Wizz Air expects return to profit after putting fuel hedging fiasco behind it

Low-cost European carrier Wizz Air expects to return to profit this year as the post-pandemic rebound in travel gathers pace and the group puts a series of setbacks behind it. The airline’s expectations of making a profit in the year to March 2024 contrast with the previous financial year, when it faced several problems, including a decision to abandon fuel hedges that backfired when the war in Ukraine sent prices up sharply. The fuel price exposure was a substantial contributor to the carrier’s net loss for the year to March 31 of E535m. With comprehensive currency and fuel hedges now in place, the Budapest-based group said on Thursday that it expected to report a net profit for the current financial year of between E350m and E450m. Wizz Air has expanded aggressively since it was founded almost 20 years ago, making it a competitor to Ryanair in Europe’s low-cost market. Referring to the lack of hedging, CE József Váradi said its fuel costs in the first half of its last financial year had been “totally down to the market” and that the market “was not paying a favour to us”. He attributed the expected turnround from the E535m loss to profits of E350m to E450m to three factors. Váradi said that of the roughly €1bn improvement he expected cost efficiencies to generate €400mn, a further €200mn to come from better use of the airline’s fleet and crew and about €400mn from having fuel and currency hedges in place. “I’m very confident in the performance of the airline financially as a result of all the operational changes and investments we’ve made,” Váradi said. Like other low-cost airlines, Wizz is investing in the latest generation of single-aisle, fuel-efficient aircraft. During the current financial year, it is expecting to receive 42 Airbus A321neo aircraft, with new, fuel-efficient engines. It intends to hand back to lessors 16 smaller A320s with older engines.<br/>