The Motley Fool

Wizz Air warns of more losses this year! Here’s what I’d do now

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A Wizz Air plane prepares for takeoff
Image: London Luton Airport

The Wizz Air (LSE:WIZZ) share price has fallen again on Wednesday after the airline released its latest trading update. The FTSE 250 share has dropped 1% in midweek trading, trimming share price gains during the past 12 months to 32%.

Hopes of a strong bounceback for the aviators from 2021 have steadily lost altitude in recent months. And today Wizz Air has underlined the difficulties facing the industry as it warned that financial 2022 “will continue to be a transition year.”

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

According to chief executive József Váradi: “We are cautiously optimistic about the recovery of the business, which has started later than what we would have liked as Covid-19 restrictions have remained in place longer than anticipated.” He added that “unless we see an accelerated and permanent lifting of restrictions,” the company expects to remain loss-making in the 12 months to March 2022.

A “difficult” time to forecast

Váradi noted that “[while] the recovery pattern continues to be difficult to forecast,” he added that “the trends are encouraging and we are ready as ever.” Wizz Air said it expected to fly at around 30% of capacity in the current quarter, and that it plans to resume all cash-generative routes as soon as government rules permit.

While Wizz Air said it could record another net loss in financial 2022, it added that “we see a strong trading environment” for the following year. The UK share expects to run at full capacity in the next fiscal year.

A Wizz Air plane takes off

Growth strategy continues

Wizz Air saw revenues plummet 73% during the 12 months to March, it said, to €739m. Passenger numbers crumbled by more than three quarters year-on-year in the period as the pandemic grounded its planes. The Hungarian airline carried just 10.2m passengers in fiscal 2021.

As a result, the UK airline swung to a €566.5m pre-tax loss from a €294.1m profit in the previous year. However, tough trading conditions didn’t derail Wizz Air’s ambitious growth plans. The company expanded the number of flight operating bases from 25 to 43. It also expanded its fleet from 121 planes to 137.

Wizz Air also saw the amount of cash on its books swell 8% year-on-year. It had total cash of €1.62bn as of the end of March.

What Im doing about Wizz Air

Clearly, Wizz Air faces a great deal of uncertainty going forward, as today’s forecasts prove. But as a long-term investor, I think buying the airline could be a very savvy move. The low-cost travel segment still has plenty of room for growth, a theme which the company plans to exploit to the fullest through aggressive expansion.

What’s more, Wizz Air has plenty of liquidity to help see it through the current industry downturn. I think this emerging-market-focussed business could prove a shrewd long-term UK share to buy.

In fact, I’m thinking of adding it to my Stocks and Shares ISA today.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Wizz Air Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.