For the fiscal year (FY) ending 31 March 2022, the Hungarian ultra-low-cost carrier (ULCC) Wizz Air expects a net loss in the range of €632-652 million. Let’s see the reasons behind the loss and the future outlook for 2023.
2022 net loss: Covid-19 and Ukraine War
According to Wizz Air, the underlying reasons for the FY22 losses are to be found in the ongoing Covid-19 pandemic and the break-out of the Ukraine war. Particularly relevant was the surge of the Omicron variant in November 2021, which, according to the Official Airline Guide (OAG), caused a decline of 22% in Wizz Air frequencies in the months of November and December 2022 compared to 2019.
Moreover, Wizz Air is one of the European airlines mostly hit by the outbreak of the Ukraine war. Indeed, the Hungarian ULCC market share in the country amounted to 26.6%, second to the number one carrier, Skyup (28.6%), and before the Ryanair Group, with 16.2%.
Notwithstanding the anticipated net loss, the Group is confident in its strong liquidity position, with cash and cash equivalents amounting to €1.37 billion. During a crisis, such as the Covid-19 pandemic and, more recently, the Ukraine war, it is fundamental for an airline to be able to count on a solid liquidity position, so as to be able to meet its short-term liabilities, thus being considered financially sound.
For FY23, the focus of the management will be on maximizing revenues and returning to productivity levels seen before the Covid-19 pandemic, which would translate into improved profitability for the next financial year.
Indeed, at the beginning of FY23, the airline has confirmed it is ready to ramp up operations, especially in sight of the next summer season, when the airline expects to operate capacity, or Available Seats Kilometres (ASKs), 30% ahead of 2019 in the April-June quarter and 40% ahead of 2019 in the July-September quarter.
Based on the increasing booking patterns witnessed in the last few weeks, the carrier predicts demand for summer flights will build up significantly immediately after Easter. Indeed, the airline has announced new aircraft allocations at different airports in Europe, new routes, and frequencies for the next summer season.
Wizz Air is also confident that its expanded and diversified network, its ULCC low-cost structure, and lower fares will sustain a progressive and significant recovery in the months to come.
Do you think Wizz Air will manage to register pre-Covcid levels next summer? Let us know in the comment below!