Wizz Air shares rose on Thursday after the airline announced encouraging final results showing the group was on an upward trajectory before the Middle East conflict.
Wizz Air carried a record number of passengers last year, yet still saw its bottom line virtually vanish, with net profit collapsing to just €1.3m from €213.9m the year before.
But investors are looking beyond net profit. The dramatic fall in profits was driven largely by tax. F25 had benefited from a hefty one-off €194.2m tax credit, whereas this year the airline took a €25.7m charge as that benefit unwound.
Strip out the tax noise, and the report is actually very encouraging. EBITDA rose 16.2% to €1,318.3m, which the company says shows the underlying resilience of the business.
Operationally, the airline kept growing. Wizz flew a record 69.7 million passengers, up 10%, and pushed total revenue 8% higher to €5.69bn. Capacity climbed too, with seats up 10.5%.
But Wizz Air couldn’t get away from rising costs. Operating profit slipped to €139.7m from €167.5m, squeezed by sharply higher depreciation and maintenance costs as older aircraft are wound out of the fleet. Maintenance alone jumped 40%, while depreciation rose 22%.
Garry White, Chief Investment Commentator at Charles Stanley, said: “Wizz Air’s full-year results show a business returning to growth but still suffering from significant cost pressures
Chief executive József Váradi framed F26 as a year of hard decisions to set the business up for the long haul.
Wizz pulled out of Abu Dhabi, wound down its Vienna base and redirected capacity towards Central and Eastern Europe, where it reckons it has stronger structural advantages. It now holds a 25.3% share of the CEE market, comfortably the largest operator there by seats.
The Middle East crisis impacted earnings through the cancellation of Tel Aviv and Cyprus routes, though fuel hedges put in place before the Iran conflict largely cushioned the impact of rising fuel prices.
Citing poor visibility and the ongoing situation around Iran and the Strait of Hormuz, Wizz declined to give full-year F27 guidance. Like all airlines, Wizz Air desperately needs a resolution to the conflict in the Middle East.