Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wizz Air Holdings PLC (WZZAF, Financial) reported a robust revenue environment with unit revenue up over 3%, generating more cash and improving the leverage ratio to below 4.
- The company has been recognized as the Most Sustainable Low-Cost Airline for the fourth consecutive time, highlighting its commitment to sustainability.
- Operational metrics have improved significantly, with aircraft utilization reaching 12 hours 48 minutes, up from 12 hours 7 minutes the previous year.
- On-time performance and completion rates have improved, positioning Wizz Air Holdings PLC (WZZAF) as one of the best in the industry, enhancing customer satisfaction.
- The company is 65% hedged on both fuel and FX for fiscal 2026, providing some protection against market volatility.
Negative Points
- Profitability was negatively impacted by a EUR27 million FX loss and a one-off wet lease cost of EUR40 million.
- The GTF engine issues have led to operating older and under-gauged aircraft, negatively affecting unit cost performance.
- The company faces significant cost pressures, including higher maintenance and depreciation costs due to the grounding of aircraft.
- Wizz Air Holdings PLC (WZZAF) is experiencing a mismatch in timing between wet lease costs and the return of engines, affecting financial performance.
- The competitive environment has softened, with competitors dropping fares, impacting Wizz Air Holdings PLC (WZZAF)'s pricing strategy and revenue.
Q & A Highlights
Q: Is the timing mismatch on costs due to wet leases and engine returns expected to continue until the wet leases exit the fleet?
A: Jozsef Varadi, CEO, explained that the wet lease operations are planned to phase out completely by the end of October. There may be some legal obligations to manage, but operationally, wet lease aircraft will not be used after November 1st.
Q: How does Ryanair's pricing impact Wizz Air's fares, especially in overlapping markets?
A: Jozsef Varadi, CEO, noted that Ryanair tends to drop fares significantly in the last two weeks before departure, affecting Wizz Air where they overlap. However, Wizz Air is more diversified and has unique market approaches, which helps mitigate some of the impact.
Q: With the fleet expected to grow to 260-270 aircraft by FY 2026, what does this imply for FY 2027?
A: Jozsef Varadi, CEO, stated that due to Airbus delivery delays, the fleet growth is expected to be around 20% for the next financial year. The delays are likely to continue, smoothing out the growth trajectory over the coming years.
Q: Why maintain guidance despite cost pressures and wet lease costs?
A: Ian Malin, CFO, explained that the guidance was adjusted to account for revenue and wet lease costs. The company believes it can manage costs effectively over the remaining months of the year, maintaining discipline to compete in the revenue environment.
Q: How is Wizz Air managing the uncertainty of engine returns and preventing issues seen this quarter?
A: Jozsef Varadi, CEO, mentioned that the company is better positioned post-summer. They plan to adjust capacity based on engine availability, avoiding reliance on wet leases outside the summer period.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
