REG - Wizz Air Holdings - Q1 F23 Results
27/07/2022 07:00
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RNS Number : 8359T Wizz Air Holdings PLC 27 July 2022
Q1 F23 RESULTS
RAMPING UP FOR RECORD SUMMER FLYING
LSE: WIZZ
Geneva, 27 July 2022: Wizz Air Holdings Plc ("Wizz Air" or "the Company"), the
fastest growing and one of the most sustainable European airlines, today
issues unaudited results for the three months to 30 June 2022 ("first quarter"
or "Q1") for the Company.
Three months to 30 June 2022 2021
Change
Passengers 12,182,156 2,954,274 312.4%
Revenue (€ million) 808.8 199.0 306.4%
EBITDA (€ million) (154.4) (17.8) 766.6%
EBITDA margin (%) (19.1) (9.0) -10.1ppt
Operating loss for the period (€ million) (284.5) (108.6) 162.0%
Reported loss for the period (€ million) (452.5) (114.4) 295.5%
RASK (€ cent) 3.46 2.69 28.6%
Ex-Fuel CASK (€ cent) 2.62 3.57 (26.6)%
Fuel CASK (€ cent) 2.18 0.86 153.5%
Total Cash (€ million) 1,583.2 1,378.8* 14.8%
Load factor (%) 84.7 63.6 +21.1ppt
Period-end fleet size 157 141 11.3%
Period-end seat count 14,390,508 4,645,853 209.7%
* Total Cash balance as at March 31, 2022. Total cash comprises cash and cash
equivalents, short-term cash deposits and restricted cash.
József Váradi, Wizz Air Chief Executive commented on the results:
"During the first quarter of F23 we continued to ramp-up Wizz Air as COVID-19
transitioned from a pandemic to an endemic setting. Passengers and revenue
more than quadrupled versus the same quarter last year, up almost 20% versus
pre-pandemic levels, with 30% more capacity operated.
Whilst we are rebuilding the airline with greater scale we remain very
conscious of the challenging macroeconomic and operational backdrop. Fuel
prices for the quarter were double pre-pandemic levels. Lingering restrictions
from COVID-19 remained, particularly during April and May, while the war in
Ukraine and supply chain disruptions affecting air traffic control, security
and ground operation resources have impacted our utilisation.
As a result, unit costs (CASK) for the quarter were around 40% higher versus
pre-pandemic, 75% of this increase was driven by commodity inflation, whilst
unit revenues (RASK) for the quarter were 10% below pre-pandemic levels,
predominantly a function of lower load factors as we ramped up the operation
and as the Ukraine war dented our momentum.
Our operating loss for the quarter was 285m EUR, whilst our net reported loss
of 453m EUR was impacted by the strength of the USD causing a non-cash,
unrealized FX impact in the income statement. Our liquidity strengthened
significantly in the quarter to 1.6 billion EUR as we grew our business.
During Q1 F23 we invested to re-establish our proven pre-pandemic operating
model, defined by our ultra-low cost principles. We are seeing the results of
this investment already through Q2 and we expect to deliver a material
operating profit as revenue and pricing momentum continue to improve."
Commenting on further business developments during the period, Mr Váradi
added:
"During the quarter we focused on ramping up our network - restoring capacity
in our core markets just below pre-pandemic levels. Around 30% of our new
capacity was deployed in markets where we expanded new operations during
COVID-19 (e.g. Italy, Albania, Abu Dhabi, new bases in UK and West-Balkans).
We've now adjusted our network in view of the industry supply chain
disruptions, making tactical capacity reductions from June onwards to increase
the agility of our operation and supply chain."
On the summer and the outlook, Mr Váradi said:
"By now we have the largest part of the summer ramp-up behind us and expect to
operate around 30% higher ASKs in the summer compared to pre-pandemic levels.
We expect continued month-on-month momentum in net total fares and loads
through the summer as we work to maximize RASK - given the higher input costs
- and we expect RASK in the second quarter to improve +10% versus F20.
We are encouragingly starting to see normalization of operational disruption
levels as we have lowered utilization by circa five per cent for the summer
versus F20, still operating industry-leading utilization.
