European low-cost giant Wizz Air has posted a third-quarter loss as the omicron variant continued to take a bite out of its profitability. The airline netted a €267.5 million ($302 million) loss for the three months ended December. Although revenues have begun to increase, the airline has warned of further losses in Q4 before things start to stabilize.

Losses widen, but revenue is up

Budget European airline Wizz Air has posted a deeper loss in the three months to December 2021, but seems to be turning a corner in terms of revenue. The total net loss was €267.5 million ($302 million), compared to €116 million ($131 million) loss in the same quarter of 2020.

But this was accompanied by a very positive sign of revenue rushing back to the airline. For the quarter, Wizz Air posted an income of €408.4 million ($461 million), an increase of 172.5% compared with its performance in the same quarter of last year. This was further illustrated by an almost 250% increase in passengers carried, from 2.27 million in Q3 2020 to an impressive 7.79 million in this last quarter.

The increased losses are almost a necessary evil as Wizz prepares for a return to some sort of normality. The ramping up of operations comes with added costs, but is accompanied by a healthy growth in passenger traffic, and the achievement of a load factor in excess of 77% - still a way of Wizz’s typical 96% plus load factor but an improvement over the 63% of last year.

József Váradi, Wizz Air Group Chief Executive Officer, commented on the results:

“Wizz Air continued its recovery during the third quarter of F22 and well exceeded 2019 passenger and capacity levels in the peak holiday traveling period, despite the emergence of the Omicron variant. Our operating loss was €213.6 million as travel restrictions continued to affect demand as we continued to ramp up our  workforce, fleet, bases and routes to support our path to full utilization and pre-Covid 19 cost structure by late Spring 2022.”

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Readying for recovery

Despite still a way off returning to operations as usual, Wizz is keenly orchestrating its pathway to recovery. During the quarter, it opened new bases in Italy at Rome Fiumicino, Naples and Venice, with five, two and two aircraft based in each, respectively. Several bases have seen additional aircraft added, including London Gatwick, which now has five aircraft, and Abu Dhabi, which now has eight.

The airline ordered a further 102 Airbus A321 aircraft at the Dubai Airshow, as part of the huge Indigo Partners order. The deal included 27 A321XLRs and options for Wizz to add another 15 A321neos in the future. The airline says it has purchase rights in place for 75 A321neos to be delivered in 2028/2029 – these have to be converted into a firm order by the end of this year.

The airline has scheduled an extraordinary general meeting in late February to seek shareholder approval of these new aircraft orders. In total, it would see the backlog for the airline standing at an incredible 419 aircraft. Taking into account aircraft returns as well as acquisitions, this plan would see the fleet grow from 179 aircraft today to 383 by 2027.

The airline remains one of the youngest and greenest in the world, with an average fleet age of just five years. It says that, in January 2022, it has surpassed 5,500 employees, more than it had pre-COVID. Despite short-term headwinds, the airline remains confident in a continued recovery, projecting full utilization from the summer onwards.