Wizz Air Returns to Profitability as European Summer Traffic Recovers

No-moat Wizz Air joins other European airlines in a return to profitability. The group generated EUR 57 million of operating profit in the fiscal second quarter, compared with a loss of EUR 139 million last year and a loss of EUR 109 million in the previous quarter. Free cash flow was positive in the first half, with total liquidity now at EUR 1.7 billion. Wizz Air carried 9.5 million passengers at a load factor of 80% in second quarter, reaching 81% of precoronavirus passenger levels, as the summer period in Europe saw a sharp recovery as travel restrictions were lifted. The group expects to report a loss of EUR 200 million in the third quarter, as it moves into the seasonally weaker winter period. The company is in high-growth mode as it continues to grow its fleet and expand its network. We maintain our GBX 6,800 fair value estimate and believe the stock offers the best risk-adjusted upside among our European Airline coverage.