DALLAS — Hungarian LLC Wizz Air (W6) has revealed plans to grow its capacity by 35% over the winter season due to expected sustained passenger demand.
The airline is forecasting that demand will remain strong despite Europe’s high inflation climate, which directly affects consumer spending. Chief executive Jozsef Varadi said, “So far, we are seeing no indication of a drop in demand, so we remain confident.”
The carrier proposed capacity increase also implies that the carrier will join Ryanair (FR) as one of the few European-based airlines to surpass their pre-pandemic capacity.
Interestingly, the 35% increase in capacity is below analysts’ predictions, which hints at W6 practicing caution after experiencing operational disruptions—airport disruptions, and delays, among other contingencies that impacted unit revenues of previous quarters.
For the 2Q22 period, W6 reported an operating loss of US$63m (€63.8m), but it reported core earnings of €374m. The positive core earnings reflected the carrier’s recovery from airport disruptions that pulled its financial position into losses.
In 3Q22, the recoup continued, with revenues up 41% when compared to the same period prior to the pandemic, resulting in strong EBITDA levels.
Euro-dominated Lease Contracts
To offset the macroeconomic conditions, the airline is looking to introduce euro-dominated lease contracts. The foreign-exchange losses accumulated to €269m, dragging the carrier to a net reported loss of €384m.
“The significant net foreign exchange loss accounted for in the period is mainly caused by the foreign exchange translation of the net unhedged US dollar lease liability position” the airline stated.
Varadi also stated that 61% of new contracts are now euro-financed; other measures are also being implemented and explored, such as caps on rent formulas. Additionally, the liquidity position of the company remained unchanged despite foreign exchange moves and was recorded at €163bn in cash at the end of September.
The macroeconomic conditions will present “some uncertainty” in the winter, said Varadi. However, the carrier’s plans to grow, diversify, and expand its fleet make it “well-positioned to drive profitable growth in the future.”
Featured image: Wizz Air HA-LWM Airbus A320-232. Photo: Alberto Cucini/Airways