FTSE 250: Wizz Air shares fall as it warns of 10% rise in plane fares

·Finance Reporter, Yahoo Finance UK
·3 min read
plane ticket Stewardesses of Wizz Air take a selfie during the unveiling ceremony of the 100th plane of its fleet at Budapest Airport, Hungary, June 4, 2018. REUTERS/Bernadett Szabo
Wizz Air said plane ticket prices are likely to increase by 'upper single-digits' this year. Photo: Bernadett Szabo/Reuters

The price of a plane ticket is likely to jump by close to 10% between July and September, the CEO of Wizz Air (WIZZ.L) has said.

The European low-cost airline said tickets are already more expensive now than they were in the year before the pandemic struck and expects prices to increase by 'upper single-digits' this year.

“Our bookings are showing strong performance in the first fiscal quarter, with average fares trending higher at low single digits versus (the) same period in F20 (financial year ending March 2020),” said chief executive József Váradi.

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“For fiscal quarter two, we expect fares in the upper single digits ahead of the equivalent period F20.”

This could see fares rise by close to 10%, although the company did not reveal any more detailed assessment of where they are likely to go.

Revenue jumped 125% to €1.7bn (£1.5bn), while pre-tax loss rose from €567m (£482m) to €642m.

The company's share price was down by over 5% as investors were not happy with the lack of financial guidance for the rest of the year.

“There is also the issue that air fares are going up and more people have less money in their pocket each month after paying the bills, so they might not be able to afford to travel," AJ Bell investment director Russ Mould, said.

“Add in disruption with air traffic control and you’ve got a chaotic backdrop which means airlines could experience a third consecutive summer of misery. That explains why Wizz Air is not providing further financial guidance for its current year."

Airlines in the UK and across Europe have been struggling to keep up with demand as travel returns to normal for many holiday destinations for the first time since the beginning of the COVID-19 pandemic.

Wizz Air has cancelled some UK flights over the past week, but has not been as badly hit by the disruption as rivals such as easyJet (EZJ.L) and, earlier in the year, British Airways (IAG.L).

“The airline industry remains exposed to externalities such as air traffic control disruption and continuing operational issues within the airports sector, adding to a volatile macro environment,” said Váradi.

Wizz Air said it is planning to grow capacity by more than 30% in the first quarter of the financial year and 40% in the second quarter.

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Wizz Air also warned shareholders that recent disruption at airports will probably lead to the airline making an operating loss in the first quarter of its financial year.

"Shortages of staff in air traffic control, security and other parts of the supply-chain are impacting airlines, our employees and our customers directly.

"We are deploying extra resources to minimise disruptions and urge all other stakeholders to do the same, having customers' best interests always in mind."

Váradi added: “We see strong consumer demand for summer, but expect an operating loss for the first quarter of F23."

The number of Wizz Air passengers more than doubled from 10.2 million to 27.1 million in the year to the end of March.

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