Hungarian airline Wizz Air (WIZZ) is thriving despite higher oil prices and lower fares. It hopes these issues will help weed out weaker rivals with ‘unprofitable capacity.’
The company is guiding for net profit of between €310m and €340m in the year to 31 March 2019, which at the top end would be ahead of the €329m pencilled in by analysts.
Shares in Wizz Air are 4.7% higher this morning to £32.93.
In the year to 31 March, the airline revealed profitability soared 22.1% to €275m amid a backdrop of high economic growth rates across Central and Eastern Europe and ‘ultra-low fares.’
This paints a stark contrast to Wizz Air’s rivals such as Ryanair (RYA), which warned this week that consistently lower fares are one of many headwinds expected to reduce profitability.
PASSENGER NUMBERS HIT RECORD HIGH
Wizz Air says its relentless focus on costs means it benefitted from a 24.7% jump in passengers looking for cheaper flights.
As of 31 March, passenger numbers hit a record high of 29.6m and this is forecast to rise a further 20% to 36m in 2019.
Significant investment in cost efficient aircraft such as Airbus’ A320neo has been a core part of the airline’s strategy as these will deliver better fuel burn efficiency and even lower unit costs.
Flights are more effectively being filled up with the load factor increasing 1.3% to 91.3%.
Davy Research analyst Ross Harvey says Wizz Air is delivering strong profitable growth.
He forecasts between 11% and 24% growth in net income in the next year despite a rising fuel bill.
