Wizz Air (WIZZLN 26s; Ba1 S /NR /BBB- Neg) May traffic & revisit on FY24

May/April traffic and FY24 (ending March) results below. Unclear if it will refi '26 line (par callable from Nov) but it is carrying significant debt load still (leverage trending lower on headline recovery). GTF engine inspections are impacting capacity; 47 aircraft grounded as of Mid-May & it expects that to peak at 50 by end of 1H25 (September) - total fleet is 208. Its still assuming avg. time in inspections of 300days before engines return to service but notes Pratt & Whitney has reduced that to 180 days (i.e. potential upside); FY25 capacity is expected to be flat yoy dragged on by above assumptions. We see no issues with short-end €Jan 26s - neither do markets now its streaming at Z+82/4.2% to maturity. Might be the most impressive airline rally/recovery we have had in the local markets; +8pts/-320bps in 7-months.

• May traffic; capacity +1.2%yoy, Passengers +2.1%yoy, load factor +0.7ppts. Reverses some weaker stats from April including a -0.3%yoy fall in passengers. Despite capacity only increasing +0.4%, former dragged load factor -0.6ppts.
• FY24 (12m to march) earnings was 2 weeks ago, not much surprise after pre-released trading update. FY25 guidance was for capacity in 1H & FY25 to be flat, load factor of 92%, RASK up HSD, ex-fuel CASK up HSD & fuel flattish & net income €500-600m (c€533m, FY24 €366m).
• It reported net debt at €4.8b/4x to end FY24 (12m to March) & gross at €6.4b/5.4x, most debt in aircraft & engine lease liabilities with only €900m remaining in other debt including a single €500m '26. Gross & net debt was higher but leverage trending in right direction on 10 times EBITDA growth yoy.
• Its targeting continued deleveraging of net below 2x by 2H26 (late 2025). Its pointing to €223m in PDP financing that will be paid down in next 12 months alongside €254m in ETS financing in September on explicit paydowns. €26s par callable after November this yr.