We continue to be a leader on cost and sustainability. Our ex-Fuel CASK cost
structure will continue to improve sequentially, our fleet renewal continued
with an average aircraft seat count of 214 seats. Our emission levels for the
summer are expected to be almost 10% lower versus F20 summer (measured in CO2
grams per RPK), as we continue to make strong progress towards our 2030 goal
of 43g per RPK, a 25% reduction versus F20."
FINANCIAL RESULTS IN Q1
· Total revenue amounted to €808.8 million, an increase of 306.4%
versus Q1 F22:
o Ticket revenues increased by 349.6% to €392.0 million.
o Ancillary revenues increased by 272.6% to €416.8 million.
o Total unit revenue increased by 28.7% to 3.46 euro cents per available
seat kilometre (ASK).
o Ancillary revenue per passenger decreased by 9.0% versus F22 to €34.2,
however, versus F20 it was still a 13.8% increase (up €4.1 per passenger).
The increase in ancillary revenue per passenger versus F20 is driven by
dynamic pricing on bundles, seats and bags as well as continuous demand for
our flexibility products.
o Ticket revenue per passenger increased by 9.0% versus F22 to €32.2,
while compared to F20 it was tracking lower by 12.0% (down €4.4 per
passenger). The lower ticket revenue per passenger versus F20 was driven by
softer demand amidst lingering restrictions from COVID-19 (particularly during
April and May), the war in Ukraine and concerns around supply chain
disruptions.
· Total operating cost increased 255.3% to €1,093.3 million
versus Q1 F22:
o Total unit costs increased by 8.3% to 4.80 euro cents per ASK, driven by
significantly higher fuel unit costs
o Fuel unit costs increased by 153.5% to 2.18 euro cents per ASK.
o Ex-fuel unit costs decreased by 26.6% to 2.62 euro cents per ASK, driven
by the much improved utilisation of our aircraft assets, resulting in lower
unit cost of depreciation.
· The statutory loss for the period was €452.5 million.
· Total cash at the end of June 2022 increased to €1,583.2
million, including €153.2 million restricted cash.
NETWORK ADDITIONS
Base rationalization
· Doncaster, United Kingdom: one aircraft
New bases:
· Cardiff, United Kingdom: one aircraft
· Venice, Italy: two aircraft
Base aircraft additions
· London Gatwick, United Kingdom: four additional aircraft, taking
the base to five aircraft
· London Luton, United Kingdom: one additional aircraft, taking the
base to eleven aircraft
· Rome, Italy: one additional aircraft, taking the base to five
aircraft
· Catania, Italy: one additional aircraft, taking the base to three
aircraft
· Tirana, Albania: two additional aircraft, taking the base to
eight aircraft
· Katowice, Poland: two additional aircraft, taking the base to six
aircraft
· Warsaw, Poland: one additional aircraft, taking the base to eight
aircraft
· Gdansk, Poland: one additional aircraft, taking the base to seven
aircraft
· Budapest, Hungary: one additional aircraft, taking the base to
twelve aircraft
· Cluj, Romania: one additional aircraft, taking the base to seven
aircraft
· Craiova, Romania: one additional aircraft, taking the base to two
aircraft
· Larnaca, Cyprus: one additional aircraft, taking the base to two
aircraft
In addition to announcing new routes across its European network, Wizz Air
also announced launching of new routes to Dammam, the Kingdom of Saudi
Arabia from Rome, Vienna and Abu Dhabi.
FLEET UPDATE
Fleet expansion to 157 aircraft with the addition of eight new A321neo
aircraft in the quarter. Out of the eight new A321neo aircraft, two were
financed with Sale and Leaseback transactions, while six used JOLCO
transactions. At the same time, we returned four end-of-lease A320ceo aircraft
to lessors, which increased the average seats per aircraft to 214 seats. Wizz
Air's average aircraft age is 4.9 years, one of the youngest fleets of any
major airline. For the balance of F23 we expect 36 new A321neo aircraft
deliveries, while 11 A320ceo aircraft will reach the end of lease and will
exit the fleet.
SUSTAINABILITY UPDATE
· Wizz Air has been recognized as a leading airline in sustainable
travel, improving its sustainability ratings over the past years. Underpinning
its commitment to sustainability and highlighting the main reasons why it is
the greenest choice for flying, Wizz Air launched, at the beginning of 2022,
the 'Fly the Greenest' campaign and on 27 June, Wizz Air has been recognised
as the "Most Sustainable Low-Cost Airline" within the World Finance
Sustainability Awards 2022, announced in this year's summer issue of World
Finance magazine. World Finance praised Wizz Air's continued commitment to
sustainability, specifically its ambitious fleet renewal programme and other
fuel-saving initiatives.
