Wizz Air Net Profit, Revenue Rise in Fiscal 2019 But Margin Drops on Surging Fuel Costs

Wizz Air (WIZZ.L), the largest low-cost airline in Central and Eastern Europe, reported early Friday record net profit and sales in the financial year just ended but the operating earnings margin fell as fuel costs climbed.

Revenue surged to 2.32 billion euros ($2.58 billion) during the 12 months that ended March 31, from 1.94 billion euros a year ago, the firm said in its earnings statement. Load factor rose by 150 basis points to 92.8%, following a 16.7% increase in passengers and a 17% jump in available seat kilometers, which is the number of seats available multiplied by the number of kilometers flown.

While net profit rose to 291.6 million euros from 275.1 million euros, the group reported a 310 basis point drop in its earnings before interest, tax, depreciation, amortization, and aircraft rentals margin to 31.0% as fuel costs soared to 667.9 million euros in fiscal 2019 versus 479.8 million euros a year earlier. Total operating expenses were up by 22.7% year-on-year.

“Our ability to drive cost advantage further and offer low fares across our ever-expanding network will lead to an expected 17% increase in passenger numbers to 40 million in FY20 [fiscal 2020],” Chief Executive Officer Jozsef Varadi said in the statement.

Wizz Air’s net profit is expected to be in a range of between 320 million euros and 350 million euros in fiscal 2020, an improvement from a year ago, as revenue per available seat kilometers is off to a “solid” start in the first quarter.

However, the company said this guidance was dependent on the all-important summer period and the second half of fiscal 2020, a period in which the carrier anticipates a “very challenging operating environment” due in part to no signs that air traffic control and airport infrastructure issues “will improve anytime soon.”