Release Date: June 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wizz Air Holdings PLC (WZZAF, Financial) sees significant opportunities to gain market share in Central and Eastern Europe, which remains a core focus for growth.
- The company is investing in new technology, transitioning to an all A321neo fleet, which is expected to provide economic and environmental benefits.
- Revenue increased by 4% year-over-year, indicating strong demand and effective revenue protection strategies.
- Wizz Air Holdings PLC (WZZAF) is actively restructuring its network to eliminate loss-making routes and focus on profitability.
- The company is exploring aircraft ownership to balance its reliance on sale and leaseback models, potentially reducing long-term costs.
Negative Points
- The Pratt & Whitney engine issues have significantly impacted operations, with 21% of capacity grounded, leading to increased costs.
- Operating costs have risen due to the inefficiencies associated with maintaining older aircraft and the need for additional spare engines.
- The company faces challenges in hot and harsh environments, which accelerate engine wear and increase operational costs.
- There is a high level of uncertainty regarding future capacity and cost management due to ongoing engine issues and market conditions.
- Wizz Air Holdings PLC (WZZAF) anticipates continued cost pressures from maintenance and depreciation, particularly with the redelivery of older aircraft.
Q & A Highlights
Q: What gives you confidence in the full-year RASK guidance given the lack of visibility over winter and capacity growth in H2?
A: Jozsef Varadi, CEO, explained that while winter growth might seem negative due to lower unit revenues, it is an investment for maturity in the summer. The company is balancing current financial performance with future revenue and profit uplift. They are managing capacity dynamically, considering potential shifts in Airbus deliveries to avoid overcapacity. The expectation is for RASK to be positive in fiscal '26 compared to '25, though it's hard to quantify at this stage.
Q: Can you quantify the incremental cost from retiring older ceo aircraft in terms of depreciation and maintenance?
A: Ian Malin, CFO, stated that the cost increase could be around EUR0.15, split equally between maintenance and depreciation. This will be offset by increased sale leaseback gains, reduced wet leases, and a decrease in compensation due to fewer grounded aircraft.
Q: How do you plan to manage the cost increase despite having more neos and fewer aircraft on the ground?
A: Ian Malin, CFO, noted that compensation will decrease as more aircraft are parked, and the cost increase is mainly due to older aircraft and reduced compensation. The biggest issue is the detriment of ASK production, which affects unit cost calculations.
Q: What are your plans for medium-haul flying, especially with the new XLR aircraft?
A: Jozsef Varadi, CEO, mentioned that XLR flights must be disproportionately profitable to offset hot and harsh costs. Milan-Abu Dhabi was cut due to not meeting criteria, but Jeddah is expected to perform well. The company is considering scaling back the XLR fleet if necessary, with flexibility to convert orders to A321neo.
Q: How do you expect RASK to perform in fiscal '26 given the capacity growth and negative mix effects?
A: Jozsef Varadi, CEO, explained that capacity management is performance-driven, with a focus on profitability. The company has a contingency plan to shift aircraft deliveries if needed, and they are focused on regaining margins and improving profitability.
Q: Why are there incremental costs from grounded fleet in FY26 if the proportion of fleet grounded peaked in FY25?
A: Ian Malin, CFO, explained that the compensation agreement covers various engine-related issues, not just powder metal. The company is operating tightly with limited spare planes, and unexpected engine removals can still cause costs to rise.
Q: How are you addressing the misalignment of ceo engine maintenance versus redeliveries caused by GTF issues?
A: Ian Malin, CFO, stated that they constantly negotiate with Pratt & Whitney for compensation. The misalignment is due to various dynamic factors, including COVID and GTF issues, and they are managing costs within the bounds of compensation agreements.
Q: What is your outlook on the potential for shareholder value creation given the challenges faced?
A: Jozsef Varadi, CEO, remains positive about the long-term demand for air travel and the relevance of the low-cost business model. Despite challenges, he believes the company is at a turning point and sees a path to achieving profitability and value creation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