· In June, 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 the first
time comprehensively. As a key step in recognizing the impact of indirect
emissions, the company implemented a Sustainable Procurement Policy in April.
· 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" sustainable mobility conference. Brought to the
next level through the Airbus A321neo aircraft, a staple in durable aviation,
the green demonstration operations using partly sustainable aviation fuel
(SAF) were a pivotal moment for Wizz Air. During the demonstration operations,
Wizz Air took 4.5 tonnes of a SAF fuel blend, consisting of 30% pure SAF and
70% Jet A1 fuel. This helped Wizz Air also achieve the currently lowest
possible emissions per passenger kilometre in Europe out of the airlines
taking part in this sustainable effort.
· Wizz Air is in favour of the recently approved directions in the
EU institutions' positions on the Fit for 55 climate package. The European
Parliament (EP) and the Council of the European Union (Council) have proposed
elements that we have also been advocating in order to achieve a level playing
field:
o RefuelEU Aviation: The EP proposed to include a sustainable aviation fuel
(SAF) flexibility mechanism, which would help airlines meet the SAF blending
mandates when operating in regions with limited (or zero) possibilities to
purchase SAF at a favourable price. Council proposed a Sustainable Aviation
Fund to support innovation, in which this mechanism would be included.
o Emissions Trading System (ETS) Aviation proposal: The EP proposed to
extend the scope to all flights departing the EEA and to create SAF allowances
to address price differential.
· Wizz Air's CO2 emissions per passenger/km amounted to 59.6 grams
per passenger/km for the rolling 12 months to 30 June 2022 with significant
improvement for Wizz Air this year, contributing to our CO2/RPK levels
consistently reaching pre-pandemic levels.
CHANGES TO THE MANAGEMENT TEAM
In April 2022 Alexandra Avadanei was promoted to the position of Revenue
Officer. Alexandra joined Wizz Air as a cabin attendant in January 2009 and
since then held a number of senior management roles.
In July 2022, Yvonne Moynihan joined Wizz Air as Corporate Officer. In her
previous role Yvonne was the General Counsel and Board Secretary at Vueling
Airlines based in Barcelona. Prior to it, she worked for Ryanair as Legal
Counsel for five years, based in Dublin.
In July 2022, Owain Jones was appointed to the position of Development
Officer. Owain joined Wizz Air as General Counsel in September 2010 and has
served as Chief Corporate Officer, Managing Director Wizz Air UK and Chief
Supply Chain and Legal Officer.
With these new appointments we are further enhancing our leadership capacity
as we continue to demonstrate outstanding agility in the pursuit of being the
ultimate structural cost winner in the industry.
ABOUT WIZZ AIR
Wizz Air, Europe's fastest growing and most sustainable ultra-low-cost
airline, operates a fleet of 161 Airbus A320 and A321 aircraft. A team of
dedicated aviation professionals delivers superior service and very low fares,
making Wizz Air the preferred choice of 40.0 million passengers in the
financial year F20 ending 31 March, 2020 and 27.1 million passengers in the
financial year F22 ending 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, the world's only
safety and product rating agency, and 2020 Airline of the Year by ATW, the
most coveted honour an airline or individual can receive, recognizing
individuals and organizations that have distinguished themselves through
outstanding performance, innovation, and superior service. Wizz Air was also
rated the most sustainable airline in Europe by Sustainalytics in January
2022.
For more information:
Zlatko Custovic (Investors), Wizz Air: +36 1 777 9407
Zsuzsa Trubek (Media), Wizz Air: +36 70 652 4115
Edward Bridges / Jonathan Neilan, FTI Consulting LLP: +44 20 3727 1017
- Ends -
Q1 FINANCIAL REVIEW
In the first quarter, Wizz Air carried 12,182,156 passengers, a 312.4%
increase compared to the same period in the previous year as a direct result
of the gradually returning travel demand and easing travel restrictions
imposed by governments due to COVID-19. The Company generated revenues of
€808.8 million, an increase of 306.4%. These rates compare to capacity
increase measured in terms of ASKs of 215.8% and 209.7% more seats. The
underlying net loss for the first quarter was €452.5 million.
