Wizz Air Holdings Plc

Good day and thank you for standing by. Welcome to the VISAIR F23 Q3 results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question from the phone, please press star 1 and 1 again. Please be advised that today's conference has been recorded. I would now like to hand the conference over to our speaker today, Joseph Varady, CEO. Please go ahead.

Thank you. Good morning, everyone. Thank you for coming to this presentation. So this is Wiesel Holdings PSC Q3 fiscal 23 result presentation. So let me just give you the highlights as we consider this period. So in the reporting period, revenue was up 43% versus pre-pandemic level. So that is Q3 fiscal 20. If you take the financial year to date, the first nine months, we are up 35% versus pre-pandemic level. So clearly, Wizz Air is the fastest growing airline in Europe. At the same time, unit revenue grew by 4%. I think we said that before, that this is the first time we are seeing a very substantial volume growth, capacity growth delivered to the market, at the same time being able to grow unit revenue too. And within that revenue growth, N3 unit revenue will represent a 7% growth relative to pre-pandemic levels. We delivered break-even EBITDA, slightly profitable quarter on net profit, although with some fluctuation of financial inputs, especially foreign exchange. Fuel unit costs came down by 5% versus the first half of the financial year, so we are seeing some improvements of the macro environment. Let's not forget that we are unhedged in this period, so we are really subject to the market, both on fuel and foreign exchange. Completion rate improved significantly. You recall that we got severely affected by operational disruptions during the summer, and post-summer we were able to stabilize operations and improved our completion rate, so we are nearly back to historical standards. Still a small gap, but I think we are heading the right way. Liquidity, close to 1.4 billion. This is the same liquidity level as a year ago without taking any incremental financing. So essentially, the business over the past year was cash flow break-even, despite the P&L loss that we are reporting. We've got strong ratings out of the rating agencies from Fitch and Moody's, and we continue to focus on our environmental footprint and our sustainability performance which is becoming increasingly recognized by the outside world as well. And the latest manifestation of that is the CARPA, Global Environmental Sustainability Airline Award, what we received recently. If you look at kind of the key metrics of the business assistance, with regard to passenger count, we carried 12.5 million passengers in the period. This is 60% more than a year ago. and 24% more than the pre-pandemic quarter before the breakout of COVID-19. In terms of aircraft count, the fleet has been growing on a constant basis. We added 27 aircraft over the past year and our fleet is now 57 aircraft larger than what it was pre-pandemic. We extended our footprint, but at the same time, we also consolidated our operations, as you can see. We were striking out smaller, ineffective operating bases to make sure that we are gaining scale benefits and operational efficiency, as well as financial performance from those moves. So it is a more focused, more concentrated network, what we are having right now. At the same time, we entered some new markets, new countries, added three more countries to our franchise versus a year ago and nine versus pre-pandemic levels. We have been talking about sustainability, but also we have been getting some other awards in this period. I mean, we are not really trophy collectors, but of course it feels good when the industry recognizes our performance. This is important because, as we said, the current financial year is a transition year. We are ramping up operations and we are ramping up our investments we have made during the COVID times. As a result, you can see our market share has grown substantially in San Antonio from 18% pre-pandemic times to 27% now. I mean, that's a substantial growth, so essentially our impact is 50% bigger in Central and Eastern Europe than prior to the breakout of COVID-19. And we have continued to invest across our markets in Central and Eastern Europe. We consider Central and Eastern Europe as home run for Wizz Air, so it remains an investment market. Although on a going forward basis, you will see that Our growth rate is moderated in Central and Eastern Europe because really the growth will come through some of the new market investments that we have made during the COVID period. So strong results across the board following through our commitment to Central and Eastern Europe. And with those highlights, let me just turn it over to Jan to talk about the financial performance, and I will take it back for some of the other insights of the business. Thank you.

