discount Club membership shows traction in improving stickability with customers.

Issue Date: 20 Jul 2016