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Wizz Air losses widen but operations starting to 'normalise'

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Low-cost carrier Wizz Air has reported widening losses in the first half of the year but has said its operations are starting to “normalise” after months of disruption.

In the July to September quarter the group returned to profit, but over the six months to September 30 it made an operating loss of €63.8mn, according to results published on Wednesday. This compares with a €51.9mn loss for the same period in 2021.

Revenue over the period more than doubled, from €880mn to €2.19bn.

Severe disruption because of staff shortages and problems at airports pushed Wizz to an operating loss of €284mn for April to June, the first quarter of its financial year.

Chief executive József Váradi said the carrier, a fast-growing rival to low-cost operators such as Ryanair, was now in a position to become profitable.

“Our operational performance has recently normalized and we are now back in line with our historically low levels of cancellations and flight disruptions,” Váradi said.

Váradi added that the problems over the summer had been favorably a result of issues such as shortages of air traffic controllers and delays at airport security. But he said the issues were now resolved.

“If you look at the last months of operation of the airline, we’re back to our standards,” Váradi said. “We’re operating our flights with no significant disruption.”

Wizz Air’s shares were down 60p — 3.5 per cent — to £16.75 at lunchtime in London. Shares have now fallen by 64 per cent over the past year.

The airline filled 86.9 per cent of its seats in the first half, against a 75.3 per cent load factor for the same period of 2021. Low-cost airlines typically aim to fill more than 90 per cent of their seats.

Váradi said Wizz had not yet reached the levels of fleet utilization and load factors of before the pandemic.

But he expressed confidence that any remaining problems would be resolved by the time Wizz’s financial year ended on March 31.

“We’re quite confident we’re going to get there by the end of the financial year, by the start of the next financial year,” he said.

The company has been hit hard by rising energy costs after abandoning fuel price hedging during the pandemic. However, it has said it expects to have similar hedging strategies to competitors in place by April.

“Today we’re at a competitive disadvantage,” Váradi said. “As of April, we won’t have that competitive disadvantage versus our competitors.”

Wizz said on Wednesday that it expected to limit the increase in its non-fuel cost per available seat kilometer (CASK) — an industry standard measure of costs — for the October to March half of the current financial year to a relatively modest single-digit percentage rise above pre-pandemic levels.

The company has announced expansion plans in the Middle East and has a joint venture in Abu Dhabi. It increased its fleet by 24 aircraft to 168 by the end of the quarter, focusing its growth on larger, longer-range A320neo and A321neo airplanes.

The strength of the US dollar forced it to revalue some assets, creating what it called an “unrealised” foreign exchange loss of €285mn for the first half, against €16.5mn for the same reason in the first half of 2021. The effect deepened the reported loss for the first half to €384mn, from €121mn a year earlier.