Wizz Air’s winter profits have fallen almost 88% despite third quarter (Q3) revenue up more than 20% year-on-year, helping offset rising fuel costs.
The budget carrier on Wednesday (January 30) posted Q3 Ebitdar (earnings before interest, taxes, depreciation, amortisation, restructuring or rent) of €106.3 million for the three months to December 31, up from €104.2 million on the same period last year.
However, its quarterly profits plummeted 87.6% from €14 million to just €1.7 million.
Q3 revenue though increased 21.1% year-on-year from €422.9 million to €512.7 million driven, according to Wizz, by 14.9% passenger growth to 8.1 million for the quarter on a load factor of 91%.
Wizz’s Q3 revenue growth was boosted by ticket revenues up 20.4% to €291.1 million and ancillary revenues up 22.3% to €221.5 million, including ancillary revenue per passenger up €1.5 (7%) to €27.1 boosted by a new baggage policy.
Cost burdens included a 21.6% increase in fuel unit costs and a one-time increase in pilot salaries, which came into effect from April.
Fuel expenses increased 39.9% to €166.2 million during Q3, up from €118.8 million on Q3 2017. The increase, said Wizz, was driven by the company’s growth and higher average fuel prices.
Key highlights for the quarter included 53 new routes growing Wizz’s network to more than 600 routes across 44 countries from 26 bases and the addition of two new Airbus A320 aircraft taking its fleet to 106 aircraft (72 A320s and 34 A321s).
On-time performance increased to 80.4% during the quarter, up from 72.1% during Q3 2017, with only 79 of Wizz’s 45,946 flights cancelled during Q3 compared to 226 during the same period last year. As a result, Q3 disruption costs were €5.9 million as opposed to €7.9 million in Q3 2017.
Wizz’s full-year net profit guidance of €270 million to €300 million remains unchanged.
In the UK specifically, Wizz Air UK received its UK route licence during Q3 allowing it to continue flying to non-EU countries irrespective of Brexit. Its UK fleet has been increased to 11 aircraft for summer 2019.
The airline has though shut its tour operation, Wizz Tours, which sold packages made up of flight tickets bundled with hotel accommodation. Wizz Tours ceased operations on December 31.
Jozsef Varadi, Wizz Air chief executive, said: "Due to higher fuel prices, we proactively adjusted growth capacity to help offset the cost pressure with higher yields.
“Our industry leading aircraft utilisation, which helps drive our unit costs lower, was negatively impacted by the capacity adjustments in the quarter, but with the recent fall in fuel prices, we will be increasing our utilisation levels back to the high levels from the start of F20.
“The company maintains its net profit guidance range of €270m and €300m for the full year. Where we will be within this range will depend on the extent of March yield pressures, which will be affected year-on-year given Easter falls after the financial year-end in April, and external factors such as Brexit uncertainty.
"Wizz Air remains well on track to deliver its mission to be the undisputed ultra-low cost carrier in the industry."
Varadi added the rollout of Wizz’s A321 Neo fleet would start during Q4.