REG - Wizz Air Holdings - Half-year Report
02/11/2022 07:17
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RNS Number : 9959E Wizz Air Holdings PLC 02 November 2022
WIZZ AIR HOLDINGS PLC - RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2022
STRONG REVENUE AND CAPACITY GROWTH IN H1
LSE: WIZZ
Geneva, 2 November 2022: Wizz Air Holdings Plc ("Wizz Air", "the Company" or
"the Group"), the fastest-growing European low-cost airline, today issues
unaudited results for the six months to 30 September 2022 ("first half", "H1"
or "H1 F23").
This interim financial report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this report
should be read in conjunction with the 2022 Annual Report and Accounts, and
any public announcements made by Wizz Air Holdings Plc during the interim
reporting period.
Financial results
Six months to 30 September 2022 2021 Change
Passengers carried (million) 26.5 12.5 112.0%
Revenue (€ million) 2,193.8 880.4 149.2%
EBITDA (€ million) 217.8 164.3 32.5%
EBITDA margin (%) 9.9 18.7 -8.8ppt
Operating loss for the period (€ million) (63.8) (51.9) 22.9%
Unrealised FX loss (285.2) (16.5) 1,628.5%
Reported loss for the period (€ million) (384.3) (120.9) 217.9%
RASK (€ cent) 4.48 3.38 32.4%
Ex-fuel CASK (€ cent) 2.62 2.75 -4.7%
Total cash (€ million)* 1,629.9 1,378.8 18.2%
Load factor (%) 86.9 75.3 11.5ppt
Period-end fleet size 168 144 16.7%
Period-end seat count (thousand) 30,485 16,588 83.8%
* Comparative number is total cash balance as at 31 March 2022. Total
cash comprises cash and cash equivalents, cash deposits, and restricted cash.
József Váradi, Wizz Air Chief Executive, commented on the results:
"Wizz Air delivered strong results in the second quarter of the fiscal year,
after a difficult first quarter operationally. Revenue in the first half of
the fiscal year was materially higher than it was in the same period last
year, and up 31 per cent versus the same period pre-COVID-19. For the second
quarter, revenue was up 41 per cent versus the same period pre-COVID-19.
Revenue per available seat kilometre improved from -10 per cent during the
first quarter to +11 per cent during the second quarter, ahead of guidance,
all measured versus the pre-COVID-19 quarters. This was driven by load factors
recovering and improved yields, no longer held back by COVID-19 or the war in
Ukraine. Wizz Air's focus continues to be the combined approach of delivering
growth while pricing for cost inflation.
EBITDA for the second quarter turned strongly positive to €374 million,
bringing the first half to total EBITDA of €218 million (up 32.5 per cent
half year on half year), despite the headwinds we continued to encounter on
supply chain disruptions and high commodity prices.
This performance confirms that our network investments and sustained capacity
growth drive strong top-line growth.
Our liquidity position, however, remained unaffected by foreign exchange moves
and further increased from June as we closed the period with €1,630 million
in total cash."
Commenting on business developments, Mr Váradi added:
"Much has been done within the aviation industry to address the significant
issues that were a feature early in the 2022 calendar year. As a consequence,
our operational performance has recently normalised and we are now back in
line with our historically low levels of cancellations and flight disruptions.
This is important as it helps us to return to the customer service excellence
the brand is built on and proud of whilst having a consequential positive
impact on the financial performance of the business. We are proud that we set
a new Company record by operating 859 flights in a single day on 5 September
2022 and reported record traffic in the period June to August, carrying a
total of 12.9 million passengers.
Beyond normalising the operations, during the quarter we reached important
milestones. We have exercised existing purchase rights for 75 A321neo
aircraft, locking in highly competitive aircraft prices, negotiated prior to
the current inflationary environment. Wizz Air benefits from having fixed
interest rate structures financing 94 per cent of its existing fleet. We have
agreed the financing terms of 31 aircraft since the summer. Our aircraft
finance tender processes continue to be oversubscribed, with a 15 per cent
increase in financing participants compared to last year. We are successfully
adding EUR-denominated lease contracts with 61 per cent of new contracts now
EUR-financed.
As a consequence, Wizz Air's fleet programme continues to provide it with
significant and structurally embedded competitive advantage both in terms of
operating and fuel efficiency, as well as financing costs.
Within the quarter we have taken expansion initiatives in key markets that
will further drive our leading CEE market share. Following the signing of an
MoU with the Ministry of Investment in the Kingdom of Saudi Arabia, Wizz Air
has started operating the first of 20 new routes to Riyadh, Jeddah and Dammam.
Also, with the most recent expansion across Italy, Wizz Air is now the third
largest airline there in terms of capacity offered on sale in the
December-ending quarter."
On current trading and the outlook for the full year, Mr Váradi said:
"As we move closer to the winter 22/23 season, we are gearing up to operate
c.35 per cent higher capacity in the second half versus 2019 (normalized for
COVID-19 impact in Feb-March 2020).
On top of this additional capacity, our trading for the period comes with
average fares (combined ticket and ancillaries) above 2019 levels, placing our
RASK expectations to mid-single digit gains in second half. Our
diversification strategy into the Gulf will also see more inbound and outbound
routes to the Middle East and we are expecting moderate counter-seasonal
contribution in terms of traffic and revenues from these destinations.
While the macroeconomic backdrop remains challenging and uncertainty for
consumers has heightened, we have put in place measures to mitigate the impact
on our costs. We expect to continue to see the seasonal effect of lower
utilisation on our ex-fuel CASK during the second half of the year, but are on
track to return to pre-COVID-19 utilisation levels in spring 2023. As we have
announced, as of April 2023, we will also be levelling the playing field on
fuel costs as the Company returns to the systematic hedging of jet fuel and
ETS credits. In the meantime, we expect continued cost management to bring
ex-fuel CASK in line with a single digit increase when comparing H2 F23 to H2
F20. Whilst there remains some uncertainty during the winter period in
relation to macroeconomic and input costs, the combination of a return to
proven levels of both ex-fuel and fuel CASK in April 2023, and the continued
diversification and growth of our network supported by fleet expansion plans
leaves the Company well positioned to drive profitable growth in the future."
Revenue and cost highlights for H1
Total revenue amounted to €2,193.8 million, an increase of 149.2 per cent
versus H1 F22:
· Passenger ticket revenues increased by 185.7 per cent to
€1,182.1 million.
· Ancillary revenues increased by 116.8 per cent to €1,011.7
million.
· Total unit revenue increased by 32.4 per cent to 4.48 Euro cents
per available seat kilometre (ASK).
· Ticket revenue per passenger increased by 34.7 per cent to
€44.6 and was also up by 3.1 per cent versus H1 F20.
· Ancillary revenue per passenger increased by 2.3 per cent to
€38.2 and was also up by 18.3 per cent versus H1 F20.
Total operating costs increased 142.2 per cent to €2,257.6 million versus H1
F22:
· Total unit costs (including net financing expense) increased by
26.5 per cent to 4.73 Euro cents per ASK.
· Ex-fuel unit costs decreased by 4.7 per cent to 2.62 Euro cents
per ASK.
· Fuel unit costs increased by 113.6 per cent to 2.11 Euro cents
per ASK.
Total cash increased by 18.2 per cent to €1,629.9 million from €1,378.8
million.
The unrealised non-cash FX charge in H1 amounted to €285.2 million (H1 F22:
€16.5 million). This is due to the continuously strengthening USD against
the EUR, which drove a revaluation of USD liabilities on the balance sheet.
Network additions
Base rationalisation
· Doncaster, United Kingdom: one aircraft
· Cardiff, United Kingdom: one aircraft (made seasonal)
· Sarajevo, Bosnia and Herzegovina: two aircraft
· Palermo, Italy: one aircraft
· Chisinau, Moldova: three aircraft (temporary suspension)
New bases
· Suceava, Romania: one aircraft
Base aircraft additions
· Rome, Italy: two additional aircraft, taking the base to seven
aircraft
· Milan, Italy: one additional aircraft, taking the base to six
aircraft
· Vienna, Austria: one additional aircraft, taking the base to five
aircraft
· Bucharest, Romania: five additional aircraft, taking the base to
seventeen aircraft
· Cluj, Romania: one additional aircraft, taking the base to seven
aircraft
· Iasi, Romania: one additional aircraft, taking the base to four
aircraft
· Sofia, Bulgaria: one additional aircraft, taking the base to
seven aircraft
· Abu Dhabi, UAE: four additional aircraft, taking the base to
eight aircraft
With the announcement of Blue Air rescue fares and allocating an additional
five aircraft to Bucharest, more capacity was also added to Bacau,
Cluj-Napoca, Iasi and Sibiu. Temporarily, we are switching to serving Chisinau
base in Moldova with in-bound flights due to heightened risk of airspace
closure. Our major expansion in Italy is adding 750,000 seats on sale from
Rome and Milan and twelve new routes launching from October.
We set a new Company record by operating 859 flights in a single day on 5
September 2022 and reported record traffic in the period June to August,
carrying 12.9 million passengers.
Fleet update
· In the first six months of the fiscal year Wizz Air took delivery
of 21 new A321neo aircraft, while redelivering six A320ceo aircraft, ending
the second quarter with a total fleet of 168 aircraft: 53 x A320ceo, 41 x
A321ceo, 6 x A320neo and 68 x A321neo.
· Delivered aircraft were financed through twelve sale and
leaseback and nine JOLCO transactions.
· The average age of the fleet currently stands at 4.6 years, one
of the youngest fleets of any major European airline, while the average number
of seats per aircraft has climbed to 216 as at September 2022.
· The share of new "neo" technology aircraft within Wizz Air's
fleet increased to 44 per cent by the end of H1 F23, and is planned to surpass
50per cent by the end of F23.
· For the remainder of F23 we expect 14 new A321neo aircraft
deliveries, while nine A320ceo aircraft will reach the end of their lease and
will exit the fleet.
· In line with Wizz Air's ambition to become a 500-aircraft airline
by the end of the decade, the Group has exercised its purchase rights in
relation to 75 A321neo aircraft delivered in calendar years 2028-29.
· As at 30 September 2022, Wizz Air's delivery backlog comprises a
firm order for 13 x A320neo, 319 x A321neo and 47 x A321XLR aircraft, plus the
additional order for 15 x A321neo, a total of 394 aircraft.
Financial update
· In light of the current volatile macroeconomic conditions, we
implemented the following remedial measures during the period:
o signed more EUR currency leases during the period covering 61 per cent of
new contracts;
o included caps to rent formulas limiting impact of rising interest rates;
and
o advanced aircraft with pre-delivery payments (PDP) in EUR currency into
next year's delivery stream.
· Jet fuel hedging using zero-cost collars has been supplemented
with call options for 8 per cent of F23 consumption during the winter 2022/23
season at $1,201/mT. Overall, F23 coverage is at 54 per cent of consumption
with F24 at 28 per cent.
Sustainability update
Wizz Air's CO(2) emissions amounted to 57.1 grams per passenger/km for the
rolling twelve months to 30 September 2022. For the month of September 2022,
CO(2) emissions were 55.3 grams per passenger/km (12.7 per cent lower
compared to same month last year).
We continue to be focused on delivering value for all stakeholders and to
further our environmental and social agenda. The most material sustainability
developments during the first six months of F23 were:
Month Project Description
April 2022 Sustainable Procurement Policy The Company implemented its Sustainable Procurement Policy in April 2022 to
increase its oversight regarding indirect emissions in the supply chain.
June 2022 Annual Sustainability Report with TCFD As part of the 2022 Annual Report and Accounts, Wizz Air released its Annual
Sustainability Report for F22, including its TCFD disclosure with an enhanced
climate risk analysis, and reported the Company's greenhouse gas emissions for
Scope 1, 2 and 3 for the first time, in accordance with the Greenhouse Gas
Protocol.
