Wizz Air’s share price has soared since the start of November as improved results and increased traveller demand boost investor confidence. This marks a turnaround, but the stock is still down on the year.
Wizz Air’s [WIZZ.L] share price has experienced plenty of turbulence this year. Year-to-date, the Hungarian carrier’s stock has fallen almost 50%, closing Friday 16 December at 2,109p.
Rising fuel costs and inflation triggered by Russia’s invasion of Ukraine weighed on the stock. Not helping matters was a summer of travel chaos as airports struggled to cope with increased demand, leading Wizz Air to cut 10% of its flights over the lucrative summer period.
Yet in recent weeks pent-up demand from travellers as Covid-19 restrictions lift has boosted Wizz Air’s share price. But can the airline recover to 2021’s highs, when the stock traded north of 5,000p?
Interim results fuel Wizz Air’s share price
Wizz Air’s share price climbed higher after interim results published 2 November gave investors something to cheer about.
Passenger numbers rose 112% year-on-year to 26.5m for the six months to 30 September. Revenue increased 149.2% to €2.2bn, with earnings before tax up 32.5% to €217.8m. Yet operating losses widened to €63.8m, up from €51.9m the previous year. The losses were blamed on staff shortages and problems at airports over the summer.
Wizz Air’s operational performance has since “normalised,” said CEO József Váradi, with the airline now back at “historically low levels of cancellations and flight disruptions.”
The airline has also been busy expanding its network, which could boost revenues. In September, the airline announced 11 new routes across Europe, while this month it announced flights to Saudi Arabia.
Wizz Air’s share price is now up over 39% since the start of November.
Travel demand returns
Covid-19 variant Omicron led to more travel restrictions at the end of last year at a time when the industry was already struggling with the impact of earlier measures to curb the pandemic. In the last three months of 2021, Wizz Air’s operating losses were €214m, up over 50.5% year-on-year.
Winter 2022 could be a different story. Pent-up demand from travellers looking to escape to sunnier destinations and the lifting of many restrictions have led to a surge in bookings.
During November 3.7m people flew with Wizz Air, an increase of around 1.5m on the same month last year. CEO Varadi told a conference in Gibraltar earlier in December that bookings were intact for the next three months.
Rival Ryanair [RYA.IR] also reported a 10% year-on-year rise in passenger numbers last month to 11.2m. CEO Michael O’Leary said this month that Christmas bookings were ahead of pre-pandemic levels in 2019. Prices were also “ahead by a low double-digit percentage,” he said.
Still, it’s not all been good news for Wizz Air recently. On Friday, the Civil Aviation Authority slammed the airline for “unacceptable” behaviour as its passengers are more likely to escalate complaints. The airline’s slow complaints processes also raised significant concerns for the regulator. Wizz Air’s share price dropped 6.02% on the day the news came out.
Last year, Wizz Air’s share price traded between a 4,000p and 5,500p range. The stock still has a long-way to go before it recovers to those levels. Fuel prices remain heightened, and the industry is still in recovery mode.
However, the return of traveller demand and increased revenues suggest things are heading in the right direction. Third-quarter results due in January should provide an insight into just how robust winter demand was.
Analysts seem to think there’s more upside in Wizz Air’s stock. The 16 analysts polled by Refiniv have a median 12-month price target of 2,629.76p. Hitting this would see a 24.69% upside on Friday’s close.