Wizz Air bumps up full-year profit forecast after soaring to record first-half results

 
Rebecca Smith
The airline posted record results for the first-half of the year
The airline posted record results for the first-half of the year (Source: Getty)

Hungarian low-cost carrier Wizz Air has lifted its full-year profit forecast after it reported record first-half results today.

But shares dipped in morning trading, as much as eight per cent, as the airline failed to live up to great expectations among analysts, who had already expected profits to come in above a previous range given of €250-€270m, and could have anticipated a greater lift.

Read more: Wizz Air on track for flying revenues as airline gets Brexit-ready

The figures

For the six months to 30 September, Wizz Air passenger numbers were up by a quarter on the same time last year to 15.6m.

Revenue also rose by nearly a quarter to €1.1bn (£972m), while profit for the period was up 24.6 per cent to €289m. Ancillary revenue, spanning non-ticket sources such as baggage fees and on-board food, was also flying, rising 31.1 per cent to €464m.

It has lifted its full-year profit forecast to a range of €265m-€280m, up from a previous range of €250m-€270m.

The airline's shares, which have been soaring of late, dropped eight per cent in early trading, before recovering a bit of ground.

Why it's interesting

It has been a turbulent time for many in the aviation sector, the most recent example being the collapse of Monarch last month. And IAG boss Willie Walsh said a tough winter is on the horizon for several airlines that "will face a challenge".

Wizz Air however, had a sunnier tale to tell. For the first half of the year, the London-listed firm announced 57 new routes, taking its network to over 550 routes across 28 bases in 43 countries. It has also been bolstering its fleet, which it says is already one of the youngest among major European airlines, with the addition of six Airbus A321ceo and one A320ceo aircraft.

For the full-year, Wizz Air is now expecting to grow capacity by 23 per cent, with load factor - gauging how efficiently an airline fills its seats - rising by one percentage point.

The airline has also been getting Brexit-ready, saying last month that it will set up a UK subsidiary in order to guarantee it will be able to keep operating flights in the UK after Brexit.

What the company said

József Váradi, Wizz Air's chief executive said:

Our results for the first half of the current financial year ending 31 March 2018 ('FY18') have been ahead of expectations with robust trading across all of our markets. We carried 15.6m passengers, 25 per cent more than in the same period last year, generating 25 per cent higher revenues.

Our record first half net profits were also 25 per cent higher compared to the first half of last year, maintaining a 25 per cent net profit margin. In light of this strong performance and encouraging third quarter bookings the company today raised its net profit guidance for the full year to a range of between €265m to €280m.

Our network, routes and bases continued to expand rapidly to meet the demand from our core central and eastern European markets, highlighting the continued significant growth opportunity for the company in the region.

What analysts said

Analysts at Davy Research said Wizz Air's first-half performance "underlines its strategic target of growing as rapidly as possible within the constraints of maintaining flattish margins and returns - to this end, it was a solid first half".

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