Budget airline defies sector gloom as it looks to take advantage of other travel group’s poor performances
WizzAir soars with strong full year trading numbers
- Airline reports revenue growth of 19% and a 29% increase in underlying profits to €345mn
- Management remains confident in short term outlook, despite rivals retrenching
- Narrowly misses out on promotion into FTSE100 in yesterday’s reshuffle
The travel and airline stocks are grabbing the headlines this morning as WizzAir is surprising most investors with strong full year trading numbers and demonstrating it’s an airline not in crisis mode. For the year that ended in March, the London listed but Central and Eastern European based airline reported revenue growth of 19% and a 29% increase in underlying profits to €345mn. This is off the back of a 16% growth in passenger numbers and a load factor rising to 93.6%. It’s certainly an airline that was still in the strong growth phase just before the coronavirus crisis hit, and while it has suffered from the crisis, management seems far more confident in its short term outlook. Management still plan on being one of the first to resume full operations and increase capacity into 2021 while rivals are retrenching.
While we don’t have a formal recommendation on WizzAir, we view it as one to certainly watch as it seems to be well placed in the growing market for budget flights in Eastern and Central Europe. Much like easyJet, it’s well capitalised and has good liquidity. As the likes of easyJet and other travel groups head out of the FTSE 100, WizzAir just missed out on promotion. However, given time and the crisis abating, we’re confident it can become a member of the top index.
Additionally, TUI has jumped over 7% this morning as it comes to an agreement with Boeing on the grounding of the 737 MAX. While this is good news, we feel it doesn’t change the bigger picture much for the travel group. We fear the leisure travel sector will struggle to return sales to prior crisis levels amid jobs losses and reduced incomes among consumers in the UK, Germany and the rest of Europe. We prefer to avoid
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