WizzAir soars with strong full year trading numbers

Budget airline defies sector gloom as it looks to take advantage of other travel group’s poor performances

Article updated: 3 June 2020 11:00am Author: Helal Miah

  • 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

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment. 

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