Thank you, Joseph. Good morning and thank you. As outlined in the highlights, revenue more than doubled in Q3 versus last year this time, with a Q3 revenue figure of almost a billion euro, 43% higher than the same period pre-COVID in F20. EBITDA was roughly breakeven and our operating result improved, though still affected by higher operating costs, which we will break down in detail later, as well as explain how these will be brought back in line with pre-pandemic levels. Ultimately, we turned a 33.5 million euro profit for the quarter, admittedly helped by a course correction from a strengthening euro. Cash remained level with last year's balance, despite the growth and the higher volume of business. Revenue is 43% higher than fiscal year 20 for the same quarter. Notably, unit revenue growth when compared to this quarter in fiscal year 20 came in at 3.73 cents, which is almost 4% higher than F20 and 50% higher than the same quarter last year. And it is lining up with the half-two guidance we gave you in November. Ancillary revenue is growing fast at 7.5% versus fiscal year 20 as we optimize and segment our customers better and tailor suitable products to their requirements. Longer routes, such as those to the Middle East and that region in general, present the opportunity to price up. And across the network, as our load factor increases, so will our ticket-related unit revenue. The cash balance at the end of December was 1.37 billion euro. In line with our forecast, and it reflects the seasonality of the reporting period. In addition, we purchased 125 million euros of EU and UK emissions trading credits as part of our offset obligations, unflown revenue for future flight purchases, and the refund of PDP payments from Airbus contributed to almost 100 million euro of positive cash flow during the period. We ended the quarter with roughly the same amount of cash as we did in the same quarter last year, despite the 43% growth in available seat kilometers, which demonstrates the business's ability to generate cash while withstanding the summer challenges. We have not required the PDP financing facility that we mentioned in last quarter's results presentation, although that credit line has now progressed from a term sheet stage to definitive documentation, and we anticipate a closing in early February to provide additional liquidity should there be an unexpected deterioration in macro factors. With respect to our fleet financing obligations, we have secured financing commitments for all aircraft scheduled for delivery in calendar year 2023. In addition, we have been engaging with the market in preparing for deliveries for next year, for 2024, and we remain confident that the combination of the Wizz Air credit quality and the Superior Airbus A321neo aircraft in the 239-seat configuration will make our order book the most attractive asset for the leasing community to finance, which will ultimately put us at a cost advantage compared to other airlines. Our ex-fuel-cast figure continues to drop and ended at 2.49 euro cents, which is now only 10% higher than pre-pandemic levels and is approaching guidance, which targets the second half of this year's increase to no more than single digits compared to fiscal year 2020. Cost reduction is our top priority now that the post-COVID ramp-up pressure is starting to normalize and the enhancements we spoke about previously start to mature. We remain confident that the results of these efforts combined with higher aircraft utilization will deliver reduced unit costs that return to historical levels. In fact, if you look at the last row on this slide, it shows how our utilization increased compared to this quarter last year, but how it is still below our fiscal year 20 levels and dramatically below our target minimum of 12 and a half hours a day, which Joseph will talk about later. Fuel costs continue to put pressure on earnings this quarter, but as of today, I can confirm that we continue to follow our hedging policy and we have 45% of our fuel requirements for next year hedged and 20% of our fuel-related currency hedged as well for next year. In terms of how we're going to tackle ex-fuel cask, it's twofold. Firstly, there are a number of structural cost reductions that we will benefit from. These include having the youngest fleet with an average age of 4.6 years, which means lower operating costs and higher fuel efficiency. Then you have an up-gauge fleet with 239 seats for the new deliveries, which, especially with utilization returning, puts us far ahead of any other operator whose seat count is simply unmatched. Secondly, we factor in the work we've been putting in this winter to optimize the business, such as rationalizing bases, optimizing the route network, eliminating certain flying patterns, reducing flight disruptions, and improving customer service. With that, I'll hand the floor back to Yosef to further talk about our cost advantage and targets for the balance of this year and next. Thank you.