WOOD Flash - Wizz Air CMD: show me the money

Yesterday (2 October), Wizz Air hosted a CMD in Budapest for the buy and sell sides. As it is currently in a closed period, the conversation did not focus on either the performance during the summer, or its near-term trading. Instead, the discussion concentrated on the longer-term evolution of, and prospects for, the business. In our view, most investors and analysts do not dispute that Wizz operates an attractive model, with a uniquely-efficient fleet underpinning its ultra-low-cost model. In theory, this should be profitable, and yet, in practice, over the last five years, since the start of the pandemic, it has struggled to return to generating positive free cash flows from its underlying business of flying people to places. Undeniably, Wizz has suffered a long series of external setbacks, many of which (the pandemic, the wars in Ukraine and Levant, the P&W engine issue) we can hardly blame the management for. That said, for a lasting rerating of the shares, Wizz needs to return to delivering robust positive FCF. The presentations have, understandably, delivered little on this front, other than reiterating management’s intention to bring down costs. This should, indeed, be the company’s main focus, but so far, it has remained elusive.