Wizz Air bats away Brexit turbulence with record first half profit after halving its plans for UK growth

 
Rebecca Smith
The aviation sector was among the first to feel the effects of Brexit
The aviation sector was among the first to feel the effects of Brexit (Source: Getty)

The largest central and eastern European low-cost airline, Wizz Air Holdings, has committed its future to the UK market despite Brexit, as it stuck to full-year profit forecast.

The figures

Profit for the half was a record €253.3m - up 39.1 per cent on last year, while underlying profit after tax was €231.6 million (a year-on-year increase of 12.5 per cent).

Total cash at the end of September 2016 was €935.2m, of which €805.5m was free cash.

Passenger numbers rose 17.4 per cent to 12.5m, which Wizz Air said secured its position as the leading low-cost carrier for central and eastern Europe.

The fall in the British pound hit first-half revenues to the tune of €6.6m, though Wizz said "this was absorbed by the strength of the rest of our network".

Why it's interesting

The airline's revenues took a hit thanks to the slump in sterling post-Brexit vote, but it has maintained its full-year profit forecast. The pound has lost 18 per cent against the dollar and 15 per cent against the euro since the Brexit vote.

And in July, the airline said it would swap some of its planned expansion away from Britain due to weakness in the pound, scaling back its intended second-half UK capacity growth from 30 per cent to 15 per cent.

But Wizz Air hasn't seen any signs of demand weakness on routes to and from Britain after June 23, following the referendum.

What the company said

Chief executive József Váradi said:

We remain highly committed to the UK market and continue to deliver double-digit growth on our UK network. Nevertheless, our highly diversified network enabled us to quickly absorb capacity we reallocated in reaction to the weak sterling following the Brexit vote.

Looking forward, while we expect fares to continue falling across the sector over the full year on the back of low fuel prices, our ability to continue to reduce ex-fuel costs means we can re-confirm our previously stated full year guidance for underlying net profit of between €245 to €255 million.

He added that the airline's "ultra-low cost model", gave it a clear cost advantage over most of its rivals.

In short

The low-cost carrier's whizzing along nicely and feeling confident in the face of challenging market conditions.

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