Wizz Air shares fell 5 per cent in early afternoon trading as the low-cost carrier cut its full-year growth target and blamed air traffic controller strikes for a 14 per cent drop in pre-tax profit in its first quarter.
“With these disruptions likely to continue into autumn and on the back of a continued rise in fuel prices in the first quarter, the company took the decision to trim its full-year [capacity] growth target from 20 per cent to 18 per cent,” said József Váradi, chief executive.
The group kept its full-year profit target unchanged at €310m-€340m.
Earlier this week, Mr Váradi said the “failure of French air traffic control authorities to ensure a continued and adequate service has already caused massive disruption”.
Profit fell from €60.5m to €52.1m in the three months to the end of June, the Hungarian airline said on Wednesday, as total delay and compensation costs trebled to €9.1m.
Mr Váradi said he expected disruptions to cost €1.5m a month until October, when the winter schedule begins. “Hopefully after that we will see some easing because of the seasonality in the industry.”
Shares in the airline fell 5 per cent in early afternoon trading in London to £33.80.
Barclays said it was not too worried by the results. “In spite of this external disruption risk, we see the Wizz Air management team demonstrating strong financial discipline, with a clear profit and margin focus, by trimming capacity growth.”
The bank gave “a very modest downgrade” to its full-year profit forecast, to €319m.
A sharp rise in cancellations — from 24 in the first quarter of last year to 145 in the same period this year — increased costs and weighed on revenue per available seat kilometre, a commonly used industry metric, which fell 1.4 per cent. Cost per available seat kilometre grew 2.2 per cent, although it fell 1 per cent excluding fuel.
Passenger numbers grew 20 per cent to 8.6m and revenue 18 per cent to €553m. But operating expenses increased even more, by 23 per cent to €499m, with staff costs up more than a third and fuel costs up by close to that amount.
The results came a day after Wizz Air joined rivals easyJet, Ryanair and IAG, owner of British Airways, in filing legal complaints with the European Commission over the disruption. Speaking on Tuesday, Mr Váradi said that addressing the disputes “must be a priority for the European authorities to ensure European citizens and businesses are no longer held hostage to national industrial relations issues”.
On Wednesday he added that it was “always the airlines that pay the financial burden” of air traffic controller strikes through compensation, but he also noted that they affected “hundreds of millions of passengers”.
However, Mr Váradi said Easter falling outside the quarter had depressed profit more than the strikes because travel over the holiday period contributed €17m last year.
Ross Harvey, analyst at Davy, said that “changes in [Wizz’s] baggage policy through winter” had brought down ancillary revenues, namely sales apart for the ticket price, by 9.3 per cent. In October 2017, the airline removed charges for cabin bags.
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