Wizz Air on the Offensive As It Prepares for Growth After Coronavirus

No-moat Wizz Air ended the 2021 financial year on a strong financial footing and is gearing up for a strong recovery. The positive tone is a departure from the rest of the industry--the company added 18 new bases and 255 routes, slashed cash operating costs, and increased available liquidity by EUR 400 million to EUR 1.6 billion. Revenue and passenger numbers for the year declined by 73% and 75%, respectively, while posting EUR 482 million of underlying losses, compared with a profit of EUR 345 million in 2020. First-quarter 2022 capacity is anticipated to be 30% of 2019 levels, but the group remains optimistic it can achieve 2019 capacity levels in the fourth quarter and potentially exceed 2019 levels for the 2023 financial year. The company expects to emerge with a lower cost base, underpinned by shrewd supplier negotiations and lower ownership costs as the group takes delivery of its outstanding A320/1 aircraft orders over the next five years. We don’t expect to make any meaningful changes to our GBX 6,800 fair value estimate and believe the stock offers the best risk-adjusted upside among our European airline coverage.