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Wizz Air says Omicron has dented recovery

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Wizz Air claims that the Omicron variation of COVID-19 has hampered its recovery efforts, with travel demand expected to suffer in the first three months of 2022 as a result of the uncertainty.

This setback will result in additional losses in the low-cost carrier’s financial year’s final quarter, according to Jozsef Varadi, the company’s CEO, in a statement released on January 26, 2022.

“The emergence of the Omicron variant and renewed travel restrictions impacted our trading performance late in the quarter and we expect demand in January, February and part of March to be impacted by ongoing travel uncertainty,” he predicted.

The eastern-European carrier reported an operating loss of €213.6 million ($241 million) in the third quarter of 2021, compared to a loss of €142 million ($160 million) a year ago. It had previously forecasted quarterly losses of roughly €200 million ($226 million).

The larger losses, according to Wizz, were due to the company ramping up operations while the epidemic continued to hinder demand. Wizz, like rival Ryanair, claimed it had boosted demand by lowering ticket prices. The airline reported that average ticket income per passenger fell to €20.84 ($23.52) in the third quarter, down from €30.11 ($33.98) the year before.

“Wizz Air continued its recovery during the third quarter of F22 and well exceeded 2019 passenger and capacity levels in the peak holiday traveling period, despite the emergence of the Omicron variant,” Varadi commented. “In total, we carried 7.8 million passengers with a load factor of 77.1%. During peak weeks our capacity reached 110% of 2019 ASKs.”

Wizz said it expects the operating loss in the fourth quarter of its financial year to be slightly larger than the one it has revealed for the third quarter owing to Omicron uncertainty. It has previously stated that it might lose money in the fourth quarter.

The carrier expressed “cautious optimism” for further recovery in the spring and “near-full” usage from summer onwards.

The remarks appear to be more pessimistic than when Wizz released its second-quarter earnings in November 2021.

It was planned to resume full operations in Spring 2022 at the time. Wizz said Omicron had “dented” recovery in a presentation on its website on January 26, 2022.

“Despite the short-term headwinds, we are cautiously optimistic for a continued recovery into Spring and near-full utilization from Summer onwards,” Varadi said. “We continue to back our strategic choices to invest in our fleet, grow our bases and routes, and lower our unit cost in order to take advantage of the market created in the wake of COVID-19.”

Varadi also mentioned Wizz’s plans to expand its Gatwick operations after obtaining slots from Norwegian Air in December 2021.

Wizz announced that it would operate 170 aircraft this summer, up from 150 at the end of the third quarter. By the end of the decade, the airline hopes to operate 500 planes.

 

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