June 2022 "Most Sustainable Low-Cost Airline" Wizz Air was recognised as the "Most Sustainable Low-Cost Airline" within the
World Finance Sustainability Awards 2022, announced in this year's summer
Award issue of the World Finance magazine.
June 2022 Green demonstration flight with SAF On 28 June, Wizz Air operated its first green demonstration flight between
Bucharest and Lyon on the occasion of the European Commission's "Connecting
Europe Days 2022". During the demonstration, Wizz Air took 4.5 tonnes of a SAF
fuel blend, consisting of 30 per cent pure SAF and 70 per cent jet A1 fuel.
This helped Wizz Air achieve the lowest emissions per passenger kilometre out
of the airlines taking part in this sustainability effort.
July 2022 Target True Zero coalition Wizz Air has joined the World Economic Forum's Target True Zero (TTZ)
coalition. The coalition published a report on 18 July on "Unlocking
Sustainable Battery and Hydrogen Powered Flight".
August 2022 New policies and updates New Equal Opportunities and Fair Treatment Policy, Working Hours Compliance
Disclosure and Policy of Good Conduct.
August 2022 Carbon Disclosure Project (CDP) Wizz Air submitted its second voluntary disclosure to CDP.
September 2022 Change in Sustainability and Culture Committee In connection with the creation of the Safety, Security and Operational
Compliance Committee, Charlotte Pedersen has stepped down from the
Sustainability and Culture Committee as a result of becoming Chair of the
Safety, Security and Operational Compliance Committee. At the same time,
Charlotte Andsager has stepped down from the Remuneration Committee and has
become the new Chair of the Sustainability and Culture Committee.
September 2022 Management gender diversity Our management team female diversity increased to 36 per cent (target is 40
per cent by F26).
September 2022 Alliance for Zero-Emission Aviation and Renewable and Low-Carbon Fuels Value Wizz Air has joined the Alliance for Zero-Emission Aviation (AZEA), a
Chain Industrial Alliance voluntary initiative launched by the European Commission to pave the way for
next-generation sustainable aircraft. The Company also joined the Renewable
and Low-Carbon Fuels Value Chain Industrial Alliance, a new initiative that
focuses on boosting production and supply of renewable and low-carbon fuels in
the aviation and waterborne sectors.
Other developments previously announced during the period
· The Board has decided to create the new role of Deputy Chair. The
Deputy Chair will deputise for the Chairman if the Chairman is not present at
the Board meetings. Stephen Johnson has been appointed to the role due to his
industry experience, as well as his long association with the Company.
· The Board has established a Safety, Security and Operational
Compliance Committee, chaired by Charlotte Pedersen, to assist the Board with
oversight of the Group's policies, practices and performance in relation to
safety, security and operational compliance management.
· Wizz Air successfully repatriated one of its aircraft that was
based in Ukraine. The remaining three aircraft are in sound technical shape
and efforts to return these to service are underway.
· Effective from 1 October 2022, Ian Malin joined the Company to
take on the Group Chief Financial Officer position, based in Budapest and
reporting to the Chief Executive Officer.
About Wizz Air
Wizz Air, the fastest-growing European ultra-low-cost airline, and one of the
most sustainable, operates a fleet of 172 Airbus A320 and A321 aircraft at
the date of this press release. A team of dedicated aviation professionals
delivers superior service and very low fares, making Wizz Air the preferred
choice of 27.1 million passengers in the financial year that ended on 31 March
2022. Wizz Air is listed on the London Stock Exchange under the ticker WIZZ.
The Company was recently named one of the world's top ten safest airlines
by airlineratings.com (http://airlineratings.com/) , the world's only safety
and product rating agency, and 2020 Airline of the Year by ATW, the most
coveted honour an airline can receive, recognising individuals and
organisations that have distinguished themselves through outstanding
performance, innovation and superior service, and was also rated the most
sustainable airline in Europe by Sustainalytics in January 2022.
For more information:
Investors: Zlatko Custovic, Wizz Air +36 1 777 9407
Media: Zsuzsa Trubek, Wizz Air +36 70 652 4115
Edward Bridges/Jonathan Neilan, FTI Consulting LLP +44 20 3727 1017
H1 financial review
In the first half of the financial year, Wizz Air carried 26.5 million
passengers, a 112.0 per cent increase compared to the same period in the
previous year, and generated revenues of €2,193.8 million, 149.2 per cent
higher than last period. These rates compare to capacity increase measured in
terms of ASKs of 88.2 per cent and 83.8 per cent more seats. The load factor
increased from 75.3 per cent to 86.9 per cent.
The loss for the first half was €384.3 million, compared to a loss of
€120.9 million in the same period of F22.
Summary condensed consolidated interim statement of comprehensive income
(unaudited)
For the six months ended 30 September
Six months ended Six months Change
30 Sep 2022 ended
€ million 30 Sep 2021
€ million
Passenger ticket revenue 1,182.1 413.8 185.7%
Ancillary revenue 1,011.7 466.6 116.8%
Total revenue 2,193.8 880.4 149.2%
Staff costs (180.3) (97.2) 85.5%
Fuel costs (including exceptional income) (1,032.7) (256.9) 302.0%
Distribution and marketing (46.2) (21.2) 117.9%
Maintenance, materials and repairs (115.5) (58.5) 97.4%
Airport, handling and en-route charges (503.5) (254.4) 97.9%
Depreciation and amortisation (281.6) (216.2) 30.2%
Net other expense (97.9) (27.8) 252.2%
Total operating expense (2,257.6) (932.3) 142.2%
Operating loss (63.8) (51.9) 22.9%
Comprising:
Operating loss excluding exceptional income (63.8) (56.2)
Exceptional income - 4.3
Financial income 3.1 1.8 72.2%
Financial expenses (59.8) (42.7) 40.0%
Net foreign exchange loss (269.2) (26.8) 904.5%
Net financing expense (325.9) (67.7) 381.4%
Loss before income tax (389.7) (119.6) 225.8%
Income tax credit/(expense) 5.4 (1.3) (515.4)%
Loss for the period (384.3) (120.9) 217.9%
Loss for the period attributable to:
Non-controlling interest (9.5) (4.6)
Owners of Wizz Air Holdings Plc (374.8) (116.3)
Underlying loss for the period* (384.3) (125.2) 206.9%
Underlying loss for the period attributable to:
Non-controlling interest (9.5) (4.6)
Owners of Wizz Air Holdings Plc (374.8) (120.6)
* Underlying loss excludes exceptional items, being the impact of hedge
gains classified as discontinued resulting from the impact of COVID-19.
Revenue
Passenger ticket revenue increased by 185.7 per cent to €1,182.1 million and
ancillary revenue (or "non-ticket" revenue) increased by 116.8 per cent to
€1,011.7 million. Total revenue per ASK (RASK) increased by 32.4 per cent to
4.48 Euro cents.
Average revenue per passenger was €82.9 during H1 F23, an increase of 17.6
per cent versus H1 F22. Average ticket revenue per passenger increased from
€33.1 in H1 F22 to €44.6 in H1 F23, €11.5 or 34.7 per cent higher than
last year, while average ancillary revenue per passenger increased from
€37.4 in H1 F22 to €38.2 in H1 F23, an increase of €0.8 or 2.3 per cent.
The increase in passenger ticket revenue was driven by the improvement in the
passenger demand environment which was strongly impacted by the lifting of
travel restrictions due to COVID-19, while the increase in ancillary revenue
per passenger was driven by our core and flexibility products.
Operating expenses
Operating expenses for the first half increased by 142.2 per cent to
€2,257.6 million from €932.3 million in H1 F22, driven in particular by
fuel price increase, capacity ramp-up and the resulting higher staff, airport,
handling and en-route charges. Total cost per ASK (CASK) including impact of
hedges increased by 26.5 per cent to 4.73 Euro cents in H1 F23 from 3.74 Euro
cents in H1 F22. CASK excluding fuel expenses decreased by 4.7 per cent to
2.62 Euro cents in H1 F23 compared to 2.75 Euro cents in H1 F22.
Staff costs increased by 85.5 per cent to €180.3 million in H1 F23, up from
€97.2 million in H1 F22, reflecting the increase in capacity as well as the
accompanying hiring due to the capacity ramp-up.
Fuel expenses (including exceptional items) increased by 302.0 per cent to
€1,032.7 million in H1 F23, from €256.9 million in the same period of F22.
The increase was driven primarily by the increasing fuel prices; the average
fuel price (including hedging impact and into-plane premium) paid by Wizz Air
in the first half was US$1,279.4 per tonne, an increase of 95.0 per cent from
US$656.0 in the same period in F22. The unfavourable EUR/USD rate also had a
big impact on fuel cost; the FX rate was 1.03 in the first half of F23, a
decrease of 0.15 from the same period in F22. Fuel consumption rose 86.5 per
cent to 760,851 tonnes in H1 F23 from 408,020 tonnes a year earlier.
Distribution and marketing costs increased by 117.9 per cent to €46.2
million from €21.2 million in the first half of F22, in line with the
increase in capacity and marketing activity due to new base openings.
Maintenance, materials and repair costs increased by 97.4 per cent to €115.5
million in H1 F23 from €58.5 million in H1 F22, due to increased utilisation
of the fleet and greater number of maintenance events.
Airport, handling and en-route charges increased to €503.5 million in the
first half of F23 versus €254.4 million in the same period of F22. The
increase was primarily due to the increase in traffic.
Depreciation and amortisation charges were 30.2 per cent higher at €281.6
million in the first half, up from €216.2 million in the same period in F22.
The increase is related to depreciation on the growing fleet and the increased
flight cycles flown.
Net other expense amounted to €97.9 million in H1 F23, compared to €27.8
million in the same period in F22. The variance was primarily driven by the
significant increase of flight disruption and compensation costs due to
increased delays and cancellations (H1 F23: €89.6 million cost; H1 F22:
€17.5 million cost), partially offset by an increase in engine and aircraft
sale and leaseback gains (H1 F23: €41.8 million gain; H1 F22: €16.1
million gain).
Financial income amounted to €3.1 million in the first half compared to
€1.8 million in the same period in F22, driven by higher interest rates on
deposits.
Financial expenses amounted to €59.8 million in the first half compared to
€42.7 million in the same period in F22. Financial expenses predominantly
arise from interest charges related to lease liabilities under IFRS 16, which
increased because of the growing fleet.
Net foreign exchange loss was €269.2 million in the first half compared to a
gain of €26.8 million in the same period in F22. The significant net foreign
exchange loss accounted for in the period is mainly caused by the foreign
exchange translation of the net unhedged USD lease liability position.
Taxation
The Group recorded an income tax credit of €5.4 million in the period
compared to an income tax expense of €1.3 million in the same period in F22.
The tax credit is mainly attributable to an increase in deferred tax assets
due to the foreign exchange translation effect on IFRS 16 lease liabilities
and a higher tax rate in the UK. This credit more than offset local business
tax and innovation tax paid in Hungary.
Second quarter performance
In the three months to 30 September 2022 ("Q2" or "the second quarter"), Wizz
Air carried 14.3 million passengers, a 55.9 per cent increase compared to the
same period in the previous year, and generated revenues of €1,385.0
million. These rates compare to an increase in capacity measured in terms of
ASKs of 37.9 per cent. The load factor increased from 79.9 per cent to 88.8
per cent. The profit for the second quarter was €68.2 million, compared to a
loss of €6.5 million in the same period of F22.
