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Wizz Air (WIZZLN 26s; Ba1/NR/BBB- Neg) Sept. Traffic

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As we have said before traffic is not a focus - load factors are a tad more useful but still it is costs and yields (including where capacity is being deployed) that are the drivers of earnings right now. Wizz actually did well on pricing last quarter but costs an obvious issue - which it will blame on Pratt & Whitney engine issues/groundings. €26s are trading at Z+230/4.8%/€95.3 on mids - we are still skewed to see value there. Equities are down -12% this week (~normal vol) and on the Israel/Iran tensions we'd only note it was already stretching itself on capacity though costly wet leases and its focus is on Central & Eastern Europe corridor - i.e. we don't see significant impacts. On the small reversal higher in Oil - Wizz will still face a tailwind in spot prices; it was hedged 65% for year ending March '25 at circa $800 vs. spot $707. Our commodities analyst see this as a risk premia NOT fundamentals/supply impact driven and go on to add oversupply concerns for next year is keeping a lid on the moves. 1H (3m to Sept) results come on the 7th of Nov.


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As we have said before traffic is not a focus - load factors are a tad more useful but still it is costs and yields (including where capacity is being deployed) that are the drivers of earnings right now. Wizz actually did well on pricing last quarter but costs an obvious issue - which it will blame on Pratt & Whitney engine issues/groundings. €26s are trading at Z+230/4.8%/€95.3 on mids - we are still skewed to see value there. Equities are down -12% this week (~normal vol) and on the Israel/Iran tensions we'd only note it was already stretching itself on capacity though costly wet leases and its focus is on Central & Eastern Europe corridor - i.e. we don't see significant impacts. On the small reversal higher in Oil - Wizz will still face a tailwind in spot prices; it was hedged 65% for year ending March '25 at circa $800 vs. spot $707. Our commodities analyst see this as a risk premia NOT fundamentals/supply impact driven and go on to add oversupply concerns for next year is keeping a lid on the moves. 1H (3m to Sept) results come on the 7th of Nov.


Keep reading...Show less