Wizz Air predicts more losses before travel picks up for summer

Wizz Air, the low-cost airline, has forecast more losses during the winter due to the impact of the Omicron coronavirus variant but expects a resurgence in passenger demand to drive a rebound later this year.

The London-listed carrier on Wednesday reported an operating loss of €213.6m for the final three months of 2021, when the emergence of the variant and travel restrictions derailed the aviation sector’s fragile recovery. That figure was worse than the €141.9m lost in the same period in 2020 as Wizz burnt through cash to increase its workforce and fleet of aircraft, and to open new bases.

Operating losses would “slightly” widen in the present quarter, before demand for travel returned, Budapest-based Wizz said in its statement.

Wizz chief executive Jozsef Varadi said the airline had to discount ticket prices to encourage people to travel. He expected passenger demand to be affected in January, February and for the first part of March.

Low-cost rival Ryanair said before Christmas that its losses for 2021 could more than double after it slashed flight schedules in response to the spread of the Omicron variant.

Varadi said he expected “near full utilisation” of the airline’s 170-strong fleet of aircraft by the summer, following an ambitious expansion strategy that saw the airline order new planes and open bases during the pandemic to expand its eastern European hubs into the wider regional market.

The airline’s board last year offered Varadi a £100m bonus if he could push up the airline’s share price as the industry recovered from the pandemic.

Wizz bought a portfolio of slots from Norwegian Air Shuttle at London Gatwick Airport last month as part of a move into the UK. The airline has opened or expanded bases in Italy, Abu Dhabi and eastern Europe.

Wizz flew more passenger miles during the busiest parts of the Christmas season than in 2019, and employs more people than before the crisis.

Wizz in September made an unsuccessful takeover approach for UK-listed easyJet, a deal that would have immediately accomplished its push into western Europe.

Wizz had a strong balance sheet including liquidity of €1.4bn at the end of December, 16 per cent higher than one year ago, and carried 7.8m passengers in the last three months of 2021, up from 2.7m in the same period in 2020.

“We continue to back our strategic choices to invest in our fleet, grow our bases and routes, and lower our unit cost in order to take advantage of the market created in the wake of Covid-19,” Varadi said.