Other information
1. Cash
Total cash (including restricted cash and cash deposits with more than three
months' maturity) at the end of the first half increased by 18.2 per cent to
€1,629.9 million versus 31 March 2022, of which €1,494.5 million is
non-restricted cash. Adjusted free cash flow (defined as net cash generated by
operating activities and proceeds from sale of tangible assets) in the six
months period ended on 30 September 2022 was €569.1 million (in the six
months period ended on 30 September 2021 was €406.6 million).
2. Restatement of F22 H1 comparatives
After careful reflection and having regard to the growth in the number of
aircraft on order and increased significance of gains on sale and leaseback
transactions, the Group determined that the proceeds from sale and leaseback
transactions which were included in cash flows from operating activities
within the statement of cash flows in the prior period should be presented as
cash flows from investing activities. Accordingly, management has restated the
presentation of the condensed consolidated interim statement of cash flows for
the six months ended 30 September 2021. Gains and credits associated with
sales and leaseback transactions in the prior period amounted to €55.9
million were previously included under changes in deferred income and are now
presented under proceeds from the sale of tangible assets. Please refer to
Note 19 to the condensed consolidated interim financial statements for more
details.
3. Ownership and control
To protect the EU airline operating licence of Wizz Air Hungary Ltd (a
subsidiary of the Company), the Board has resolved to continue to apply a
disenfranchisement of Ordinary Shares held by non-EEA Shareholders in the
capital of the Company. This will continue to be done on the basis of a
"Permitted Maximum" of 45 per cent pursuant to the Company's articles of
association ("the Permitted Maximum"). In preparation for the 2022 Annual
General Meeting (AGM), on 13 September 2022 the Company sent a Restricted
Share Notice to Non-Qualifying registered Shareholders, informing them of the
number of Ordinary Shares that will be treated as Restricted Shares:
· a "Qualifying National" includes: (i) EEA nationals, (ii)
nationals of Switzerland and (iii) in respect of any undertaking, an
undertaking which satisfies the conditions as to nationality of ownership and
control of undertakings granted an operating licence contained in Article 4(f)
of Regulation (EC) No. 1008/2008 of the European Commission, as such
conditions may be amended, varied, supplemented or replaced from time to time,
or as provided for in any agreement between the EU and any third country
(whether or not such undertaking is itself granted an operating licence); and
· a "Non-Qualifying National" includes any person who is not a
Qualifying National in accordance with the definition above.
4. Hedging position
Wizz Air operates under a clear set of treasury policies approved by the Board
and supervised by the Audit and Risk Committee. During the earlier phases of
the COVID-19 crisis, key players in the airline industry, including Wizz Air,
were severely impacted with significant financial hedge losses. As a result,
during that time and as agreed with its Board of Directors, Wizz Air moved to
a no hedge policy to avoid hedge losses in the future.
In Europe, however, key competitors continued to hedge, albeit at lower
coverage levels versus pre-pandemic.
Given the sustained and ongoing volatility in commodity prices Wizz Air has
decided to reinstate the jet fuel hedging and align the policy with its peers
from F24 onwards. The hedges under the hedge policy will be rolled forward
quarterly, 18 months out, with coverage levels over time reaching indicatively
between 65 per cent for the first quarter of the hedging horizon and 15 per
cent for the last quarter of the hedging horizon. In line with the hedging
policy, Wizz Air also intends to hedge its US dollar exposure related to fuel
consumption. There are no outstanding US dollar hedges as of 30 September
2022. Jet fuel hedge coverages at 30 September 2022 are as follows:
Jet fuel hedge coverage
Period covered F23 F24
12 months
6 months
Exposure in metric tonnes ('000) 754 1,839
Coverage in metric tonnes ('000) 407 513
Hedge coverage for the period 54% 28%
Coverage by hedge types:
Zero-cost collars in metric tonnes ('000) 340 513
Weighted average ceiling $1,367 $1,063
Weighted average floor $1,104 $924
Call options in metric tonnes ('000) 67 -
Weighted average ceiling $1,201 -
Weighted average floor - -
Sensitivities
Pre-hedging, a $10 (per metric ton) movement in the price of jet fuel impacts
the H2 F23 fuel costs by $7.5 million.
One cent movement in the EUR/USD exchange rate impacts the H2 F23 operating
expenses by €8.4 million.
Key statistics
Six months ended Six months ended Change
30 Sep 2022 30 Sep 2021
Capacity
Number of aircraft at end of period 168 144 16.7%
Equivalent aircraft 156.3 140.6 11.2%
Utilisation (block hours per aircraft per day) 11.82 7.37 60.4%
Total block hours 338,125 189,572 78.4%
Total flight hours 293,928 165,550 77.5%
Revenue departures 141,108 80,488 75.3%
Average departures per day per aircraft 4.93 3.13 57.5%
Seat capacity 30,485,203 16,587,843 83.8%
Average aircraft stage length (km) 1,607 1,569 2.4%
Total ASKs ('000 km) 48,976,909 26,026,915 88.2%
Operating data
RPKs ('000 km) 43,219,485 19,593,818 120.6%
Load factor 86.9% 75.3% 15.4%
Passengers carried 26,476,899 12,491,139 112.0%
Fuel price (average US$ per tonne, including hedging impact and into-plane 1,279.4 656.0 95.0%
premium)
Foreign exchange rate (average US$/€, including hedging impact) 1.03 1.19 -13.4%
CASK
Six months ended Six months
30 Sep 2022 ended Change
Euro cents 30 Sep 2021 Euro cents
Euro cents
Fuel costs 2.11 0.99 113.6%
Staff costs 0.37 0.37 -
Distribution and marketing 0.09 0.08 15.5%
Maintenance, materials and repairs 0.24 0.22 4.8%
Airport, handling and en-route charges 1.03 0.98 5.2%
Depreciation and amortisation 0.57 0.83 -30.8%
Net other expenses 0.20 0.11 92.1%
Net financial expenses 0.12 0.16 -26.4%
Total CASK 4.73 3.74 26.5%
CASK excluding exceptional operating expense 4.73 3.76 25.9%
Total ex-fuel CASK 2.62 2.75 -4.7%
Available seat kilometres (ASK): the number of seats available for scheduled
passengers multiplied by the number of kilometres those seats were flown.
CASK: cost per ASK, where cost is defined as operating expenses and financial
expenses net of financial income, excluding exceptional items.
Ex-fuel CASK: cost per ASK, where cost is defined as operating expenses and
financial expenses net of fuel expenses and financial income, excluding
exceptional items.
Equivalent aircraft: the number of aircraft available to Wizz Air in a
particular period, reduced on a per aircraft basis to reflect any proportion
of the relevant period that an aircraft has been unavailable.
Adjusted free cash flow: net cash generated by operating activities and
proceeds from sale of tangible assets.
Flight hours: each hour from the moment the aircraft takes off from the runway
for the purposes of flight until the moment the aircraft lands at the runway
of the arrival airport.
Load factor: the number of seats sold divided by the number of seats
available.
Revenue passenger kilometres (RPK): the number of seat kilometres flown by
passengers who paid for their tickets.
RASK: total revenue divided by ASK.
Utilisation: the total block hours for a period divided by the total number of
aircraft in the fleet during the period and the number of days in the relevant
period.
Yield: the total revenue per RPK.
For the definition of certain other technical terms used in this document,
including some non-GAAP financial measures, please refer to our 2022 Annual
Report and Accounts, particularly on page 68.
Definition and reconciliation of other non-statutory financial performance
measures
"Earnings before interest, tax, depreciation and amortisation" (EBITDA) is
profit (or loss) before net financing costs (or gain), income tax expense (or
credit), depreciation and amortisation.
EBITDA (excluding exceptional items) is profit (or loss) before net financing
costs (or gain), income tax expense (or credit), depreciation, amortisation
and exceptional items.
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
€ million € million
Operating loss (excluding exceptional items) (63.8) (56.2)
Depreciation and amortisation 281.6 216.2
EBITDA (excluding exceptional income) 217.8 160.0
The Company has a policy of rounding each amount and percentage individually
from the fully accurate number to the figure disclosed in the information
presented. As a result, some amounts and percentages do not total - though
such differences are all small.
Forward-looking statements
The information in this announcement includes forward-looking statements which
are based on the Company's or, as appropriate, the Company's Directors'
current expectations and projections about future events. These
forward-looking statements may be identified by the use of forward-looking
terminology including, but not limited to, the terms "believes", "estimates",
"plans", "projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or comparable
terminology, or by discussion of strategy, plans, objectives, goals, future
events or intentions. These forward-looking statements are subject to risks,
uncertainties and assumptions about the Company and its subsidiaries and
investments, including, among other things, the development of its business,
trends in its operating industry and future capital expenditures. In light
of these risks, uncertainties and assumptions, the events or circumstances
referred to in the forward-looking statements may differ materially from
those indicated in these statements. Forward-looking statements may, and often
do, materially differ from actual results.
None of the future projections, expectations, estimates or prospects or any
other statements contained in this announcement should be taken as forecasts
or promises nor should they be taken as implying any indication, assurance or
guarantee that the assumptions on which such future projections, expectations,
estimates or prospects have been prepared are correct or exhaustive or, in the
case of the assumptions, fully stated in the announcement. Forward-looking
statements speak only as of the date of this announcement. Subject to
obligations under the Listing Rules and Disclosure and Transparency Rules made
by the Financial Conduct Authority under Part VI of the Financial Services and
Markets Act 2000 (as amended from time to time), neither the Company nor any
of its affiliates, or individuals acting on its behalf, undertakes to publicly
update or revise any such forward-looking statement, or any other statements
contained in this announcement, whether as a result of new information, future
events or otherwise.
As a result of these risks, uncertainties and assumptions, one should not
place undue reliance on these forward-looking statements as a prediction of
actual results or otherwise. The information and opinions contained in this
announcement are provided as at the date of this announcement and are subject
to change without notice.
Emerging and principal risks and uncertainties
The aviation industry is subject to many risks and Wizz Air's business is no
exception. A number of risks, as described in our 2022 Annual Report and
Accounts, have the potential to adversely affect Wizz Air's expected results
for the remainder of the current financial year. These risks include
competitive moves, economic and political events such as safety events, Black
Swan events including pandemics like COVID-19, foreign exchange rates and the
price fluctuations of jet kerosene.
The full list of risks considered is set out below:
· information technology and cyber risk, including website
availability, protection of our own and our customers' data, and ensuring the
availability of operations-critical systems in an increasingly complex system
landscape;
· external factors, ensuring the Company has capabilities and
resilience to deal with risks such as geopolitical risks, Brexit, fuel cost,
foreign exchange rates, risk of higher cost of doing business, competition,
general economic trends, and the default of a partner financial institution;
· network development, making sure that we are making the best use
of our capacity, driving maximum utilisation and ensuring that we have access
to the right airport infrastructure at the right price so that we can keep on
delivering the superior Wizz Air service at low fares across an expanding
network;
· fleet development, ensuring the Company has the right number of
aircraft available at the right time to take advantage of commercial
opportunities and grow in a disciplined way without any supply chain
disruption;
· regulatory risk, making sure that we remain compliant with
regulations affecting our business and operations and we remain agile to react
to the changing governmental actions due to COVID-19, Brexit and changing
policies due to sustainability (taxation, etc.);
· operations, including safety events and terrorist incidents and
employee and passenger security;
· global pandemic, which has been the reality during 2020, 2021 and
the start of 2022 and may continue to impact the Company and its interests in
the near future even after the successful vaccination programmes and slowly
reaching an endemic state;
· human resources, ensuring we are able to recruit the right
quality and the right number of colleagues to support our ambition to grow
and, once recruited, that they remain engaged and motivated and that the
Company has appropriate succession management in place for key colleagues,
even in the context of a global pandemic;
· social and governance risks, making sure we are at all times
guided through our core values and our value of integrity, and respected
throughout our business processes and deals, and providing transparency to all
our stakeholders through responsible reporting and disclosure; and
· environmental risk, ensuring that we are able to answer the
growing need of environmental protection and consciousness, mitigate the
emerging transition and physical risks and create a sustainable,
climate-friendly service for our customers at all times respecting the planet.
