Wizz Air cuts capacity again, posts €285m Q1 loss amid 'challenging' backdrop

Low-cost carrier Wizz Air has cut capacity over its peak summer season, lowering available seats by a further 5% and deepening cuts already announced in June.

Wizz Air, which reported an operating loss of €285.0m for the first quarter, stated it had continued to ramp up operation against the "challenging" macro and operational backdrop experienced throughout the quarter.

The FTSE 250-listed group also noted that the strength of the US dollar at the end of the quarter compared to the start had driven an unrealised FX loss of €136.0m. However, the company added that it expects this to reverse if the EUR regains strength relative to the USD during the next months and quarters.

Wizz Air said available seat kilometres were up 30% when compared to the 2020 trading year, growing sequentially month-on-month as most restrictions from Covid-19 were discontinued.

Revenue per available seat kilometre was down 10% versus 2020, with net fares in line with the pre-Covid period, but a load factor of 85%, down nine percentage points, reflecting efforts made by the group to pass through higher input cost in its fares. Ancillary revenues for the quarter were up 14% over 2020, while ticket fares were down 12%.

Looking ahead, Wizz Air anticipates "a material operational profit" in the second quarter of the trading year as revenue and pricing momentum was expected to continue to improve.

AJ Bell's Danni Hewson said: "Despite its best efforts to aggressively grow its position in the low-cost airline market, Wizz Air's latest trading update doesn't paint a picture of a company flying high. While aircraft capacity is up compared with the period just before the pandemic, the percentage of bums on available seats has fallen.

"Wizz Air's ticket fares were down in the quarter and there has been a big jump in fuel costs. All in all, the airline was loss-making in its first quarter, meaning the considerable effort put into making it a winner in the industry hasn’t actually generated any extra money in its pocket. Ever the optimist, Wizz Air sees a much better second quarter, predicting that ticket prices will be higher, more people will be travelling, and non-fuel costs will ease back. However, like many other airlines, Wizz Air is reducing its capacity this summer to ease pressures on airports. There isn't much else that Wizz Air can do beyond entering a price war to help fill its planes to maximum capacity. That seems unlikely given the trend across the sector is for air fares to go up."

Reporting by Iain Gilbert at Sharecast.com