Wizz Air delivers positive outlook despite Iran war uncertainty over fuel costs and travel demand

Wizz Air expects to report a “breakeven to slightly positive” net profit for the full financial year which ended on March 31.

The net income improvement against previous guidance resulted from stronger underlying revenue and a “well-hedged macro-economic mix”, the airline noted in a trading statement.  

The eastern and central European budget carrier ended the financial year with a “strong liquidity position”, reporting a total cash position of €2.1 billion.

Looking forward, the conflict in the Middle East has introduced “near-term uncertainty” around fuel costs and customer demand.

Fares are being cut as a result to stimulate demand.

The airline said: “We are approximately 70% hedged for our summer fuel needs, at around $720 per metric tonne, and benefit from a significant fuel burn advantage, with [Airbus] A321neos comprising 75% of our current fleet consuming 18% less fuel relative to the legacy aircraft technology.”

Current scheduled capacity for the first half of the year stands at around 51 million seats, up 28% year on year.

“Against this, we see the forward bookings with 44% currently sold, up 2 percentage points year-on-year, reflecting a positive response to the continuing development of our network,” Wizz Air added.

“This includes adding capacity across our existing markets and opening new operating bases within the Wizz Air European footprint with significant bias towards leisure demand.

“To maintain this booking momentum and protect load factors amid geopolitical uncertainties, we have strategically utilised promotional fares to stimulate demand during H1 F27."

Chief executive Jozsef Varadi said: “While the industry faces the challenges of the conflict in the Middle East, we have proactively pivoted the affected capacity to our core markets and are seeing strong demand trends through the peak summer period across our network.

“Wizz Air’s financial strength, including cash liquidity, hedge positions and our highly fuel-efficient fleet, continues to underpin our ability to grow our business with structural competitive advantages.

“As such, while we are mindful of the near-term geopolitical challenges, we remain excited by the growth potential inherent in our core markets and the fact that Wizz Air is well placed to further strengthen its leadership in the faster growing CEE region.’’