Hungarian low-fare carrier Wizz Air has grounded around 85% of its fleet because of travel restrictions introduced by governments to contain the spread of the coronavirus, the airline said on March 24.
The company continues to operate 15% of its capacity and remains operational in Romania, Hungary, and Bulgaria, but the grounding of the entire fleet remains a distinct possibility over the next period, as potential additional travel restrictions and social distancing policies issued by authorities may make international flying for commercial purposes either untenable or impossible, it said in an update for investors.
"Given the significant balance sheet strength and liquidity, as well as the company's ultra-low-cost business model, Wizz Air is confident in its ability to survive even a potential prolonged grounding substantially beyond the current estimates for the impact of COVID-19 in Europe," it added.
Wizz Air said it has implemented additional cost-cutting measures in third-party spending, overhead spending, discretionary spending, and non-essential capital expenditure. Measures have also been implemented to secure the airline's cash position working with vendors, suppliers, and authorities, it added. Wizz Air said it has rolled out a series of voluntary working hour reduction options and leave options with staff.
"Wizz Air's ultra-low-cost business model and our strong balance sheet provide a solid foundation and a significant competitive advantage in the current challenging environment for airlines, while also making us a long-term structural winner in the aviation sector," said CEO Jozsef Varadi. "However, this situation is posing a significant threat on the aviation industry, and we call on governments to take non-discriminatory steps which will benefit all airlines," he added.
Wizz Air reported a record €21.4mn net profit in Q3 as passenger traffic grew 23% y/y to 10mn in the quarter, where load factor was up 1.1pp to 92.5%. Ebidta rose 25.2% to €131.6mn and revenue by 24.6% to €637mn
A week ago Varadi told local press the company expects to incur €40mn in losses in the February-March period but hopes to restore normal services from July. The company still has €1.5bn free cash and its financial position is stable, he said, adding that the present situation offers opportunities to carriers with good liquidity.
Wizz Air is CEE's leading no-frills airline flying on 710 routes to 154 airports in 45 countries. It carried 40mn passengers in the last 12 months.