The Directors consider that the principal risks to the Company's business
during the second half of the financial year remain those summarised above and
set out on pages 70 to 77 of our 2022 Annual Report and Accounts, available at
corporate.wizzair.com.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed consolidated interim statement of comprehensive income
For the six months ended 30 September 2022 (unaudited)
Note Six months ended Six months
30 Sep 2022 ended
€ million 30 Sep 2021
€ million
Passenger ticket revenue 6,7 1,182.1 413.8
Ancillary revenue 6,7 1,011.7 466.6
Total revenue 6,7 2,193.8 880.4
Staff costs (180.3) (97.2)
Fuel costs (including exceptional income) (1,032.7) (256.9)
Distribution and marketing (46.2) (21.2)
Maintenance, materials and repairs (115.5) (58.5)
Airport, handling and en-route charges (503.5) (254.4)
Depreciation and amortisation (281.6) (216.2)
Net other expense 8 (97.9) (27.8)
Total operating expenses (2,257.6) (932.3)
Operating loss (63.8) (51.9)
Comprising:
Operating loss excluding exceptional income 10 (63.8) (56.2)
Exceptional income (included in fuel costs) - 4.3
Financial income 9 3.1 1.8
Financial expenses 9 (59.8) (42.7)
Net foreign exchange loss 9 (269.2) (26.8)
Net financing expense 9 (325.9) (67.7)
Loss before income tax (389.7) (119.6)
Income tax credit/(expense) 11 5.4 (1.3)
Net loss for the period (384.3) (120.9)
Net loss for the period attributable to:
Non-controlling interest (9.5) (4.6)
Owners of Wizz Air Holdings Plc (374.8) (116.3)
Other comprehensive (expense)/income - items that may be subsequently
reclassified to profit or loss:
Net movements in cash flow hedging reserve, net of tax
Net change in fair value (125.9) 14.2
Recycled to profit or loss (8.7) (12.0)
Change in time value of call options (2.9) -
Currency translation differences (4.9) (0.7)
Other comprehensive (loss)/income for the period, net of tax (142.4) 1.5
Total comprehensive loss for the period (526.7) (119.4)
Total comprehensive loss attributable to:
Non-controlling interest (11.9) (4.8)
Owners of Wizz Air Holdings Plc (514.8) (114.6)
12 (3.63) (1.28)
Basic and diluted loss per share (Euro/share)
Condensed consolidated interim statement of financial position
As at 30 September 2022
Note 30 Sep 2022 31 Mar 2022
(unaudited) (audited)
€ million € million
ASSETS
Non-current assets
Property, plant and equipment 13 4,302.8 3,631.4
Intangible assets 76.1 62.4
Restricted cash 56.3 67.3
Deferred tax assets 14.1 1.7
Trade and other receivables 14 22.4 20.7
Total non-current assets 4,471.6 3,783.5
Current assets
Inventories 128.7 70.9
Trade and other receivables 14 300.8 186.9
Current tax assets 6.4 2.5
Derivative financial instruments 3.1 0.7
Restricted cash 79.1 94.9
Short-term cash deposits 365.2 450.0
Cash and cash equivalents 1,129.3 766.6
Total current assets 2,012.6 1,572.5
Total assets 6,484.2 5,356.1
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital - -
Share premium 381.2 381.2
Reorganisation reserve (193.0) (193.0)
Equity part of convertible debt 8.3 8.3
Cash flow hedging reserve (138.4) (3.8)
Cost of hedging reserve (2.9) -
Cumulative translation adjustments (3.2) (0.7)
Retained earnings (283.2) 87.3
Capital and reserves attributable to the owners of Wizz Air Holdings Plc (231.3) 279.3
Non-controlling interest (27.3) (15.4)
Total equity (258.6) 263.9
Non-current liabilities
Borrowings 17 4,469.0 3,525.3
Convertible debt 25.7 26.1
Deferred income 18 86.1 63.0
Deferred tax liabilities 2.0 3.4
Derivative financial instruments 13.7 -
Trade and other payables 15 58.9 56.8
Provisions for other liabilities and charges 16 29.6 43.9
Total non-current liabilities 4,684.9 3,718.4
Current liabilities
Trade and other payables 15 875.3 558.6
Current tax liabilities 6.7 0.2
Borrowings 17 499.3 413.1
Convertible debt - 0.3
Derivative financial instruments 126.1 4.6
Deferred income 18 394.3 333.8
Provisions for other liabilities and charges 16 156.2 63.2
Total current liabilities 2,057.9 1,373.7
Total liabilities 6,742.8 5,092.1
Total equity and liabilities 6,484.2 5,356.1
Condensed consolidated interim statement of changes in equity
For the six months ended 30 September 2022 (unaudited)
Share capital Share Reorganisation Equity Cash flow hedging reserve Cost of hedging reserve Retained Total Non-controlling interest Total
€ million premium reserve part of convertible debt € million € million Cumulative translation adjustments earnings € million € million equity
€ million € million € million € million € million € million
Balance at 1 April 2022 - 381.2 (193.0) 8.3 (3.8) - (0.7) 87.3 279.3 (15.4) 263.9
Comprehensive income
Loss for the period - - - - - - - (374.8) (374.8) (9.5) (384.3)
Fair value losses in the period - - - - (125.9) - - - (125.9) - (125.9)
Gains transferred to statement of profit or loss - - - - (8.7) - - - (8.7) - (8.7)
Hedge discontinuation gains transferred to income statement - - - - - - - - - - -
Change in time value of call options - - - - - (2.9) - - (2.9) - (2.9)
Currency translation differences - - - - - - (2.5) - (2.5) (2.4) (4.9)
Total other comprehensive income/(expense) - - - - (134.6) (2.9) (2.5) - (140.0) (2.4) (142.4)
Total comprehensive income/(expense) - - - - (134.6) (2.9) (2.5) (374.8) (514.8) (11.9) (526.7)
Transactions with owners
Share-based payment charge - - - - - - - 4.2 4.2 - 4.2
Total transactions with owners - - - - - - - 4.2 4.2 - 4.2
Balance at - 381.2 (193.0) 8.3 (138.4) (2.9) (3.2) (283.3) (231.3) (27.3) (258.6)
30 September 2022
Condensed consolidated interim statement of changes in equity
For the six months ended 30 September 2021 (unaudited)
Share capital Share Reorganisation reserve Equity part of convertible debt Cash flow hedging reserve Retained Total Non-controlling interest Total
€ million premium € million € million € million Cumulative translation adjustments earnings € million € million equity
€ million € million € million € million
Balance at 1 April 2021 - 381.2 (193.0) 8.3 (2.2) 1.1 712.3 907.7 (4.0) 903.7
Comprehensive income
Loss for the period - - - - - - (116.3) (116.3) (4.6) (120.9)
Fair value gains in the period - - - - 14.2 - - 14.2 - 14.2
Gains transferred to statement of profit or loss - - - - (11.4) - - (11.4) - (11.4)
Hedge discontinuation gains transferred to income statement - - - - (0.6) - - (0.6) - (0.6)
Currency translation differences - - - - - (0.5) - (0.5) (0.2) (0.7)
Total other comprehensive income/(expense) - - - - 2.2 (0.5) - 1.7 (0.2) 1.5
Total comprehensive income/(expense) - - - - 2.2 (0.5) (116.3) (114.6) (4.8) (119.4)
Transactions with owners
Share-based payment charge - - - - - - 2.4 2.4 - 2.4
Total transactions with owners - - - - - - 2.4 2.4 - 2.4
Balance at - 381.2 (193.0) 8.3 - 0.6 598.4 795.5 (8.8) 786.7
30 September 2021
Condensed consolidated interim statement of cash flows
For the six months ended 30 September 2022 (unaudited)
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
€ million
(restated*)
€ million
Cash flows from operating activities
Loss before income tax (389.7) (119.6)
Adjustments for:
Depreciation 275.3 211.5
Amortisation 6.2 4.7
Financial income (3.1) (1.8)
Financial expenses 59.8 42.7
Realised fair value gains on derivative financial instruments 14.1 (4.2)
Unrealised foreign currency losses 285.2 16.5
Realised non-operating foreign currency (gains)/losses (25.4) 9.7
Gain on sale of property, plant and equipment (41.8) (16.1)
Share-based payment charges 4.3 2.3
184.9 145.7
Changes in working capital
Increase in trade and other receivables (114.1) (32.6)
Decrease in restricted cash 45.5 12.3
Increase in derivatives (6.0) -
(Increase)/decrease in inventory (57.7) 6.5
Increase in provisions 61.7 5.7
Increase in trade and other payables 300.9 122.5
Increase in deferred income* 62.9 94.9
Cash generated by operating activities before tax 478.2 354.9
Income tax paid (4.2) (4.2)
Net cash generated by operating activities 473.9 350.7
Cash flows from investing activities
Purchase of aircraft maintenance assets (55.2) (16.1)
Purchases of tangible and intangible assets (38.2) (13.3)
Proceeds from sale of tangible assets* 95.2 55.9
Advances paid for aircraft (261.9) (227.5)
Refund of advances paid for aircraft 284.9 147.4
Interest received 2.4 1.6
Decrease/(increase) in short-term cash deposits 84.8 (53.2)
Net cash generated by/(used in) investing activities 111.9 (105.2)
Cash flows from financing activities
Interest paid - IFRS 16 lease liability (43.6) (34.4)
Interest paid - JOLCO (3.6) (1.0)
Interest paid - other (1.4) (1.0)
Proceeds from new loans** 47.7 -
Repayment of loans** (240.7) (205.5)
Net cash used in financing activities (241.7) (242.0)
Net increase in cash and cash equivalents 344.2 3.5
Cash and cash equivalents at the beginning of the period 766.6 1,100.7
Effect of exchange rate fluctuations on cash and cash equivalents 18.5 5.8
Cash and cash equivalents at the end of the period 1,129.3 1,110.0
* The prior period was restated. Refer to Note 19 for more details..
** Mostly JOLCO and IFRS 16 leases.
Notes to the condensed consolidated interim financial statements (unaudited)
1. General information
Wizz Air Holdings Plc ("the Company") is a limited liability company
incorporated in Jersey, registered under the address 44 Esplanade, St Helier
JE4 9WG, Jersey. The Company is managed from Switzerland, under the address
Route François-Peyrot 12, 1218 Le Grand-Saconnex, Geneve. The Company and its
subsidiaries (together referred to as "the Group" or "Wizz Air") provide
low-cost, low-fare passenger air transportation services on scheduled
short-haul and medium-haul point-to-point routes across Europe and the Middle
East. The Company's Ordinary Shares are listed in the premium segment of the
Official List of the Financial Conduct Authority and admitted to the Main
Market of the London Stock Exchange.
2. Basis of preparation
These unaudited condensed consolidated interim financial statements present
the financial results of the Group for the six-month period ended 30 September
2022. These condensed consolidated interim financial statements have been
prepared in accordance with the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority, IAS 34, 'Interim Financial Reporting' as
adopted by the European Union and those parts of the Companies (Jersey) Law
1991 applicable to companies reporting under IFRS. The unaudited condensed
consolidated interim financial statements should be read in conjunction with
the annual consolidated financial statements for the year ended 31 March 2022,
which have been prepared in accordance with IFRSs and IFRICs as adopted by the
European Union and with those parts of the Companies (Jersey) Law 1991
applicable to companies reporting under IFRS.
