Wizz Air Holdings Plc plans to step up its expansion in Eastern Europe as slower capacity growth at local flag-carriers stung by higher fuel costs encourages a recovery in ticket prices.
Budapest-based Wizz will add 6.6 million seats in the year that began April 1, lifting its capacity to about 33 million passengers. The increment represents about half of all forecast growth in its markets, and compares with the addition last year of 3.7 million seats, equivalent only to one in every six in the region.
Wizz shares surged almost 12 percent Thursday, the biggest intra-day gain since February 2015, after the company said adjusted net income will reach a range of 250 million euros to 270 million euros ($281 million to $303 million) this year, indicating a gain of 10-20 percent. Chief Executive Officer Jozsef Varadi said flat seat growth at rivals such as LOT Polish Airlines SA is spurring a recovery in fares following a period of over-capacity.
“I was saying a few months ago that I would be expecting a more stabilized revenue environment by winter, but it looks like it’s happening earlier,” Varadi said in a telephone interview. “We’re seeing more disposable income coming into the market and at the same time, given the higher fuel price, we’re seeing a more disciplined capacity environment.”
Yields, a measure of fares, will be flat in the peak summer season, after declining 10 percent in fiscal 2017, according to Wizz, which is already Eastern Europe’s biggest discount carrier, ranking No. 1 in eight of 13 countries and second in a further four, behind Ryanair Holdings Plc. The pricing recovery is being encouraged by economic growth of as much as 4 percent.
Profit in the year ended March 31 rose less than 1 percent to 225 million euros amid the fare decline, even as the passenger tally jumped 19 percent to 23.8 million. Wizz aims to attract about 30 million customers this year, Varadi said.
The carrier operated 79 Airbus SE A320-series single-aisle planes at the end of the reporting period, with 21 allocated to Poland, the same number to Romania, and 10 based in Hungary. The fleet should swell to 91 jets by next March.
Wizz stock was priced 10 percent higher at 2,141 pence as of 11:06 a.m. in London, where the company listed 2015. The shares have advanced 20 percent this year, valuing the business at 2.19 billion pounds ($2.8 billion).
©2017 Bloomberg L.P.