Wizz Air Holdings Plc

Hello and welcome to WISR fiscal year 2021 results call. Throughout this call, all participants will be in a listen-only mode and afterwards, there will be a question and answer session. Just to remind you that this conference call is being recorded. Today, I am pleased to present Josef Varady, CEO of WISR. Please go ahead with your meeting.

Good morning, everyone. Thanks for joining this call. So this is to present the CRISPR-21 annual results of the company. And with that, let me take you through the presentation we prepared for you. So moving the presentation. Off-front, let me just give you some highlights of how we are seeing this business. performing and what views we have with regard to the future. Clearly, it's been a very challenging year, the toughest year for the industry, the toughest year for Viz in our history. But at the same time, I think, as every reset, it has also created a significant number of opportunities for the airline. And we have been trying to take advantage of those opportunities But, of course, we've been dealing with issues as they arise day by day, but we have been keeping an eye on our future and we have been strongly invested against the opportunities as we moved along the lines. We believe that we are a stronger airline today than a year ago, despite the fact that our own performance was almost marginal relative to previous times. We lost 75% of our revenues during the year but relative to the market, relative to our competitors, we believe that we are a better airline and a stronger business than ever before. We have been very disciplined on managing liquidity. We ended the financial year with 1.6 billion euros of cash. This is significant and that makes us obviously very resilient and not only resilient but kind of investable. when it comes to investing into new markets, into aircraft. And those two strategies have been fundamental for building long-term structural competitive advantages for the airline during the pandemic. We retained our investment grade rating by both Moody's and Fitch. That is relevant not only for the feel of it and the look of it, but certainly for financing aircraft, we have been taking significant aircraft deliveries, new aircraft deliveries during the past year and we continue to do so going forward. As a matter of fact, our fleet has grown 13% during this period, so we need to take out financing in quite a significant magnitude for those new aircraft deliveries. And obviously our credit rating flows through the cost of capital deployed against our aircraft delivery stream. So it is very important that we maintain investment grade credit. And it's not just been the fleet that has grown during the period, but we have much broadened and enlarged our network or footprint during this period. We opened up 18 new operating bases in this period, or at least announced some of them yet to be opened. And we have been trying to take advantage of the market opportunities as they arose during the period, obviously. our capacity, our growth had been much wanted by the market. We are one of the very few airlines in Europe that actually can deliver growth to airports and we have been benefiting from that reset, striking good commercial deals for the long run and tapping into very attractive markets. We are ready to move. We have created a lot of flexibilities in the company. We can move aircraft, we can move people with the aircraft. That has made us very agile and I think we continue to be very agile going forward. Depending on the operating circumstances, We will see how restrictions really go. We are ready to go. And we think that the consumer is there. The consumer actually wants to fly, wants to move. There is nothing wrong with willingness to travel. If you look at the U.S., the U.S. is already at 80% levels versus 2019, and we expect it to exceed actually 100% for domestic travel. flying in peak summer. So we think the consumer is totally intact and want to come back into the franchise. It all boils down to travel restrictions and Europe has not done too well with that regard. It's been a roller coaster and there are still significant uncertainties going forward. And that kind of taints, in a way, our ability to to guide you on fiscal 22 because I think it is actually quite a broad range of outcome that we may end up with in the end depending on our ability to depending on our ability to operate within the framework of restrictions or no restrictions. So I think we need to see how markets get unrestricted. The good news obviously is vaccination. I mean, vaccination has been rolled out more aggressively in certain countries, but now everyone I think is catching up certainly in Europe. So that should make a significant difference. I think we also understand that various new variants could affect this whole paradigm, but this is yet to be seen. So we are cautiously bullish. We are certainly very upbeat with regard to our ability to move quickly as the market opens up and we will do so. So if we move to the next slide. But this is the footprint of the airline today. A lot of expansion during the pandemic. Hundreds of new routes launched and a very significant network today. We are operating to 48 countries in total. As said, we added 18 new operating bases during the year. So this is a much enlarged and enhanced operating network certainly a matching host commercial network, but we are selling them what we had a year ago. We've got a number of recognitions during the year. I would note that Wizz Air is the very first European airline. If you can think of such thing as a European airline, you should certainly think Wizz Air. Our license number is 001. We are the first European airline licensed by EASA. We think it's a significant move and that gives a significant path for our ability to expand and scale our business not only from a commercial perspective but also from a regulatory and operational perspective. If we move the page. As you can see, as I said at the beginning, we are a better airline than what we were a year ago relative to the market. We have gained strength pretty much in every core market we operate from in Central and Eastern Europe, but also in select markets in Western Europe. Some of it is obviously our ability to have been able to take advantage of the pandemic, and some of it obviously is rising from the weakness of our competitors. And clearly what I think is going to happen post-pandemic is that we will be a much strengthened business platform operating a newer fleet of aircraft at much lower operating costs than our competitors, that we have to rely on aging aircraft and higher operating costs and this is being a commodity obviously triggers the winner on the basis of who delivers the lowest cost, lowest cost prevails and we are just going to further enhance our lowest-cost position in the marketplace. And with that, let me hand it over to Jarek.

