WOOD Flash – Pegasus Airlines: 4Q22 beats consensus estimates, management upbeat on outlook

Despite the challenging start (with the COVID-19 restrictions, and the geopolitical uncertainty and high fuel prices brought about the war in Ukraine), 2022 turned out to be the most profitable year in Pegasus' history. The company reached an industry-leading 34.1% EBITDA margin, on an eye-wateringly wide RASK over CASK spread of EUr 1.21/ASK. It reached EBITDA of EUR 835m for the year, up 44% vs. the previous record, reached in 2019. These excellent results were delivered in spite of the high fuel prices, and were driven by extremely strong pricing. Pegasus was able to capture the pent-up demand for travel, thanks to its proactive capacity ramp-up emerging from the pandemic, its better management of the early summer disruption experienced by the European airlines, and its decision to allocate more capacity to the profitable international segment (which also had a positive impact on its average stage length and the ASK growth). Looking forward, the company remains optimistic: it expects to fly around 20% more ASK in 2023E compared to 2022, and says that the bookings in place currently indicate a higher load factor and slightly higher pricing compared to 2022 (although the visibility on the key summer season remains limited). At the same time, Pegasus expects the re-fleeting into the neos, under way currently, to drive further efficiency gains, which should help it to keep costs in check. Pegasus believes that its ex-fuel CASK of EUr 2.18/ASK was the lowest of any airline globally in 2022.