Budget airline Wizz Air warns its fourth-quarter loss would likely top the 213.6 million euros ($241.2 million) third-quarter hit reported on Wednesday, before an expected recovery takes off fueled by demand from Britain.
The Hungary-based carrier Wizz Air says the emergence of the Omicron coronavirus variant hit sales in the latter part of its fiscal third quarter. It might be impacted by ongoing travel uncertainty in January, February and part of March.
European airlines are on a rollercoaster ride, as governments dropped, and then sometimes reimposed, restrictions. This way, that increased both the cost and hassle of travel in a bid to contain waves of the pandemic.
CEO Jozsef Varadi tells Reuters Wizz Air cut costs and acquired new landing slots; meaning it was in a stronger position to compete with Ryanair and easyJet, once the long-expected recovery comes.
He says Wizz Air saw a demand jump in Britain after the government announced an easing to restrictions on Monday. As a group, it expects to operate 50% more capacity in August and September than the pre-pandemic 2019 summer.
“We are expecting a very strong recovery path of demand in the next few months,” he said.
“Sea change in recent weeks”
Ryanair said earlier this month its confidence levels had undergone a “sea change” in recent weeks; as the perceived threat from Omicron eases and public attitudes to travel improve. EasyJet reports on Thursday.
Varadi of Wizz Air notes, however, that input costs were rising, with fuel, wages and regulatory changes all adding pressure; meaning that fare prices would need to go up in the short term.
While Ryanair says it expects fares to rise due to lower available capacity, after airlines fail or shrank, Varadi says he expected there to be overcapacity in the next three to six months as rivals return to the market.
He says the question for 2022 is which airline has the most efficient cost base to offer competitive prices while juggling higher input costs. Wizz Air had liquidity of 1.4 billion euros at the end of December.
Barclays says the update is in line with expectations but noted that solid passenger numbers came with weak pricing. Wizz Air’s shares were up 2.5 per cent in early trade.