Wizz Air has swung to a loss in an "extremely volatile" period, attributing the downturn to the Middle East conflict and soaring fuel costs. The low-cost carrier warned that the industry faces challenges for the rest of the year.
Financial Results
The airline recorded an operating loss of 183 million euros (£157 million) between April and June, compared with a profit of 27.5 million euros (£23.6 million) in the same period last year. Wizz said this largely reflected a jump in jet fuel costs, linked to the increase in global oil prices, with Brent crude oil peaking above 120 dollars a barrel in late April.
Fuel expenses surged by 39% year-on-year to 610.5 million euros (£523.8 million). The airline said this reflected 87% higher market prices, which it managed to partially mitigate through its own cost actions.
Industry Impact
The increased fuel expenses have slammed the industry, with easyJet, British Airways owner IAG, and Ryanair all reporting a fall in profits in recent weeks. Wizz previously said it took a 50 million euro (£42.9 million) hit from the Iran war after having to cancel flights to Tel Aviv and other routes to the Middle East and Cyprus in March.
While many flights have resumed, the company said it was reallocating flying from longer-haul Middle East routes to shorter European markets. The weaker earnings update came despite passenger numbers soaring by a quarter to 21.2 million over the three-month period. Total revenues also increased by 5.5% year-on-year to 1.5 billion euros (£1.29 billion).
CEO Statement
Chief executive Jozsef Varadi said: "The industry has been extremely volatile over the June quarter due to conflict in the Middle East, elevated fuel prices, and changes in booking patterns."
"We are focused on strengthening the core network, improving density and reallocating flying from longer-haul Middle Eastern operations into shorter European sectors. While we continue to see the build-up of forward bookings, the rest of the year is expected to present both industry challenges and strategic opportunities."