Consolidated statement of comprehensive income (unaudited)
For the three months ended 30 June - rounded to one decimal place
Continuing operations 2022 2021 Change
€ million € million
Passenger ticket revenue 392.0 87.2 349.6%
Ancillary revenue 416.8 111.9 272.6%
Total revenue 808.8 199.0 306.4%
Staff costs (86.3) (34.5) 150.0%
Fuel costs (508.0) (63.5) 700.6%
Distribution and marketing (20.0) (7.3) 174.2%
Maintenance materials and repairs (53.8) (41.6) 29.2%
Airport, handling and en-route charges (229.6) (69.9) 228.4%
Depreciation and amortisation (130.1) (90.8) 43.3%
Net other expenses (65.5) (0.1) n.m.**
Total operating expenses (1,093.3) (307.7) 255.3%
Operating loss (284.5) (108.7) 161.9%
Financial income 0.4 0.9 -56.5%
Financial expenses (27.0) (20.8) 30.1%
Net foreign exchange (loss)/gain (139.9) 14.9 n.m.**
Net financing expense (166.5) (4.9) n.m.**
Loss before income tax (451.1) (113.6) 297.1%
Income tax expense (1.4) (0.8) 68.9%
Statutory loss for the period* (452.5) (114.4) 295.5%
Underlying loss for the period* (452.5) (118.7) 281.2%
*Q1 FY22 underlying net profit excludes the impact of hedge gains classified
as discontinued (amounting to €4.3 million)
**n.m.: not meaningful as a variance is more than (-)100 per cent
Revenue
Passenger ticket revenue increased 349.6% to €392 million and ancillary
income (or "non-ticket" revenue) increased by 272.6% to €416.8 million,
driven by gradually returning travel demand. Total revenue per ASK (RASK)
increased by 28.7% to 3.46 euro cents from 2.69 euro cents in the same period
of F22 driven by a significantly higher load factor. For perspective, RASK in
Q1 F20 was 3.84 euro cents and the decline in RASK in Q1 F23 is completely
attributable to load factor differences.
Average revenue per passenger decreased to €66.4 in Q1 F23 which was 1.1%
lower than the Q1 F22 level of €67.1. Average ticket revenue per passenger
increased by 9% from €29.5 in Q1 F22 to €32.2 in Q1 F23, average ancillary
revenue per passenger decreased from €37.6 in Q1 F22 to €34.2 in Q1 F23,
representing a decrease of 9.0%. As noted above, this quarter's average
ancillary revenue per passenger when compared with Q1 F20 (pre-Covid period),
shows an increase of 13.8% from €30.1 to €34.2 on the back of dynamic
pricing on bundles, seats and bags as well as increased demand for our
flexibility products.
Operating expenses
Operating expenses for the three months increased by 255.3% to €1,093.3
million from €307.7 million in Q1 F22. Total Cost per ASK ('CASK') increased
by 8.3% to 4.80 euro cents in Q1 F23 from 4.43 euro cents in Q1 F22.
Staff costs increased by 150% to €86.3 million in Q1 F23 from €34.5
million in Q1 F22, trailing behind the increased capacity operated.
Fuel expenses increased by 700.6% to €508.0 million in Q1 F23, significantly
up from €63.5 million in the same period of F22. The average fuel price
(including hedging impact and excluding into-plane premium) paid by Wizz Air
during the first quarter was US$1,238.7 per tonne, an increase of 130.3% from
US$537.9 the same period in F22.
Distribution and marketing costs increased by 174.2% in Q1 F23 to €20.0
million due to the increased revenue performance.
Maintenance, materials and repair costs increased by 29.2% to €53.8 million
in Q1 F23 compared to €41.6m in Q1 F22 due to a larger fleet, increased base
maintenance events and end of lease obligations.
Airport, handling and en-route charges increased by 228.4% to €229.6 million
in the first quarter of F23 versus €69.9 in the prior year, an increase
mostly driven behind the ASK increase and mix effects in the network operated.
Depreciation and amortisation charges increased by 43.3% in the first quarter
to €130.1 million, up from €90.8 million in the same period in F22, mainly
due to larger fleet and higher aircraft utilization.
