Wizz Air Holdings Plc

In a moment I'll hand over to Joseph Faraday and Jan Malin. There will be a full presentation followed by Q&A where we'll start with questions in the room and then move on to the webcast. With that I'll hand over to Joseph.

Thank you. Good morning everyone. Thank you for coming. So this is our Q3 results. I would just like to set up the stage for the discussion today. Could you please move the slide? Yes. So we are up on passenger numbers by good 12%. On the back of capacity, increased ASK terms, 11%, slightly lower risk than last year. But I think this is pretty much in line with what we guided to the market. EBITDA is up 12%. And our cash improved to 2 billion euros. Important to note that In the meantime, we have actually repaid the 500 billion outstanding bond. Net loss was improved to 139 million by around 100 million versus past year. So we think that these results are consistent with what we have told the market we would deliver. So no surprise. So with that regard, this is a fairly benign report this time around. If you kind of dig into some of the attributes and driving factors, revenue growth came out as a good 10%. Please take note of the fact that our stage strength is down. by about 5%, so obviously this is somewhat affecting unit revenue performance. GTF engine recovery continues to unfold, so we are now grounding 33 aircraft versus 40 a year ago. As you know, the plan is to uplift the aircraft completely by the end of calendar year 2027, and I think we are on track on that. Sadly, it is strengthened to 2 billion, of which we repay the 500 million outstanding bond. As in the other market speculations, what would happen to that bond, extended or not, but it is behind us now. The network reshuffling has been continued. As you know, Abu Dhabi got closed a while ago, and Vienna base will close in March, and we have transitioned significant capacity to central Eastern Europe, pretty much across the whole of central Eastern Europe, reopening previous bases in Romania and opening other bases in Bratislava, Port Gorica, Yerevan or Warsaw. A number of aircraft allocations have been announced in this period. Again, this is pretty much across the board in Central and Eastern Europe, but also in Western Europe, particularly in Italy. We are managing the fleet growth, and we have not only managed the fleet growth, but we also moderated capacity going through the week or second half of the financial year in the OPEC period. That's why we ended up with lower utilization. But again, I think you need to consider it as kind of a transitionary period, and this is an issue of the time we are going through. productivity and utilization will ramp back up going into the next financial year. So summer capacity, I think we are fairly clear on that by now. We are seeing as the growth of around 24% coming through, which will translate into around 30% seed growth. Again, you recall, we guided you on this, that while we are looking at medium-term growth rate of around 10 to 12 percent. It still takes some time to get there given the aircraft order and the GTF uplifting process. So the next period is still going to be high growth and then we start moderating it down in the second half and as of the next financial year fiscal 28 you're actually going to be seeing the growth rate what we were talking about. And accordingly, the Flippen is adjusted for that. So again, high growth in the first half, in the summer fiscal year 27, and somewhat of a moderated growth coming closer to the target in the second half of fiscal year 27. And with that, I would hand over to Julian with regard to the numbers.