The comparative figures included for the year ended 31 March 2022 do not
constitute statutory financial statements of the Group based on Article 105
(11) of the Companies (Jersey) Law 1991. The consolidated financial statements
of the Group for the year ended 31 March 2022, together with the Independent
Auditors' Report, have been filed with the Jersey Financial Services
Commission and are also available on the Company's website (wizzair.com). The
Independent Auditors' Report on those financial statements was unqualified.
The Company has a policy of rounding each amount and percentage individually
from the fully accurate number to the figure disclosed in the condensed
consolidated interim financial statements. As a result, some amounts and
percentages do not total - though such differences are all small.
Going concern
Wizz Air's business activities, financial performance and financial position,
together with external factors and principal risks likely to affect its future
development and performance as described in our 2022 Annual Report and
Accounts, including the plans to finance a growing number of future aircraft
deliveries, where sale and leaseback financing is typically secured shortly
before the scheduled delivery date of the aircraft and our judgment that there
will continue to be demand in the leasing market to finance our aircraft prior
to their delivery dates, have been reviewed by the Directors and are
considered to be unchanged.
At 30 September 2022, the Group held cash and cash equivalents of €1,129.3
million (total cash of €1,629.9 million including €365.2 million of
short-term cash deposits and €135.4 million of restricted cash), while net
current liabilities were €45.3 million and net liabilities were €258.6
million. The external borrowings of the Group consist of €500 million of
bonds maturing in January 2024, €500 million of bonds maturing in January
2026 and convertible debt with a balance of €25.7 million. A further
€3,948.4 million in relation to future liabilities from lease, JOLCO and FTL
contracts are presented as borrowings.
The Group operates using a three-year planning cycle. The plan projection for
the period ending on 31 March 2025, end of F25, has recently been updated. The
Directors have reviewed their latest financial forecasts for the next twelve
months from the date of signing these financial statements including plans to
finance committed future aircraft deliveries (see Note 20) due within this
period that are currently unfinanced and available committed financing for
aircraft. After making enquiries and testing the assumptions against different
forecast scenarios including a severe but plausible downside scenario, the
Directors have satisfied themselves that the Group is expected to be able to
meet its commitments and obligations as they fall due for a period of at least
the next twelve months from the date of signing this report.
These enquiries and testing included a base case model of how the operations
of the business would develop over the next twelve months from the date of
signing this report. Wizz Air expects to further improve utilisation of its
fleet with higher unit revenues as compared to the previous year, as already
evidenced in the first six months of F23. Pass-through of higher input costs
in our pricing combined with stabilising our unit cost will restore the
profitability of the Group in F24 and F25. The Directors have also modelled a
downside scenario that assumes an even higher price for jet fuel and a
stronger USD, whilst at the same time modelling a weaker trading environment
(simulated by a lower RASK for the entire planning period) to take account of
the current global economic uncertainty. The directors have also considered
the impact of these downside scenarios for a period beyond the next twelve
months that includes the repayment of our bonds in January 2024. In this
scenario the Group is still forecasting sufficient liquidity throughout this
period.
The Directors also considered the impact of climate change over the time
period and concluded that it was unlikely that material physical or transition
risks that are described in the Sustainability Report, on pages 17 to 59 of
the 2022 Annual Report and Accounts, would arise over this period. In
preparing its base and downside forecasts the Directors also took into account
the impact of the war in Ukraine and the three aircraft stranded in Ukraine
and no material impact is forecast. The Directors have assumed that the
COVID-19 pandemic will no longer have a significant impact on business
performance.
Accordingly, the Directors concluded it was correct to retain the going
concern basis in preparing the condensed consolidated interim financial
statements.
3. Accounting policies
These condensed consolidated interim financial statements have been prepared
in accordance with the accounting policies, methods of computation and
presentation applied in the Group's most recently published consolidated
financial statements for the year ended 31 March 2022, except for the changes
explained below.
The preparation of condensed consolidated interim financial statements
requires management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial statements the
significant judgments made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements for the year ended 31
March 2022, with the exception of changes in estimates that are required in
determining the provision for income taxes. Taxes on income in the interim
periods are accrued using the effective rate that would be applicable to
expected total annual profit or loss. Proceeds from sale of tangible assets,
including sale and leaseback transactions, were classified within cash flows
from investing activities (Note 19).
In preparing the condensed consolidated interim financial statements, the
Directors have considered the impact of climate change, particularly in the
context of the disclosures included in the Strategic Report in the 2022 Annual
Report and Accounts, the stated emission targets and the update provided on
pages 3 and 4 of this Interim Report. These considerations did not have a
material impact on the Group's going concern assessment, nor on the financial
reporting judgments and estimates used in the preparation of these interim
financial statements.
New standards, amendments and interpretations issued and effective
The following amendments and interpretations apply for the first time in the
six months to 30 September 2022, but do not have a material impact, or any
impact, on the condensed consolidated interim financial statements of the
Group:
· Amendments to IFRS 3, 'Business Combinations': Reference to the
Conceptual Framework, Contingent Liabilities and Cumulative Translation
Adjustments
· Amendments to IAS 16, 'Property, Plant and Equipment': Proceeds
before Intended Use
· Amendments to IAS 37, 'Provisions, Contingent Liabilities and
Contingent Assets': Onerous Contracts - Cost of Fulfilling a Contract
· Annual Improvements 2018-2020
New standards, amendments and interpretations issued but not yet effective
The following new accounting standards and interpretations have been published
by the IASB that are not yet effective and have not been early adopted by the
Group. These standards are either not relevant or not expected to have a
material impact on the Group in the current or future reporting periods or on
foreseeable future transactions.
Not yet endorsed by the EU:
· Amendments to IAS 1, 'Presentation of Financial Statements':
Classification of Liabilities as Current or Non-current and Classification of
Liabilities as Current or Non-current
· Amendments to IFRS 16 Leases: Lease Liability in a Sale and
Leaseback
Endorsed by the EU but not yet effective:
· Amendments to IAS 1, 'Presentation of Financial Statements' and
IFRS Practice Statement 2: Disclosure of Accounting Policies
· Amendments to IAS 8, 'Accounting Policies, Changes in Accounting
Estimates and Errors': Definition of Accounting Estimates
· Amendments to IAS 12, 'Income Taxes': Deferred Tax Related to
Assets and Liabilities Arising from a Single Transaction
· IFRS 17, 'Insurance Contracts' including Amendments to IFRS 17
(issued on 25 June 2020)
· Amendments to IFRS 17, 'Insurance Contracts': Initial Application
of IFRS 17 and IFRS 9 - Comparative Information
4. Financial risk management
Interest rate benchmarks
As a result of interest rate benchmark reform many benchmark interest rates
are not published anymore, or will be last published in 2023. In connection
with floating rate leases, the Group has exposures to LIBORs, which are
anticipated to be published until 30 June 2023. Accordingly, this had no
impact on the H1 F23 condensed consolidated interim financial statements and
the effect of this change will be evaluated once the existing rates are
replaced and contracts are amended. Based on management's assessment to date
there is no significant risk that the IBOR reform will have a material impact
on the Group's results or financial position.
Hedging
During the earlier phases of the COVID-19 crisis, key players in the airline
industry, including Wizz Air, were severely impacted with significant
financial hedge losses. As a result, during that time and as agreed with its
Board of Directors, Wizz Air moved to a no hedge policy to avoid hedge losses
in the future.
In Europe, however, key competitors continued to hedge, albeit at lower
coverage levels versus pre-pandemic.
Given the sustained and ongoing volatility in commodity prices Wizz Air has
decided to reinstate a hedging policy and align its policy to those of its
peers.
For F23 the Company has entered into jet fuel hedge deals to manage the tail
risk, as a response to commodity market volatility due to the war in Ukraine.
In June the Company reinstated its Board approved systematic hedging policy
from F24 with the following coverage and time horizon.
The hedges under the hedge policy will be rolled forward quarterly, 18 months
out, with coverage levels over time reaching indicatively between 65 per cent
for the first quarter of the hedging horizon and 15 per cent for the last
quarter of the hedging horizon. In line with the hedging policy, Wizz Air also
intends to hedge its US dollar exposure related to fuel consumption.
Hedge transactions during the year
The Group used zero-cost collar instruments and, to some extent, call options
to hedge its jet fuel exposures.
Foreign exchange hedge:
Six months ended Six months
30 Sep 2022
ended
30 Sep 2021
€ million € million
Loss recognised within fuel costs
Effective cash flow hedge - (2.3)
Fair value change of discontinued cash flow hedge expiring in the financial - (0.3)
year*
Total loss recognised within fuel costs - (2.6)
Fuel hedges:
Six months ended Six months
30 Sep 2022 ended
30 Sep 2021
€ million € million
Gain recognised within fuel costs
Effective hedge - gain transferred into the statement of profit or loss 8.7 13.7
Discontinued cash flow hedge expiring in the financial year* - 0.6
Fair value change of discontinued cash flow hedge expiring in the financial - 4.0
year*
Total gain recognised within fuel costs 8.7 18.3
* Fair value change and result of discontinued hedges were charged to
exceptional expense.
Hedge period-end open positions
The fair value of derivatives is estimated by the contracting financial
institutions as per their industry practice. As required, the fair values
ascribed to those instruments are verified also by management using high-level
models. These estimations are performed based on market prices observed at
period end and therefore, according to paragraph 128 of IAS 1, do not require
further disclosure. Such fair values might change materially within the near
future but these changes would not arise from assumptions made by management
or other sources of estimation uncertainty at the end of the period but from
the movement of market prices. The fair value calculation is most sensitive to
movements in the jet fuel and foreign currency spot prices, their implied
volatility and respective yields.
Foreign exchange hedge: No open position at period end.
Fuel hedge:
Derivative financial instruments
At 30 September 2022 '000 Non-current Current Non-current Current Net
assets
assets
liabilities
liabilities
liability
metric tonnes
€ million € million € million € million € million
Effective cash flow hedge positions 920.6 - 3.1 (13.7) (126.1) (136.7)
Total fuel hedge 920.6 - 3.1 (13.7) (126.1) (136.7)
Derivative financial instruments
At 31 March 2022 '000 Non-current Current Non-current Current Net
assets
assets
liabilities
liabilities
liability
Metric
€ million € million € million € million € million
tonnes
Effective cash flow hedge positions 240.0 - 0.7 - (4.6) (3.9)
Total fuel hedge 240.0 - 0.7 - (4.6) (3.9)
For the movements in other comprehensive income refer to the condensed
consolidated interim statement of changes in equity.
Hedge effectiveness
The effectiveness of hedges is tested both prospectively and retrospectively
to determine the appropriate accounting treatment of hedge gains and losses.
Prospective testing of open hedges requires making certain estimates, the most
significant one being for the future expected level of the business activity
(primarily the utilisation of fleet capacity) of the Group. Building on these
estimations of the future, management makes a judgment on the accounting
treatment of open hedging instruments. Hedge accounting for jet fuel and
foreign currency cash flow hedges is discontinued where the "highly probable"
forecast criterion is not met in accordance with the requirements of IFRS 9.
Following the COVID-19 outbreak, the fuel consumption in the six months ended
30 September 2021 was significantly lower than that on which the Group hedging
programme was originally based, resulting in the discontinuation of the fuel
and foreign currency hedging relationships. There was no discontinued hedging
relationship during the six months ended 30 September 2022.
None of the hedge counterparties had a material change in their credit status
that would have influenced the effectiveness of the hedging transactions.
Fair value estimation
The Group measures its derivative financial instruments at fair value, as
calculated by the banks involved in the hedging transactions. These
instruments fall into the Level 2 category. Fair values are determined based
on inputs other than quoted prices that are observable for the asset or
liability, either directly or indirectly. The banks are using generally
accepted valuation techniques, principally the Black-Scholes model and
discounted cash flow models. All the other financial assets and financial
liabilities of the Group are measured at amortised cost.
