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Wizz Air A321 / Wizz Air

Wizz Air outlook “very positive”, unlike Ryanair

An increasingly high-cost environment is provoking differing views from Europe’s low-cost carriers about the coming year.

One airline that appears to be exuding optimism during this time of uncertainty, rising oil prices and overcapacity is Wizz Air.

The low-cost carrier, which was established in 2003 and has a fleet of around 100 planes with 270 on order, has posted a 22% rise in full-year net profit to €275 million.

It now sees FY 2019 profit rising between 13% and 24%, the news agency Reuters reports, as bigger and more efficient Airbus A321 aircraft help to keep its costs low.

This optimism is in contrast to Europe’s biggest budget airline Ryanair, which struck a pessimistic tone when it released its profit data earlier this week and warned that higher costs and flat fares could result in its profits falling in 2019 for the first time in five years.

Cost creep
Wizz, which mainly flies within, to and from central and eastern Europe, admits that labour costs are likely to rise this year. But chief executive Jozsef Varadi stresses that its growing proportion of A321s gives it an advantage. He expects costs excluding fuel to fall by 1%.

“That is a significantly different position from our competitors. You are seeing cost creep with all of them,” he tells Reuters.

The investment analysts Goodbody commented on Wizz Air: “Overall, this is a very positive outlook.”

Airlines are facing the dilemma of rising fuel costs as the price of crude climbs above $80 a barrel for the first time since late 2014. Europe’s LCCs are likely to steal market share as the oil price rises and high-cost carriers withdraw unprofitable capacity.

“That will put pressure on the weak performing airlines, and almost all of central and eastern Europe’s incumbent national carriers perform very vulnerably with no profitability and no liquidity, so we will see what happens to them,” Varadi said.

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