Wizz Air swung to a loss in the first quarter and warned of further ‘challenges’ as soaring fuel costs continue to hammer the low-cost airline.
The London-listed Hungarian airline revealed an operating loss of £157million between April and June, down from a profit of £23.6million for the same period last year.
Wizz said this largely reflected a 21 per cent rise in unit fuel costs, which followed a spike in oil and gas prices since the start of the Middle East conflict.
Shares fell 4.62 per cent to 1094p at the open, having shed 15.5 per cent this year.
The budget airline, which primarily operates in Eastern Europe, has been more exposed to the ongoing war than others.
It has also been hit by the temporary cancellation of flights to Tel Aviv in Israel, which resumed in late May, and the grounding of some of its aircraft because some engines needed extra checks and repairs.
Slump: Wizz Air swung to a quarterly loss as it battles higher fuel costs
Chief executive József Váradi said: ‘The industry has been extremely volatile over the June quarter due to conflict in the Middle East, elevated fuel prices, and changes in booking patterns.’
The group’s load factor, a key measure of how well it fills its planes, dipped by 0.2 percentage points to 90.9 per cent.
Despite the travel disruption, Wizz Air recorded a 25.1 per cent jump in passenger numbers to 21.2million over the period, while revenue grew 5.5 per cent to £1.3billion.
Wizz Air, which continues to withhold full-year earnings guidance, said it expects available seat kilometres capacity growth of around 20 per cent year-on-year and seats up ‘high twenties per cent’.
Váradi said: ‘While we continue to see the build-up of forward bookings, the rest of the year is expected to present both industry challenges and strategic opportunities. Wizz Air is well positioned, with a strong liquidity position, a modern and efficient fleet, and a disciplined approach to capacity deployment.’
Other airlines have flagged weaker demand and higher costs as the fallout from the war continues.
Wizz Air and rival Ryanair, whose profits slumped by a third in the first quarter, have been particularly hard hit as they cut prices even further to stimulate demand.
Ryanair boss Michael O’Leary said in July that fares ‘required stimulation’ as the war led to ‘consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings.’
Alex Pugh, analyst at Freetrade, said: ‘Wizz Air’s results show there’s no shortage of passengers. Demand for cheap flights is still there.
‘Passenger growth was strong and planes remained full.
‘Consumers are still willing to travel when the price is right.
‘The problem is Wizz is having to absorb a lot more to carry them.’
He added: ‘Wizz is under profit pressure, but its cash pile gives it breathing room, so this is not an existential crisis. And there are signs of punctuality and completion rates improving even in a difficult quarter.
‘The ultra-budget airline is expanding fast, but the market will want proof bigger means better, not just more seats sold at thinner returns.’
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