The following table presents the Group's financial assets and liabilities that
are measured at fair value at 30 September 2022.
Level 1 Level 2 Level 3 Total
€ million € million € million € million
Assets
Derivative financial instruments - 3.1 - 3.1
- 3.1 - 3.1
Liabilities
Derivative financial instruments - 139.8 - 139.8
- 139.8 - 139.8
The following table presents the Group's financial assets and liabilities that
are measured at fair value at 31 March 2022.
Level 1 Level 2 Level 3 Total
€ million € million € million € million
Assets
Derivative financial instruments - 0.7 - 0.7
- 0.7 - 0.7
Liabilities
Derivative financial instruments - 4.6 - 4.6
- 4.6 - 4.6
5. Critical estimates and judgments made in applying the Group's accounting
policies
For critical estimates and judgments refer to Note 4 in the 2022 Annual Report
and Accounts of the Group. No significant changes to such estimates and
judgments occurred for the six months ended 30 September 2022, except for the
below.
Aircraft in Ukraine
Judgment: In February 2022, the airspace of Ukraine, Russia and Moldova was
closed until further notice as a result of the war in Ukraine. Four of Wizz
Air's aircraft were stranded in Ukrainian territory, one in Lviv and three in
Kyiv.
The aircraft in Lviv was successfully repatriated in September 2022. After
attending scheduled maintenance, airframe structural checks and engine
inspection the aircraft returned to service in October 2022 with no
significant extra repair work required.
The aircraft grounded in Kyiv are in good condition and with no damage,
evidenced by photographic images and local employee information. Maintenance
work has been performed to put parking and storage procedures in place. The
maintenance and inspection procedures necessary to return the aircraft into
service are work in progress at the time of this report. Engine inspections
already performed during October indicate no major adverse findings. It is
assumed that the aircraft can return to the fleet by the end of the calendar
year.
Estimate: The incremental maintenance provision requirement for the three
aircraft stranded in Ukraine is a judgment by management where the range of
outcomes is estimated between a minimum of €0.6 million and maximum of
€22.5 million less amounts already provided of €6.5 million. Relying on
the delivered inspection work, the high end of the estimated maintenance cost
represents a very remote, worst-case scenario which assumes major overhaul is
required on all components, including engines.
Hedge and derivative accounting
Estimate: The asset and liability balances at year end related to open hedge
instruments can be material. The fair value of derivatives is estimated by
contracting financial institutions as per their industry practice. As
required, the fair values ascribed to those instruments are verified also by
management using high-level models. These estimations are performed based on
market prices observed at period end and therefore, according to paragraph 128
of IAS 1, do not require further disclosure. Such fair values might change
materially within the near future but these changes would not arise from
assumptions made by management or other sources of estimation uncertainty at
the end of the period but from the movement of market prices. The fair value
calculation is most sensitive to movements in the jet fuel and foreign
currency spot prices, their implied volatility and respective yields.
Due to the reinstated hedging policy, the open hedge instrument balances of
the Group increased significantly during the period. The net carrying amount
of cash flow hedges was €136.7 million liability at 30 September 2022 (31
March 2022: €3.9 million liability). There was no discontinued hedging
relationship during the six months ended 30 September 2022.
Estimate and judgment: The effectiveness of hedges is tested both
prospectively and retrospectively to determine the appropriate accounting
treatment of hedge gains and losses. Prospective testing of open hedges
requires making certain estimates, the most significant one being for the
future expected level of business activity (primarily the utilisation of fleet
capacity) of the Group.
Building on these estimations of the future, management makes judgment on the
accounting treatment of open hedge instruments. Hedge accounting for jet fuel
and foreign currency cash flow hedges is discontinued where the "highly
probable" forecast criterion is not met in accordance with the requirements of
IFRS 9.
During the period none of the hedge counterparties had a material change in
their credit status that would have influenced the effectiveness of the
hedging transactions.
EU 261
EU Regulation (EC) No. 261/2004 (EU261) requires airlines to offer passengers
affected by a flight cancellation covered by the scope of EU261, the option to
choose between re-routing to their final destination (at the earliest
opportunity or at a later date at the passenger's convenience) and
reimbursement of their ticket price. The decree stipulates the conditions for
airlines to compensate and provide assistance to passengers (holding a valid
ticket) who have been denied boarding or whose flight has been cancelled or
delayed.
The Group monitors all flight disruption and estimates the provision for
compensation payable under EU261 based on known eligible events and historical
claim patterns. European air travel experienced a higher than normal level of
operational disruption during the Summer, where Wizz Air cancellations were in
line with other European operators, resulting in cancellation levels that were
multiples of that experienced in previous periods. As a consequence
compensation payable to customers increased and the Group has increased its EU
261 provision to €66.5 million at 30 September 2022 (€13.0 million at 31
March 2022). As operational performance has recently normalized, provisions
related to cancellations and flight disruption are expected to reduce to a
lower level.
6. Segment information
Reportable segment information
During F22 and F23 the Group had only one reportable segment, being its entire
route network, resulting in a net loss of €384.3 million during the six
months ended 30 September 2022 (for the six months ended 30 September 2021:
€120.9 million loss). All segment revenue of was derived wholly from
external customers and, as the Group had a single reportable segment,
inter-segment revenue was zero.
Entity-wide disclosures
Products and services
Revenue from external customers can be analysed by groups of similar services
as follows:
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
€ million € million
Passenger ticket revenue 1,182.1 413.8
Ancillary revenues 1,011.7 466.6
Total segment revenue 2,193.8 880.4
These categories are non-IFRS categories meaning that they are not necessarily
distinct from a nature, timing and risk point of view; however, management
believes that these categories provide clarity over the revenue profile of the
Group to the readers of the financial statements and are in line with airline
industry practice. The categories as per the definition of IFRS 15 are
disclosed in Note 7 .
Ancillary revenue arises mainly from baggage charges, booking/payment handling
fees, airport check-in fees, fees for various convenience services (e.g.
priority boarding, extended legroom and reserved seating), loyalty programme
membership fees, commission on the sale of on-board catering, accommodation,
car rental, travel insurance, bus transfers, premium calls, co-branded cards
and repatriation and cargo flights.
Geographic areas
Revenue from external customers can be analysed by geographic areas as
follows:
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
€ million € million
EU 1,560.2 645.7
UK 280.1 73.1
Other (non-EU)* 353.5 161.6
Total revenue from external customers 2,193.8 880.4
* This comprises a number of non-EU geographic areas that are all
individually less than 10 per cent of total revenue.
Revenue was allocated to geographic areas based on the location of the first
departure airport on each ticket booking.
The Company's revenue from external customers within the EU is mainly
generated by Italy of €305.7 million for the six months ended 30 September
2022 (the six months ended 30 September 2021: €128.2 million), Romania of
€236.8 million (the six months ended 30 September 2021: €122.2 million)
and Poland of €178.9 million (the six months ended 30 September 2021:
€66.5 million).
The physical location of non-current assets is not tracked by the Group and is
therefore not disclosed by geographic area. This is because: (i) by value most
assets are associated either with aircraft not yet received (pre-delivery
payments) or with existing leased aircraft and spare engines (RoU and
maintenance assets), the location of which changes regularly following
aircraft capacity allocation decisions; and (ii) the value of the remaining
asset categories (land and buildings, fixtures and fittings) is not a material
part of total non-current assets.
The distribution of the non-current assets between the key operating entities
of the Group is as follows:
30 Sep 2022 31 Mar 2022
€ million € million
Wizz Air Hungary 3,581.6 3,149.5
Wizz Air UK 498.5 424.5
Wizz Air Leasing 301.1 195.4
Wizz Air Malta 65.4 -
Wizz Air Abu Dhabi 23.3 12.4
Other 1.7 1.9
Total non-current assets 4,471.6 3,783.5
No revenue or non-current asset of the Group were recognised in Jersey, the
Company's country of domicile for the six months ended 30 September 2022 (for
the six months ended 30 September 2021: €nil).
Wizz Air Malta Limited and WAM Ventures Holding Limited were successfully
established to reinforce Wizz Air's position and support its expansion plans
in Europe.
7. Revenue
The split of total revenue presented in the condensed consolidated interim
statement of comprehensive income, being passenger ticket revenue and
ancillary revenue, is a non-IFRS measure (or alternative performance measure).
The existing presentation is considered relevant for the users of the
financial statements because: (i) it mirrors disclosures presented outside of
the financial statements; and (ii) it is regularly reviewed by the Chief
Operating Decision Maker for evaluating the financial performance of its
single operating segment.
Revenue from contracts with customers can be disaggregated as follows based on
IFRS 15:
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
€ million € million
Revenue from contracts with passengers 2,159.4 861.7
Revenue from contracts with other partners 34.4 18.7
Total revenue from contracts with customers 2,193.8 880.4
These two categories represent revenues that are distinct from a nature,
timing and risks point of view. Revenue from contracts with other partners
relates to commissions on the sale of on-board catering, accommodation, car
rental, travel insurance, bus transfers, premium calls and co-branded cards,
where the Group acts as an agent.
The contract assets reported on 30 September 2022 as part of trade and other
receivables amounted to €3.3 million (31 March 2022: €2.3 million) and the
contract liabilities (unearned revenues) reported as part of deferred income
were €387.6 million as at 30 September 2022 (31 March 2022: €326.6
million). Out of the €2,159.4 million revenue recognised for the six months
ended 30 September 2022 (for the six months ended 30 September 2021: €861.7
million), €326.6 million (the six months ended 30 September 2021: €65.0
million) was included in the contract liability balance at the beginning of
the period.
8. Operating loss
Net other expenses
Net other expenses increased from €27.8 million for the six months ended 30
September 2021 to €97.9 million for the six months ended 30 September 2022,
as there was a significant increase in other expenses after the industry's
recovery from the COVID-19 pandemic.
The following charges less gains are included in net other expenses:
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
€ million € million
Gain on sale and leaseback transactions 41.8 16.1
Flight disruption related expenses (89.6) (17.5)
Overhead related expenses* (25.5) (16.8)
Crew related expenses (27.3) (12.0)
Expense relating to short-term leases (2.8) (0.4)
Expense relating to variable lease payments (1.4) -
Net other income 6.9 2.9
Net other expenses (97.9) (27.8)
* Overhead related expenses include fees for legal support, professional
services, consulting and IT related services.
Inventories
Inventories totalling €7.0 million were recognised as maintenance materials
and repairs expenses in the year (the six months ended 30 September 2021:
€6.7 million).
9. Net financing expense
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
€ million € million
Interest income 3.1 1.8
Financial income 3.1 1.8
Interest expenses:
Convertible debt (0.9) (1.0)
IFRS 16 lease liability (43.8) (34.4)
JOLCO and FTL lease liability (7.7) (2.1)
Unsecured debt (6.6) (4.8)
Other (0.8) (0.4)
Financial expenses (59.8) (42.7)
Net foreign exchange loss (269.2) (26.8)
Net financing expense (325.9) (67.7)
Interest income and expense include interest on financial instruments.
Interest income is earned on cash and cash equivalents and short-term
deposits.
Net foreign exchange loss in net amount of €274.7 million for the six months
ended 30 September 2022 (the six months ended 30 September 2021: €24.6
million) relates to remeasurement of lease liabilities denominated in USD.
During H1 F23 the USD/EUR exchange rate decreased from 1.11 USD/EUR at 31
March 2022 to 0.98 USD/EUR at 30 September 2022 which resulted in an increase
in lease liability and related recognition of foreign exchange loss.
10. Exceptional items and underlying loss
Exceptional items
Exceptional items are disclosed separately in the financial statements where
it is necessary to do so to provide further understanding of the financial
performance of the Group. They are material items of income or expense that
have been shown separately due to the significance of their nature or amount.
