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Summary
- Wizz Air Holdings witnessed drop in the revenues by more than 70 per cent in Q3 F21.
- The fall in passenger numbers, travel bans, airport testing and 10-days isolation on returning back to the UK have badly hampered the profits of the company
The aviation industry is crumbling down amid the coronavirus-induced crisis, which has had a direct and devastating impact on the airline companies. The prolonged restrictions and travel bans issued by the governments have led to millions of flights getting cancelled all over the world in last one year.
The cancellation of flights due to fear of catching infection has resulted into significant reductions in passenger numbers, which in turn has led to massive decline in revenues for airlines. These factors have forced the airline companies to lay off employees. Some have even avoided refunds of cancelled trips in order to keep a tab on their losses.
Though the ongoing vaccination programme on mass scale is rekindling the hope of relaxations, but the fears of the businesses will only settle when the transmission of coronavirus subsides completely. Industry experts are even anticipating that with the extended slashing of international and domestic travel, the aviation industry could never return to its previous levels.
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In the mid of the panic-stricken situation, the well-known LSE-listed airline company Wizz Air Holdings has been under spotlight for releasing its trading updates on 28 January.
Wizz Air Holdings PLC (LON:WIZZ)
The fastest growing Hungarian airline company published its unaudited results for the third quarter of FY 2021 for the period ending 31 December 2020. Though the air travel was obstructed by sustained government restrictions, the company continued to focus on strengthening its market position and protecting liquidity during the period.
Passenger number: In Q3 2021, the number of passengers carried by Wizz Air dropped 77.3 per cent Y-o-Y to 2,268,436 passengers (Q3 FY20: 10,004,629), driven by the direct impact of the Covid-19 induced widespread travel restrictions imposed by governments. The load factor recorded 63 per cent.
Revenue: The company was able to generate a total revenue of €149.9 million, recording a decrease of 76.5 per cent, resulting from a sharp dip in the capacity. The revenue from passenger ticket, average revenue per seat and average ticket revenue per passenger all decreased by 79.7% to €68.3 million, 29.3% to €41.67 and €30.11. However, there was a 19.5% increase in the average ancillary revenue per passenger to €35.95 in Q3 F21.
Operating expenses: The operating expenses (including discontinued fuel hedges) for the three-month period reported a decline of 51.7% to €291.7 million. It was €603.5 million for Q3 FY2020.
Staff costs: The costs incurred on staffs also decreased by 42.9% to €33.3 million (Q3FY2020: €58.2million) because of the capacity drop and decrease in headcount and salary.
Fuel expenses: The drop in capacity also resulted in a 73.7% decrease to €56.2 million, which was €213.8 million in Q3 FY2020.
Distribution and marketing costs: The third quarter of FY 2021 witnessed a decrease in distribution and marketing costs by 53.5% to €4.9 million.
Statutory loss: The company incurred a statutory loss of €116.4 million for the period.
Loss excluding exceptional items: reported to be €114.5 million in the third quarter.
Total cash: The company’s total cash amounted to €1,202.0 million as at 31 December 2020.
Stock Performance
Despite a fall in the revenue recorded by the budget airline, the share price was trading 5.80 per cent higher at GBX 4,448.00 from its previous trading session’s close of GBX 4,204.00 on 28 January.
Conclusion
The aviation sector has been one of the worst hit due to the Covid-19 pandemic because of the repeated travel curbs that have disrupted the industry. The road ahead also seems to be bumpy with the emergence of the new coronavirus variants in the UK, South Africa, and Brazil. It is highly unlikely that the airline sector will bounce back to normal before 2022.
