(Recasts first paragraph and adds CEO comments about new plane
orders in the second to fourth paragraphs.)
By Robert Wall and Simon Zekaria
LONDON--Wizz Air Holdings PLC (WIZZ.LN), the Central and Eastern
Europe focused budget airline that swung to profit in the fourth
quarter, said it is considering additional plane purchases to
deliver future growth.
The airline is in talks with Boeing Co. and Airbus Group NV to
acquire their newest single-aisle jetliners for growth from 2018,
Chief Executive Josef Varadi said in an interview. Mr. Varadi said
it would be "a large aircraft order" whose size hasn't yet been
defined.
Mr. Varadi said the timing of an announcement is still
uncertain, although the airline recognizes that strong demand means
Airbus and Boeing order books are filling up, making it harder to
get planes.
Wizz Air currently operates Airbus jets and has decided to shift
its focus to the A321 plane, the Toulouse-based aircraft maker's
largest narrowbody. It will introduce the plane type from November
and take all new planes of that version through December 2017.
The A321 can seat more passengers and cuts Wizz Air's unit cost
by around 10%, Mr. Varadi said. The airline has options to convert
more of its Airbus orders to the A321 type, though it will wait to
make that decision until it has experience using the plane, he
said.
The recently-listed, Budapest-headquartered company, which
carries over 16 million passengers annually, swung to a profit of
5.00 million euros ($5.46 million) for its fourth quarter ended
March 31, from a loss of EUR22 million in the year-earlier period.
Net profit jumped 109% year-over-year to EUR183 million, while
revenue rose 21% to EUR1.23 billion.
The number of passengers carried in the year increased 18% to
16.5 million. In the fourth quarter, seat capacity growth was 20%,
with the load factor--a measure of the proportion of planes
filled--up 2.2 percentage points to 83.6%, it said in a
statement.
With the continued expansion of its network, the company expects
to grow capacity by around 17% in fiscal 2016. Mr. Varadi said the
focus would be largely on boosting flights from existing bases
rather than further expanding the network.
Trading so far in fiscal 2016 has been "robust," the airline
said without elaborating. It also sees profit for the year of
between EUR165 million and EUR175 million, excluding exceptional
items, higher than EUR146.2 million reported for fiscal 2015.
Citi analysts said Wizz Air's performance is both solid and
better than expected, noting that lower operating expenses boosted
the company's profit margin.
"These results and outlook support our positive view of Wizz Air
as a leading airline in high-growth Central and Eastern Europe
making best-in-class returns," the broker said.
Wizz Air said its net profit margin for fiscal 2015 was 14.9%,
up 6.2 percentage points. Its unit costs fell 3% year-over-year to
3.61 euro cents by available seat per flown kilometer. Excluding
fuel, costs increased by 0.5% to 2.26 cents.
Low-cost airlines like Wizz Air, Europe's largest low-fare
carrier Ryanair PLC and easyJet PLC are scrapping for business in
the discount-travel market, with competition intensified by
tumbling oil prices as airlines pass on the benefit to passengers
through lower fares.
Still, Goodbody analyst Mark Simpson says Wizz Air is
well-placed to keep in step with its larger rivals. "Wizz can more
than match pricing from Ryanair over this year and the next."
Wizz Air said it recorded a year-end cash position of EUR449
million, up from EUR186 million at the end of March 2014.
At 1015 GMT, shares up 1.3% to 1,469 pence, valuing the company
at GBP758 million ($1.17 billion).
Write to Robert Wall at robert.wall@wsj.com and Simon Zekaria at
simon.zekaria@wsj.com
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