Wizz Air’s latest financial reports make interesting reading. Cash is the best way to survive in a crisis, and Wizz Air is doing well in this area. Despite an expected drop in passenger numbers, load factors, and profits, its cash balance has risen in the year up to March 2021. And ambitious growth goes along with this, despite caution over the coming year.
Cash balance growth
Amidst such a challenging year for airlines, Wizz Air’s latest finances show that it managed to not only maintain but increase its cash balance. As of March 31st 2020, it reported a balance of €1,496.3 million ($1,824 million). For March 31st 2021, this had increased an impressive 8% to €1,616.6 million ($1,970 million).
This is a great result and an important indicator of its ability to survive any continued difficulties. According to analysis from CAPA Centre for Aviation, it is the best-placed European airline for liquidity.
The growth is due to several factors. In January 2021, it issued a €500 million three-year bond. It has also raised money through refunds on advances for aircraft and sales of assets.
Still a difficult time
This stands out, however, amongst other declining statistics. No airline this year is posting great results though. IAG for example reported a loss of €6.9 billion ($8.4 billion) for the full 2020 year.
Revenue for the 2020 financial year is down 73.2%, leading to a loss of €482 million ($587 million). And passenger volume is also down 74.6%, from 40 million to 10.2 million. And alongside this, its load factor is down almost 30%, to 64%.
Speaking about the results, József Váradi, Wizz Air Group Chief Executive Officer, said:
“This was probably one of the most challenging years for the aviation industry, heavily impacted by COVID-19 related regulations… Despite these unprecedented challenges, we stayed in control of our cost structure, preserved our cash position, and maintained our investment-grade balance sheet. “
Agility and expansion
Wizz Air has stood out throughout 2020 and into 2021 for its rapid return to services and its expansion. It has increased its fleet size (from 121 aircraft to 137 according to its financial results). And it has launched many new destinations. Its network increased from 146 airports in summer 2019 to 180 in summer 2021.
Váradi explained how staying agile has importantly gone along with the expansion:
“Agility has been key in navigating the year. We expanded from 25 to 43 operating or announced bases, which inherently increases flexibility. We continuously realigned capacity with ever-changing restrictions, ramping up to 80 percent capacity in the span of weeks over summer 2020 and then down to 20 percent only weeks later.”
Alongside this, it has, of course, also had to focus on reducing costs. Most notably, there have been staff losses. Over the year, Wizz Air reports it has reduced staff by 19% across all areas, and salaries have dropped by an average of 14%.
Looking forward to 2022
Despite its optimism over new aircraft and routes, the airline’s results also contain some realistic warnings for the coming year. Overall, the airline expects to fly about 30% capacity in the first quarter of this financial year, increasing to full capacity by the next financial year. It warns that the year will end with a further loss unless there is accelerated lifting of restrictions.
“We are cautiously optimistic about the recovery of the business, which has started later than what we would have liked as COVID-19 restrictions have remained in place longer than anticipated. Therefore, F22 will continue to be a transition year. Whereas the recovery pattern continues to be difficult to forecast, the trends are encouraging, and we are ready as ever.”
Like all airlines, Wizz Air has had a difficult year. But it is a stronger position than many other airlines. Feel free to discuss its position and future more in the comments.