Thanks Joseph and good morning to all. Let me just add a few financial highlights for the year and also some color on the last quarter. So on page 5 here in the deck, you will see that our revenue was down 73% and quarter 4 revenue decline was not different, it was down 74% given the restrictions that continues also into the entire quarter. We reported an underlying loss of €482 million for the full year, with the loss for Q4 at €222 million. And the reported loss for the year was €575 million, with the difference between those two numbers being the exceptional losses linked to the discontinued hedge losses. Given where the fuel prices are and the hedge coverages are for F22, we don't believe you have major exceptional items going forward and over time we can just go back to one reported profit number. As Joseph highlighted, the total cash number was €1,670,000,000 and we'll come back to that a little bit later. On the next slide, page 6, you will see that the total costs were reduced with 46% and ex-fuel costs by 38% versus last year. Recall the ASKs were down 64%, 63.5% for the period. And you see that the costs were almost fully variable, were obviously fuel, airport charges, distribution and marketing costs. We also reduced staff costs 43%, I mean recall we don't meaningfully benefit from our furlough schemes in our region. We reduced roles with 19% back in April 2020 and in the same month also the salaries with 14% on average. So that was a big reduction on the employee cost. on the South Coast, even though during the last quarter, quarter four, we reversed some of those, let's say, salary reductions for the lower-earning incomes cabin crew and office staff, whilst we kept, obviously, these reductions in place for executives and pilots. Maintenance and depreciation are the two cost buckets that were more rigid. Obviously we want to keep our aircraft airworthy even if we don't fly them and we also started to re-deliver a certain amount of aircraft and even accelerated some of that into the year, into Q4. This brings us to liquidity on the next page. If you look at liquidity here, we're finishing the year, as said, at 1.6 billion. So it's ahead of the 1.5 billion euro where we started the year. But of course, a lot has happened in between. We issued 300 million commercial paper with the Bank of England under their CCSF program. and we issued a three-year bond in Jan 21 of €500 million. From a cash point of view, you can see from a cash burn point of view, you can see that we've actually done, despite all the adversity, a relatively good job with the cash burn highest in the first quarter of the fiscal year and in the third quarter of the year, making up 95% of the Q1 to Q3 cash burn with a pretty good summer cash performance. even at a time when we were not back to full schedules. And also in quarter four, I mean, it was a relatively difficult quarter in terms of operation with still a lot of restrictions. We only burned 84 million. Recall our guidance had been in the last six months of the fiscal year to burn 70 million euros per month in case of full grounding, so burning only 84 million in a quarter where we operated just over 20% of capacity is a pretty good performance. On slide 8, you see a little bit more color on the last quarter, with the all-in caliber, and as mentioned, €28 million per month, or €84 million for the quarter. As we mentioned, we maintain the investment grade rating. We do not have overdue refunds with passengers, other than some French cases linked to photographic expired cards. The upslot revenue remained at the level where it was in December, so around 65 million euros, which obviously holds a lot of potential for the future as bookings will come back in and that balance sheet account will kind of fill back up. And then, obviously, We continue to focus on the contribution of the flying as a key principle for the operation. On slide 9, just to close off on the financials, speaking a little bit on the ancillary revenue, we continue to reiterate our strong performance and capability on ancillary revenue. On a like-for-like basis, ancillary revenue was 5.7 Euro per passenger. Of course, there are some tailwinds here because of COVID-19, both in terms of uptake on certain products. in the portfolio, but equally in terms of pricing, because obviously pricing in the last couple of months has been relatively inelastic, or at least the demand has been relatively inelastic. But still we have strong confidence for the future to have Ancillary being in line on the like-for-like basis with our long-term target of one euro per passenger per year. And with this, I mean, Ancillary makes up more than the majority of our total revenue, which again is really critically important for our model as we try to stimulate demand with low fares and have a partial or full offset within Ancillary. And with that, Joseph, back to you.