Other expenses amounted to €65.5 million in the first quarter, compared to
€0.1 million costs in the same period last year. The increase is caused by
significantly higher flight disruption and passenger compensation costs (an
increase of €60.2 million), further increased by higher non salary related
crew expenses (training, etc).
Financial expenses amounted to €27.0 million compared to €20.8 million in
Q1 F22, driven by the increase in fleet size.
Net foreign exchange loss was €139.9 million compared to a gain of €14.9
million in Q1 F22, caused by the significant weakening of the euro against the
US dollar that resulted unrealised foreign exchange losses on the revaluation
of US dollar denominated lease liabilities.
Income tax expense was €1.4 million (Q1 F22: €0.8 million) reflecting
mainly local business tax and innovation tax in Hungary.
OTHER INFORMATION
1. Cash
Total cash (including cash and cash equivalents restricted cash and cash
deposits with more than 3 months maturity) at the end of the first quarter
increased by 14.8% to €1,583.2 million (including €153.2 million
restricted cash) versus 31 March 2022.
2. Hedging positions
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. Jet fuel hedge coverages are as follows:
Fuel hedge coverage
F23 F24
Period covered 9 months 12 months
Exposure in metric tons ('000) 1,077 1,777
Coverage in metric tons ('000) 493 256
Hedge coverage for the period 46% 20%
Blended capped rate 1,319 1,081
Blended floor rate 1,105 940
Sensitivities
· Pre-hedging, a one cent movement in the Euro/US Dollar exchange
rate impacts this financial year's operating expenses by €12.0 million.
· Pre-hedging, a $10 (per metric ton) movement in the price of jet
fuel impacts this financial year's fuel costs by $5.8 million.
3. Fully diluted share capital
The figure of 127,699,720 should be used for the Company's theoretical fully
diluted number of shares as at 15 July 2022. This figure comprises
103,237,078 issued ordinary shares and 24,246,715 new ordinary shares which
would have been issued if the full principal of outstanding convertible
notes had been fully converted on 15 July 2022 (excluding any ordinary shares
that would be issued in respect of accrued but unpaid interest on that date)
and 215,927 new ordinary shares which may be issued upon exercise of vested
but unexercised employee share options.
4. 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"). The decision by the Board is considered
appropriate to ensure Wizz Air Hungary Ltd's continued compliance with
applicable ownership and control requirements. We will provide further details
on or before 19 August 2022, simultaneously with the notice of annual general
meeting that is scheduled to take place on 13 September 2022.
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.
KEY STATISTICS
For the three months ended 30 June
2022 2021 Change
Capacity
Number of aircraft at end of period 157 141 11.3%
Equivalent aircraft 152.2 138.8 9.7%
Utilisation (block hours per aircraft per day; hh:mm) 11:47 4:22 170.0%
Total block hours 162,281 55,182 194.1%
Total flight hours 141,367 48,418 192.0%
Revenue departures 67,243 23,128 190.7%
Seat capacity 14,390,508 4,645,853 209.7%
Average aircraft stage length (km) 1,622 1,591 2.0%
Total ASKs (mln. km) 23,343 7,391 215.8%
Operating data
RPKs (mln. km) 19,959 4,719 322.9%
Load factor 84.7% 63.6% 21.1ppts
Number of passenger segments 12,182,156 2,954,274 312.4%
Fuel price (average US$ per ton, including hedging impact but excluding 1,238.7 537.9 130.3%
into-plane premium)
Foreign exchange rate (average US$/€, including hedging impact) 1.07 1.21 (11.6%)
CASK
For the three months ended 30 June*
2022 2021 Change
euro cents euro cents euro cents
Fuel costs 2.18 0.86 1.32
Staff costs 0.37 0.46 (0.11)
Distribution and marketing 0.09 0.10 (0.01)
Maintenance, materials and repairs 0.23 0.56 (0.33)
Airport, handling and en-route charges 0.98 0.95 0.03
Depreciation and amortisation 0.56 1.23 (0.67)
Other expenses/income 0.27 (0.00) 0.27
Net of financial income and expenses 0.11 0.27 (0.16)
Total CASK 4.80 4.43 0.37
Total ex-fuel CASK 2.62 3.57 (0.95)
*Figures are rounded to two decimal places
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