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Wizz Air warns of losses before recovery takes off

Wizz Air warns of losses before recovery takes off !

January 27, 2022: -Budget airline Wizz Air is warning its fourth-quarter loss would likely top the 213.6 million euros ($241.2 million) third-quarter reached reported on Wednesday before an expected recovery takes off fueled by demand from Britain.

The Hungary-based carrier said the emergence of the Omicron coronavirus variant had reached sales in the latter part of its fiscal third quarter. It is expected to be impacted by ongoing travel uncertainty in January, February, and March.

European airlines are on a rollercoaster ride over the previous year as governments dropped, and then sometimes reimposed, restrictions that increased the cost and hassle of travel in a bid to contain waves of the pandemic.

CEO Jozsef Varadi told Reuters Wizz Air had cut costs and acquired recent landing slots, meaning it was more vital to compete with Ryanair and EasyJet once the long-expected recovery comes.

He said that the airline had seen demand increase in Britain after the government announced an easing to restrictions. It expects to operate 50% capacity in August and September than in the pre-pandemic 2019 summer.

“We are expecting a solid recovery path of demand in the next few months,” he said.

Ryanair said that its confidence levels had undergone a “sea change” in the last weeks, as the perceived threat from Omicron eases and public attitudes to travel improve. EasyJet reports on Thursday.

Varadi noted that input costs were rising, with fuel, wages, and regulatory changes all adding pressure, which means that fare prices would need to go up in the short term.

While Ryanair said that it expected fares to rise due to lower available capacity after airlines failed or shrank, Varadi said he expected overcapacity in the coming three to six months as rivals return to the market.

He said the question for 2022 would be which airline had the most efficient cost base to offer competitive prices while the juggles higher input costs. Wizz Air had liquidity of 1.4 billion euros at the end of December.

Barclays said that the update was aligned with expectations but noted that solid passenger numbers came with weak pricing. Wizz Air is sharing was up 2.5% in early trade.

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