WOOD Flash – Wizz Air: 2Q FY21 – monthly cash burn down to EUR 9m during summer, despite steep capacity ramp up
Wizz Air’s headline numbers for 2Q FY21 came in below the consensus estimates on weaker unit revenues, and the stock opened lower initially yesterday (5 November). However, during the day, both we and the market managed to dig deeper, and the focus shifted to the excellent performance on cost control and cash burn. Wizz Air maintained its liquidity at nearly EUR 1.6bn, broadly similar to the end-June result, having reduced the cash burn to a mere EUR 9m per month during the quarter. This means that not only did the flights Wizz Air operate in the summer cover their variable cost, they also contributed around EUR 60m per month to the running fixed costs. This is an impressive result, considering that Wizz Air was pushing hard on the capacity resumption.The stock closed some 5% higher on the result and is up some 10% since our upgrade to BUY earlier this week, having outperformed the FTSE 250 Index by around 5% since Monday (2 November). We underscore that the winter will be difficult for all carriers, and the upcoming capacity reductions may weigh on the share price in the near term. That said, we believe Wizz Air is the best-positioned carrier in Europe in the medium- to long-run, thanks to its efficient green fleet, its focus on underpenetrated markets with significant growth potential (CEE), and its excellent relative liquidity position and cost structure. We see the stock as an attractive long-term investment and we reiterate our BUY rating.
Wizz Air Holding is a European airline. As of Mar 31 2017, Co. provided more than 500 routes from 28 bases, connecting 141 destinations across 42 countries. Co. has two reportable segments: the airline and the tour operator business units, marketed under the Wizz Air and Wizz Tours brand names, respectively. Wizz Air sells flight tickets and related services to external customers and, to an extent, to Wizz Tours. Wizz Tours sells travel packages to external customers covering the network of Wizz Air.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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