Shares for low-cost carriers Ryanair and Wizz Air have gone up this morning after both reported a strong start to 2023, with passenger numbers well above 2022 levels.
Ryanair’s passenger numbers soared to 11.8 million in the last month, 69 per cent up on January last year, while Wizz Air’s levels soared 73 per cent to 4.2 million.
Following the impressive figures, Ryanair’s share price went up by 2.5 per cent while Wizz Air’s climbed by almost five per cent.
Both reported that load factor – the measure of how well an airline fills its seats – was also up at 91 per cent for the Dublin-based airline and at 86 per cent for the Hungarian low-cost.
The data comes after both airlines reported strong quarterly results in the last week, with Ryanair posting a profit of €211m (£184.9m).
The Irish airline also said the profit had exceeded pre-pandemic levels by €123m, City A.M. reported.
Wizz Air’s profit was significantly smaller, as the airline posted earnings worth €33.5m after passenger levels soared to 12.4m in the three months ended 31 December.
Both companies, in addition to rival Easyjet, continue to perform well despite a turbulent economic environment plagued by recession fears and higher costs of living.
The secret behind the low-cost carriers’ ongoing success is that they keep offering affordable fares, demand for which increases exponentially during a recession.
“We see a strong booking momentum, as customers prioritise spending on their holidays,” Easyjet’s chief Lundgren told journalists last week.
“And in this high cost of living environment, customers are looking for value.”
Nevertheless, the future remains uncertain as low-cost airlines are not insulated from the global economic downturn.
“The market does remain jittery to forward-looking estimates though, with Wizz Air’s valuation facing a knock as investors questioned how long this elevated demand can be sustained,” Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, told City A.M.
“The distance left on the runway before sentiment reverses is yet to be seen and could cause upset,” she said last week.