Wizz Air Posts 3Q Pretax Profit Fall; Keeps Fiscal Year Views But Flags Brexit Concerns -- Update

(Updates with comments from CEO interview, share price move)

--Wizz Air's profit before tax nose dived in 3Q as costs soared

--The carrier's chief executive warns that people are delaying bookings due to Brexit

--Wizz still expects to meet FY guidance, seeing a bookings recovery once Brexit clouds clear

By Adria Calatayud and Robert Wall

Wizz Air Holdings PLC (WIZZ.LN) on Wednesday said that uncertainty over Britain's planned departure from the European Union is weighing on bookings, after posting an 88% drop in pretax profit for the third quarter of fiscal 2019.

"People are postponing bookings" as they await greater clarity of what Brexit means for travel, Wizz Air Chief Executive Jozsef Varadi said in an interview.

Once there is greater certainty over the political outcome, those bookings are likely to recover, he said.

The British parliament late on Tuesday voted for Prime Minister Theresa May to try to renegotiate terms of the U.K.'s agreement to exit the EU on March 29. Mrs. May earlier this month failed to win legislative support for the so-called withdrawal agreement she negotiated last year with Brussels.

Despite the bookings uncertainty, Wizz Air stuck to its full-year guidance.

The company said it continues to expect net profit for the year to the end of March of between 270 million euros and 300 million euros ($308.6 million and $343.0 million). Achieving that guidance will depend on the extent of pressures facing the airline such as Brexit uncertainty and the fact that Easter falls in April, after the end of the company's fiscal year, Wizz said.

Pretax profit for quarter ended Dec. 31 was EUR1.8 million compared with EUR14.6 million in the year-earlier period, said the airline, which focuses on Central and Eastern Europe.

Quarterly revenue rose 21% to EUR512.7 million from EUR422.9 million a year before, as both passenger ticket and ancillary revenue increased, Wizz said. However, higher staff and fuel costs led to a 25% rise in quarterly operating expenses to EUR512.7 million, the company said.

In the third quarter, Wizz carried 8.1 million passengers, 15% more than in the year-earlier period.

Wizz's load factor--a measure of seats sold--stood at 91.4% in the third quarter, up 2 percentage points on year, the company said.

Wizz Air shares fell 2% in early London trade in the wake of the report, but have since recovered and were last up 2% at GBP31.14.

In addition to maintaining fiscal 2019 guidance, Mr. Varadi also struck an upbeat note for the financial year starting April 1. He said the competitive environment in the crucial summer season looked better, with capacity growing in the mid-single-digits among competitors in Wizz Air's core market, down from more than double-digit growth.

"I think that there is more capacity discipline coming into play," he said.

With fuel prices easing after having rallied last year, Wizz Air also plans to fly its planes more heavily again. The budget carrier reduced utilization--the number of hours that an airline uses its aircraft--when fuel prices rose last year. With fuel prices having moderated again, Mr. Varadi said plane usage would increase again to more standard levels. Budget airlines generate much of their cost edge by flying their planes heavily.

Mr. Varadi said Wizz Air had renegotiated its plane-delivery schedule with Airbus SE (AIR.FR) after the European group last year struggled to hand over planes. The carrier expects to receive six more planes this financial year and introduce 10 in the next.

If Airbus's deliveries fall short, the plane maker would have to pay financial penalties, Mr. Varadi said. "We will get covered, financially speaking," the CEO said, adding that so far it looks like Airbus should be able to make good on its commitments

Write to Adria Calatayud at [e-mail] and Robert Wall at [e-mail]

(END) Dow Jones Newswires

January 30, 2019 06:06 ET (11:06 GMT)

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