Thank you, Joseph. Could you go to the next slide, please? So before I dive into the numbers, I just want to clarify one rumor going around. We do not have plans for scheduled service to the United States. We have applied for charter rights for World Cup flights next year, potentially. The beauty of charter is that we have an aircraft that can do it. in the form of the XLR. The competition does not. And we would only do a charter if the money makes sense. So you sell the flight in advance, you collect the cash in advance, you price it accordingly, and the profit's locked in. So that's an example of us being opportunistic and looking at ways for us to diversify our revenue stream, but I would not expect there to be a material impact to the numbers based upon that. The application allows you to select a checkbox for scheduled, and that checkbox was selected, but I think somebody's taken that. far out of proportion, so there's no change to the business model other than opportunistic charter costs based upon the mission that that aircraft can fly. In terms of this slide now, so we generated 139 million loss this quarter, 42% better than last year, and that was driven by, as Joseph already summarized, 11.1% more ASKs. I should also point out that from the seat capacity, seats grew 13.1%, giving us more units in terms of seats to be able to sell. That means that we're generating more sector productivity, and that is driven by the lower stage length. It's actually 1.8% decline this quarter, although we will see the stage length and the whole network come down as a result of the business decline. densifying and fortifying into Europe. Ticket Rask was up. 0.2%, but ancillary RASC was down for total RASC increase or decrease of 0.8%. That ancillary RASC reflects the shift in terms of the network moving away from those longer stage length lights where we were able to have a different profile of ancillary services. Ancillary remains an area of focus, and we will continue to look at ways for us to recover that decline that we saw this quarter. But overall, 0.8% lower RASC, better than I think what people were expecting. However, I will emphasize Not as good as what we would like and we're going to continue to focus both on ticketed ancillary RASC going forward Load factor was marginally down And that is driven by again, I think to some extent the seats capacity So we have a bigger gauge aircraft, which means that I think that a half percentage point down given the growth is is not anything to be concerned about we're certainly not other than focusing on improving that and Which means that overall the combination of RASC and ASK is generated just under $1.3 billion in total revenue, up 10% year on year. EBITDA, I will emphasize, was – the EBITDA margin was the same as it was last year, 13.6%. So we were able to preserve EBITDA margin despite the growth and despite the changes coming through the business. And so that's important to emphasize. However, we do see pressure on depreciation, which I'll explain in the next slide when we get to the cost side of things. So overall, I would say that revenue came in probably – better than expected and costs came in probably better than expected as well. Although, like I said, what we were expecting was anticipated and certainly still opportunities to improve. If I can go to the next slide, please. So, in terms of the cost position, we were able to keep the ex-fuel cast growth to 2.1%. That is in line with what we were communicating throughout the year. And full cask was up 2.3%. The fuel line was driven by, to some extent, the fuel pricing, but also the cost of the emissions credits. We're seeing some inflation in terms of the emission credits, which is putting some pressure on that. And we are, like everybody, receiving fewer free allowances, which means that we have to incur more costs there, although that impacts us less given the baseline that we're coming from. In terms of the rest of the cost structure, so I think staff costs in line, so with ASK growth. And then the areas where we do need to focus on and we are focusing on are the ones that we've talked about, so maintenance and depreciation in airports. So maintenance has gone up, again, in line with expectations and for the reasons that we know about, which is that we are planning on retiring 18 current engine option A320CO aircraft this year. That compares to three last year, so a six-times increase. and when you return those aircrafts they come with event related costs the event is the return and you have to comply with the lease return conditions and and the problem with that is that that requires maintenance capacity and maintenance capacity is scarce due to all the supply chain channels all the supply chain troubles happening in the industry and maintenance has just simply been higher due to inflationary pressure so we're having more event-related costs at a higher cost base. However, the good news is that we are seeing that in the next few years, we will retire most of our CEOs, 18 this year, 19 next year, 16 the following year. And with that, those event-related costs will reduce. Likewise, a portion of maintenance costs flow through depreciation, and we have 70% more aircraft in the sort of eight years or older bucket in 2026 versus 2020. And so, as a result, we're attracting higher depreciation costs in the form of maintenance depreciation than we were if you want to look at us pre-COVID, which means that those costs will simply eliminate as those aircraft are returned, but it is a transition that we have to go through. These costs, particularly in maintenance and depreciation, are high year on year, but they're driven by specific symptoms or outcomes based upon symptoms that we knew that we were going to be experiencing. Airports and handling and en route, it's a bucket of three lines there. Handling is actually, we're starting to get a handle on it, but airports and en route still are elevated. En route is due to higher pricing around navigation charges that we see across our footprint. I think many airlines are are frustrated with those costs we certainly are that's a network design issue to some extent that we will be factoring into our decision making and on airports we did a deep analysis of the cost base from fiscal year 20 to where we are today and we saw that post coping we were growing we were able to keep airport costs um under control so certainly we were seeing cost efficiency coming through there but then when we were hit by the powder powder metal grounding and our growth went from 10 to 12 percent to zero We lost the benefit of the incentives that we had negotiated. We lost the benefit of the rebates that we were expecting to generate, and we're now in the process of having to redeploy capacity in a way that we can get those back. And so the problem with that is that we've said this a few times on these calls. It's a timing issue. We have to We have to demonstrate the growth. We have to deliver the growth. We have to commit to the growth, and we have to measure it, and that takes time. But that's the gift that we have now with capacity growth coming back. Again, 10%, 11% this quarter, roughly the same next quarter, and then next year we have quite a tool to deploy when it comes to that capacity. So, yes, there's going to be a lot of pressure with that capacity in terms of deploying it. We have some exciting ambitions and plans on how we're going to do that, but we're also going to use that capacity sensibly to make sure that we tackle those cost lines. In terms of the one-offs or the other income, it's a call on the one-off. So, we did see higher sale leaseback benefits this quarter. That was, again, anticipated. No surprises there. And we were able to keep disruption costs in line with where they were last year. We had a pretty reliable third quarter last year, and the same happened this year. And we were able to continue to improve our wet lease costs and to bring that down. So, overall, I would say that the cost picture was in line, if not marginally better than expectations, but that's exactly what we're trying to do now is just to deliver expectations, and we did that this quarter, we did that the prior quarter, and that's the plan as we march through this transitionary period. If we can go to the next slide, please, just to look at the cash profile. So, again, things are in line with expectations. We were basically flat on free cash flow. We ended up the quarter with just under $2 billion in cash, just a smidge, and $1.98 billion. That's up $400 million versus the prior year. And our liquidity ratio, so the percentage of cash to last 12 months' revenue, increased five percentage points to 34%, which is one of the highest in the industry. Now, that cash balance has, of course – been reduced through the bond repayment that happened on January 19th as Joseph said And that was anticipated we did on the 23rd of December renew the bond Documentation and so that program remains available to us For the future, but at this point we don't see any requirement to raise debt and therefore we won't But we have that option on hand our cash profile going forward is is robust. We have the benefit of an earlier Easter in the beginning of April this year, which means that the cash volumes will start building as we enter into February and March. And with the growth coming in the summer period, that will deliver a large amount of unflown revenue. So we expect to restore the cash that we expended on repaying the bond uh relatively quickly to get back to a number north of two billion and that will then grow depending on how we ultimately um deploy that cash into fleet or other measures um in terms of the um in terms of the fleet we we we are um actually there's a fleet slide i'll let you talk about the xlrs so i think that's that's that's it for me um um i will also just take a moment to thank everybody from the analyst community this is my last call as official cfo i welcome my predecessor my successor veronica sponerova who joins on monday and i will of course be in the room with the team to make sure that she is set up for success as is the company so thank you all