In the first half of F22, the Group had exceptional operating income of €4.3
million relating to fuel hedges that were classified as discontinued as a
consequence of the partial grounding of the Group's fleet under the COVID-19
virus situation. There were no discontinued hedges, or other exceptional items
in F23. These items were used by management in the determination of the
non-IFRS underlying loss measure for the Group - see below.
Underlying loss
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
€ million € million
Loss for the period (384.3) (120.9)
Adjustment for exceptional items - (4.3)
Underlying loss after tax (384.3) (125.2)
The tax effects of the adjustments made above are insignificant.
11. Income tax expense
The income tax credit for the six months ended 30 September 2022 was €5.4
million (the six months ended 30 September 2021: €1.3 million charge). The
tax credit is mainly attributable to an increase in deferred tax assets due to
foreign exchange translation effect on IFRS 16 lease liabilities and a higher
tax rate in the UK.
The annual effective income tax rate of the Group has been used to calculate
the current tax charge or credit for the period. This results in an overall
effective tax rate for the six months ended 30 September 2022 of 1.4 per cent
(the six months ended 30 September 2021: (1.1) per cent).
There have been no developments in the period in respect of the uncertain
Swiss tax positions that we disclosed in Note 4 in the 2022 Annual Report and
Accounts of the Group.
12. Loss per share
Basic and diluted loss per share
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
Loss for the six months, € million (374.8) (120.9)
Weighted average number of Ordinary Shares in issue, thousands 103,158 96,574
Basic and diluted loss per share, € (3.63) (1.28)
There were no Convertible Shares in issue at 30 September 2022 (30 September
2021: nil).
Underlying loss per share
Six months ended Six months ended
30 Sep 2022 30 Sep 2021
Loss used to determine underlying loss per share, € million (374.8) (125.2)
Weighted average number of Ordinary Shares for underlying loss per share, 103,158 96,574
thousands
Underlying loss per share, € (3.63) (1.30)
The calculation of the underlying EPS is different from the calculation of the
IFRS diluted EPS measure in that for earnings the underlying loss for the six
months was used (see Note 10 ) as opposed to the statutory (IFRS) loss for
the six months. The weighted average number of shares for underlying earnings
per share should be the same as for the basic earnings per share calculation.
13. Property, plant and equipment
Land and Aircraft maintenance assets Aircraft assets and parts Fixtures and Advances paid for aircraft* Advances paid RoU assets aircraft and spares RoU assets other Total
buildings € million € million fittings € million for aircraft maintenance assets € million € million € million
€ million € million € million
Cost
At 1 April 2021 18.2 430.3 545.9 8.6 527.1 217.3 2,809.6 15.5 4,572.5
Additions - 24.5 5.7 1.6 227.5 12.5 414.0 0.1 685.9
Disposals - (79.2) (1.0) - (158.8) - (90.6) - (329.6)
Transfers - 11.0 - - - (11.0) - - -
FX translation effect - 0.1 - - - (0.2) (3.0) - (3.1)
At 30 September 2021 18.2 386.7 550.6 10.2 595.7 218.6 3,130.0 15.6 4,925.7
At 31 March 2022 25.8 374.0 690.3 11.3 734.3 224.6 3,414.1 16.1 5,490.5
Additions 0.1 33.2 483.5 1.2 271.2 33.3 389.3 7.2 1,219.0
Disposals - (90.5) (6.5) (0.2) (248.1) - (112.1) - (457.4)
Transfers - 25.0 - - - (25.0) - - -
FX translation effect - 1.7 (5.9) - - (0.7) (15.1) - (20.0)
At 30 September 2022 25.9 343.4 1,161.4 12.3 757.4 232.2 3,676.2 23.3 6,232.1
Accumulated depreciation
At 1 April 2021 3.3 298.9 61.5 6.4 - - 1,319.1 5.0 1,694.2
Depreciation charge for the period 0.6 43.0 16.4 0.4 - - 150.3 1.2 211.9
Disposals - (78.4) (0.9) - - - (90.6) - (169.9)
FX translation effect - - - - - - (0.5) - (0.5)
At 30 September 2021 3.8 263.4 77.1 6.7 - - 1,378.3 6.3 1,735.7
At 31 March 2022 4.5 263.4 83.8 7.6 - - 1,492.7 7.2 1,859.2
Depreciation charge for the period 0.8 49.2 26.4 0.9 - - 196.9 1.3 275.5
Disposals - (90.1) (0.3) (0.2) - - (111.7) - (202.3)
FX translation effect - 0.9 (0.1) - - - (3.8) - (3.0)
At 30 September 2022 5.3 223.4 109.8 8.3 - - 1,574.1 8.5 1,929.4
Net book amount
At 31 March 2021 14.9 131.4 484.4 2.2 527.1 217.3 1,490.5 10.4 2,878.2
At 30 September 2021 14.4 123.3 473.5 3.5 595.7 218.6 1,751.7 9.3 3,190.0
At 31 March 2022 21.3 110.6 606.5 3.7 734.4 224.6 1,921.4 8.9 3,631.4
At 30 September 2022 20.6 120.0 1,051.6 4.0 757.4 232.2 2,102.2 14.8 4,302.8
*Disposals represent the refunds upon delivery of aircraft of advances
previously paid.
The Group entered into various financing arrangements in order to finance
aircraft including sale and leaseback, Japanese Operating Lease with Call
Option (JOLCO) and French Tax Lease (FTL) structures. Certain of these
arrangements include Special Purpose Vehicles (SPV) in the financing structure
and in accordance with IFRS 10, where the Group has control of these entities,
these are consolidated in the Group balance sheet. Aircraft assets and parts
leased under JOLCO as part of sale and leaseback arrangements are not
classified as leases under IFRS 16 and treated as aircraft assets and parts
(as if there were no sale at all).
Other right-of-use (RoU) assets include leased buildings and simulator
equipment. Please refer to Note 17 for details on lease liabilities.
Aircraft maintenance assets are fixed assets created primarily against
provision, as the Group's aircraft or their main components no longer meet the
relevant return conditions under lease contracts.
Advances paid for aircraft maintenance assets reflect primarily the advance
payments made to the engine maintenance service provider under Flight Hour
Agreements (FHAs).
Advances paid for aircraft represent PDPs made in the year, while disposals in
the same category represent PDP refunds received from the manufacturer where
the respective aircraft or spare engine was not purchased by the Group.
Impairment
No new impairment triggers for the Group's aircraft fleet, which comprises a
single cash generating unit (CGU), in the period have been identified.
Nonetheless, an impairment risk review assessment was performed for the
Group's aircraft fleet CGU that includes virtually all property, plant,
equipment, and also the intangible assets of the Group. The recoverable amount
of that CGU was estimated by value in use calculations based on cash flow
projections in the plan approved by the Board for the following three
financial years up to and including March 2025.
Management's assessment of future trends includes trading and other
assumptions - such as fleet size, passenger numbers, load factors, commodity
prices and foreign exchange rates - based on external and internal inputs, as
well as climate change risks and opportunities outlined in the TCFD disclosure
in the Group's 2022 Annual Report and Accounts. Key assumptions for the jet
fuel price and USD exchange rate were the following:
2023 2024 2025
Jet fuel price (EUR per metric tonne) 1,100 930 850
USD/EUR exchange rate 1.02 1.02 1.04
An average growth rate of 2.2 per cent (31 March 2022: 2.1 per cent) was used
to extrapolate cash flow projections beyond March 2025 for a period of twelve
years in total to cover all lease terms in the existing aircraft fleet. A
pre-tax discount rate of 7.2 per cent (31 March 2022: 9.7 per cent) was
derived from the weighted average cost of capital of the Group. The risk of
significant adverse changes in cash flows was taken into account by
calculating and weighting management's base case approved plan with a downside
scenario that is consistent with that used in the Group's going concern
assessment. Sensitivity analysis was performed by management to assess the
impact of changes in its trading assumptions and the key assumptions detailed
above. As a result of this risk review management did not identify any
reasonably possible changes in assumptions that would cause an impairment.
Aircraft in Ukraine
The above impairment assessment included the three aircraft on the ground in
Ukraine, with a total net book value of €17.2 million. Based on photographic
and local employee information management believes that these aircraft are in
good condition and have not been damaged in the conflict. Whilst not a
separate CGU, cash flow projections were estimated for these aircraft based on
the average cash contribution generated per aircraft in the Group's fleet
adjusted for a downward scenario according to the plans and calculations
described above, and the cost of planned maintenance of the particular
aircraft. Management's working assumption is that these aircraft will be
returned to the fleet by the end of the calendar year; however, delays to the
date until the aircraft can be returned to the fleet can cause a significant
but not material change to their estimated recoverable amount. If the aircraft
do not return into service for a prolonged period of time, then additional
consideration will be needed in upcoming reporting cycles.
14. Trade and other receivables
30 Sep 2022 31 Mar 2022
€ million € million
Non-current
Receivables from lessors 12.1 9.4
Other receivables 10.3 11.3
Non-current trade and other receivables 22.4 20.7
Current
Trade receivables 178.7 96.3
Receivables from lessors 15.7 19.7
Other receivables 6.7 4.2
Prepayments, deferred expenses and accrued income 99.7 66.7
Current trade and other receivables 300.8 186.9
Total trade and other receivables 323.2 207.6
Receivables from lessors (both current and non-current) represent the deposits
provided by the Group to lessors as security in relation to lease contracts
and in relation to the funding of future maintenance events.
Trade receivables included €84.6 million of receivables from contracts with
customers (at 31 March 2022: €52.3 million).
Total trade and other receivables as at 30 September 2022 included financial
instruments in the amount of €203.3 million (31 March 2022: €141.6
million).
Impairment of trade and other receivables
30 Sep 2022 31 Mar 2022
€ million € million
Impaired receivables
- trade receivables 3.7 3.7
Allowances on impaired receivables
- other receivables 0.6 0.6
The Group recorded €2.1 million of receivables from Warsaw Modlin airport
during 2013 as compensation for damages which was immediately impaired in
full. However, the Group is legally claiming the full amount in court. The
compensation claimed by the Group, plus interest, was awarded by the District
Court of Warsaw in June 2018. However, the airport appealed against the
decision, which is currently pending. There was no transaction regarding this
receivable in the first half of this financial year.
15. Trade and other payables
30 Sep 2022 31 Mar 2022
€ million € million
Non-current liabilities
Accrued expenses 57.4 55.3
Other payables 1.5 1.5
Non-current trade and other payables 58.9 56.8
Current liabilities
Trade payables 179.9 123.4
Payables to passengers 129.3 110.9
Other trade payables 23.6 16.6
Accrued expenses 542.3 307.7
Current trade and other liabilities 875.2 558.6
Total trade and other payables 934.1 615.4
Payables to passengers include the refunds made in credits which can be used
by customers for rebooking tickets for later dates or can be requested to be
refunded by the Group in cash and other liabilities towards customers.
Accrued expenses mainly include accruals for operating expenses such as
airport and ground handling, fuel, ETS allowances, en-route and navigation,
crew and maintenance related expenses.
Total trade and other payables as at 30 September 2022 included financial
instruments in the amount of €783.8 million (31 March 2022: €529.2
million).
