Wizz Air Holdings PLC (LON:WIZZ) expects full-year profits will be at the higher end of its guidance range after it got off to a strong start.
The number of passengers carried in the three months to the end of June rose 25.2% to 7.3mln from 5.8mln the year before.
Revenue surged 28.6% to €469.3mln from €364.8mln last year, while underlying earnings (EBITDAR) rose 43.8% to €155.9mln from €108.4mln.
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Net profit for the period - the first quarter of the group’s fiscal year - rose to a record level of €58.1mln, which was half as much as it made in the first quarter of 2016.
“The company experienced a particularly strong performance from Easter traffic in the first quarter,” revealed József Váradi, chief executive of Wizz Air.
“This first quarter performance together with encouraging summer bookings and the favourable fuel price environment are setting the company up for a strong year; however, as we have seen in recent history, airlines tend to compete away the benefit of lower fuel prices with extra capacity and therefore we remain cautious on the prevailing yield environment in the second half of this financial year, a period in which the company has very limited visibility,” he added.
Despite that, the Wizz Air boss felt able to inform analysts they should expect full-year net profits to be towards the higher end of the guidance range of between €250mln and €270mln.
Neil Wilson at ETX Capital described the trading update as “punchy”.
“Wizz still trades at a discount to peers but this won’t last long at the current rate of travel,” he suggested.
“Airlines have enjoyed a fine start to 2017,” Wilson noted.
“After a turbulent period throughout 2016 it does look like the sector is enjoying favourable tailwinds, albeit against a comparable period that was tougher.
“But as Wizz warns, the industry is pretty good at competing away any margin accretion by creating more capacity – lower costs tend to equate to lower fares. Lufthansa shares plunged on a cautious outlook for the second half of the year even though it raised its full-year operating profit forecast. Wizz has also guided the market not to get too carried away with these numbers, noting that it has almost no visibility on the second half; however, with low costs and in Central and Eastern Europe a market that is relatively immature, the outlook is good,” Wilson said.
Wizz Air shares initially reacted favourably to the update, rising 64p to 2,652p, before ebbing to 2,563p, down 25p on the day.
The company also announced some senior management changes.
Stephen Jones has been appointed as Wizz Air's executive vice president and deputy chief executive officer, and will take up the role later this year after leaving his post as chief strategy, network and alliances officer at Air New Zealand.
Iain Wetherall, currently head of financial planning & control and investor relations, has been promoted to chief financial officer with effect from 01 August 2017.
Heiko Holm, currently head of technical services, has been promoted to chief technical officer.