16. Provisions for other liabilities and charges
Aircraft Other Total
maintenance € million € million
€ million
At 31 March 2021 78.1 10.8 88.9
Non-current provisions 49.3 1.8 51.1
Current provisions 28.8 9.0 37.8
Capitalised within property, plant and equipment 14.7 - 14.7
Charged to comprehensive income - 10.6 10.6
Used during the period (4.9) (4.3) (9.2)
At 30 September 2021 87.9 17.1 105.0
Non-current provisions 53.8 1.8 55.6
Current provisions 34.1 15.3 49.4
At 31 March 2022 88.8 18.3 107.1
Non-current provisions 43.0 0.9 43.9
Current provisions 45.8 17.4 63.2
Capitalised within property, plant and equipment 37.8 - 37.8
Charged to comprehensive income 6.0 91.0 97.0
Used during the period (19.7) (36.4) (56.1)
At 30 September 2022 112.9 72.9 185.8
Non-current provisions 28.7 0.9 29.6
Current provisions 84.2 72.0 156.2
Non-current provisions relate to future aircraft maintenance obligations of
the Group on leased aircraft and spare engines, falling due typically between
one and five years from the balance sheet date. Current aircraft maintenance
provisions relate to heavy maintenance obligations expected to be fulfilled in
the coming financial year. The amount of provision reflects management's
estimates of the cost of heavy maintenance work that will be required in the
future to discharge obligations under the Group's lease agreements. The amount
of provision reflects management's estimates of the cost of heavy maintenance
work that will be required in the future to discharge obligations under the
Group's lease agreements. Maintenance provision in relation to engines covered
by FHA agreements is netted off with the FHA prepayments made to the engine
maintenance service provider in respect of the same group of engines.
Other provisions mainly relate to liabilities for EU Regulation (EC) No.
261/2004 (EU 261) compensation to customers, refunds made to passengers, and
uncertain tax positions. The value of the provision is determined based on
known eligible events and historical claim patterns. As at 30 September 2022,
the provision for EU 261 compensation was €66.5 million (at 31 March 2022:
€13.0 million). This is mainly related to flight cancellations caused by
supply chain disruptions during the summer season. Since operations have
recently normalised, expenses and provision related to flight cancellations
are expected to return to lower levels.
17. Borrowings
30 Sep 2022 31 Mar 2022
€ million € million
Lease liability under IFRS 16 437.4 374.3
Liability related to JOLCO and FTL contracts 61.9 38.8
Total current borrowings 499.3 413.1
Lease liability under IFRS 16 2,415.6 1,972.9
Unsecured debt 1,004.5 997.9
Liability related to JOLCO and FTL contracts 1,033.5 541.0
Loans from non-controlling interests 15.3 13.5
Total non-current borrowings 4,468.9 3,525.3
Total borrowings 4,968.3 3,938.4
As at 30 September 2022, the fair value of borrowings was below its carrying
amount by €481.9 million (at 31 March 2022: €163.3 million). The carrying
amount of other financial assets and liabilities approximated their fair value
at 30 September 2022 and 31 March 2022.
The maturity profile of borrowings as at 30 September 2022 is as follows:
IFRS 16 aircraft and engine lease liability IFRS 16 other lease liability JOLCO and FTL lease liability Unsecured debt Loans from non-controlling interests Total
€ million € million € million € million € million € million
Payments due:
Within one month 35.3 0.2 - - - 35.5
Between one and three months 74.0 0.4 15.0 - - 89.4
Between three months and one year 325.8 1.8 46.9 - - 374.5
Between one and five years 1,401.3 11.5 277.7 1,004.5 - 2,695.1
In more than five years 1,001.0 1.7 755.8 - 15.3 1,773.8
Total borrowings 2,837.4 15.6 1,095.4 1,004.5 15.3 4,968.3
The maturity profile of borrowings as at 31 March 2022 is as follows:
IFRS 16 aircraft and engine lease liability IFRS 16 other lease liability JOLCO and FTL lease liability Unsecured debt Loans from non-controlling interests Total
€ million € million € million € million € million € million
Payments due:
Within one month 41.7 0.2 - - - 41.8
Between one and three months 61.5 0.3 9.7 - - 71.5
Between three months and one year 269.2 1.4 29.2 - - 299.9
Between one and five years 1,176.2 5.7 161.6 997.9 - 2,341.3
In more than five years 788.7 2.2 379.4 - 13.5 1,183.8
Total borrowings 2,337.3 9.8 579.9 997.9 13.5 3,938.4
18. Deferred income
30 Sep 2022 31 Mar 2022
€ million € million
Non-current financial liabilities
Deferred income 86.1 63.0
Current financial liabilities
Unearned revenue 387.6 326.6
Other 6.7 7.2
394.3 333.8
Total deferred income 480.4 396.8
Non-current deferred income represents the value of benefit for the Group
coming from credits and free aircraft components received from manufacturers
and component suppliers, which will be recognised as a credit (a decrease to
aircraft related expenses) over the useful life of the respective asset.
Current deferred income represents the value of tickets paid by passengers for
which the flight service is yet to be performed ("unearned revenue"), the
value of membership fees paid but not yet recognised and the current part of
the value of supplier credits received. Unearned revenue increased due to
higher demand and ticket booking made further in advance.
The contract liabilities (unearned revenue) of €387.6 million existing at 30
September 2022 (at 31 March 2022: €326.6 million) will become revenue during
the upcoming financial year (subject to further cancellations that might
happen after the period end).
19. Prior period restatement
After careful reflection and having regard to the growth in the number of
aircraft on order and increased significance of gains on sale and leaseback
transactions, the Group determined that the proceeds from sale and leaseback
transactions which were included in cash flows from operating activities
within the statement of cash flows in the prior period should be presented as
cash flows from investing activities. Accordingly, management has restated the
presentation of the condensed consolidated interim statement of cash flows for
the six months ended 30 September 2021. Gains and credits associated with
sales and leaseback transactions in the prior period amounted to €55.9
million were previously included under changes in deferred income and are now
presented under proceeds from the sale of tangible assets.
Six months ended Reclassification between Six months ended
30 September 2021
operating and investing
30 September 2021
activities
As previously stated As restated
€ million € million € million
Changes in working capital
Increase/(decrease) in deferred income 150.7 (55.9) 94.8
Cash generated by operating activities before tax 410.8 (55.9) 354.9
Net cash generated by operating activities 406.6 (55.9) 350.7
Cash flows from investing activities
Proceeds from the sale of tangible assets - 55.9 55.9
Net cash generated used in investing activities (161.1) 55.9 (105.2)
20. Capital commitments
At 30 September 2022 the Group had the following capital commitments:
· A commitment to purchase 304 Airbus aircraft of the A320 family
in the period of calendar year 2022-2027. Of the 304 aircraft, 257 relate to
the "neo" version of the A320 family (40 from the purchase orders placed in
June 2015, 142 from the purchase order placed in November 2017 and 75 from the
purchase order placed in November 2021), while the remaining 47 relate to the
"neo XLR" version (20 from the purchase order placed in June 2019 and 27 from
the purchase order placed in November 2021).
The total commitment is valued at US$43.2 billion (€43.9 billion) based on
list prices last published in 2018 and escalated annually until the reporting
date based on contract terms (31 March 2022: US$45.8 billion (€41.1
billion)).
Out of the 304 aircraft, 14 are to be delivered in H2 F23. As at the approval
date of this document the financing for 29 aircraft is already contracted. The
Group uses various financing arrangements in order to finance aircraft
including sale and leaseback, Japanese Operating Lease with Call Option
(JOLCO) and French Tax Lease (FTL) structures.
· In line with Wizz Air's ambition to become a 500-aircraft airline
by the end of the decade, the Group has exercised its purchase rights in
relation to 75 A321neo aircraft to be delivered in calendar years 2028-29. As
at 30 September 2022, this commitment is subject to Shareholder approval and
is valued at US$10.7 billion (€10.9 billion) based on list prices last
published in 2018 and escalated annually until the reporting date based on
contract terms.
· A commitment to purchase 28 IAE "neo" (GTF) spare engines in the
period 2022-26. In July 2016 the Group entered into an engine selection
agreement with Pratt & Whitney that, among other matters, included a
commitment for the Group to purchase 16 spare engines. In September 2019 the
Group restated and amended this engine selection agreement with certain other
commitments including a purchase of 25 additional spare engines. In October
2021 the Group committed to purchase two further spare engines.
The total commitment is valued at US$467.1 million (€475.0 million) at list
prices in 2022 US$ terms (31 March 2022: US$534.7 million (€480.4 million)).
Out of the 28 spare engines, 1 is to be delivered in H2 F23. As at the date of
approval of this document none of them are financed yet.
21. Contingent liabilities
The Group has certain contingent liabilities in relation to European
Commission state aid investigations and to legal claims initiated by
Carpatair. These matters were explained in Note 34 in the 2022 Annual Report
and Accounts of the Group and there have been no significant developments in
these cases since then.
No provision has been made by the Group in relation to these cases because
there is currently no reason to believe that the Group will incur charges from
these cases.
22. Subsequent events
There were no matters arising, between the condensed consolidated interim
statement of financial position date and the date on which these condensed
consolidated interim financial statements were approved by the Board of
Directors, requiring adjustment or disclosure in accordance with IAS 10,
'Events after the Reporting Period'.
23. Related parties
The Group has related party relationships with Indigo Hungary LP and Indigo
Maple Hill LP (collectively referred to as "Indigo" here) and its key
management personnel (Directors and Officers).
There were no related party transactions in the period ended 30 September 2022
that materially affected the financial position or the performance of the
Group during that period and there were no changes to the related party
positions described in the 2022 Annual Report and Accounts that could have a
material effect on the financial position or performance of the Group in the
same period.
The Group has contracted with a related party of the CEO to provide IT
services with regards to Machine Learning. The amount paid for this service
for the six months ended on 30 September 2022 was €1.8 million (for the six
months ended on 30 September 2021: €0.6 million), which in the judgment of
the Board was not material.
24. Seasonality of operations
The Group's results of operations, like those of most other airlines in
Europe, vary significantly from quarter to quarter within the financial year.
Historically, the Group has had higher passenger revenue during the summer
season in comparison to the winter season (with the exception of the periods
around Christmas, the New Year and Easter) as this is the period during which
many Europeans tend to take their annual holiday. Flight frequency, load
factor and average ticket prices all tend to be higher during such peak
periods compared to other periods of the year.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Interim Report in accordance
with applicable law and regulations.
The Directors confirm that these condensed consolidated interim financial
statements have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting' as adopted by the European Union.
The interim management report includes a fair review of the information
required by the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom's Financial Conduct Authority paragraphs 4.2.7 and 4.2.8,
namely:
· an indication of important events that have occurred during the
six months ended 30 September 2022 and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
· material related party transactions during the six months ended
30 September 2022 and any material changes in the related party transactions
described in the 2022 Annual Report and Accounts of the Group.
The Directors of Wizz Air Holdings Plc are listed in the 2022 Annual Report
and Accounts of the Group.
A list of current Directors is maintained on the Wizz Air Holdings Plc
website: wizzair.com.
This Interim Report was approved by the Board of Directors and authorised for
issue on 1 November 2022 and signed on its behalf by:
József Váradi
Director
Independent review report to Wizz Air Holdings Plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Wizz Air Holdings plc's condensed consolidated interim
financial statements (the "interim financial statements") in the interim
financial report of Wizz Air Holdings plc for the six month period ended
30 September 2022 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting' as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The interim financial statements comprise:
· the condensed consolidated interim statement of financial
position as at 30 September 2022;
· the condensed consolidated interim statement of comprehensive
income for the period then ended;
· the condensed consolidated interim statement of cash flows for
the period then ended;
· the condensed consolidated interim statement of changes in equity
for the period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the interim financial report of
Wizz Air Holdings plc have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting' as adopted by the
European Union and the Disclosure Guidance and Transparency Rules sourcebook
of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the interim financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with this ISRE. However, future events or
conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim financial report, including the interim financial statements, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim financial report in accordance with
the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the interim financial
report, including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the interim financial report based on our review. Our
conclusion, including our Conclusions relating to going concern, is based on
procedures that are less extensive than audit procedures, as described in the
Basis for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
1 November 2022
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