Wizz Air Remains Optimistic About Growth Prospects; FVE Unchanged

No-moat Wizz Air sounded an optimistic tone as it reported a third-quarter net loss of EUR 267 million, in line with management expectations. Revenue growth of 172% year on year reflects higher capacity and stronger load factors, which led to a 132% increase in passenger numbers compared with a year ago. Fleet capacity underutilization widened the operating loss to EUR 214 million, from EUR 142 in the prior-year comparable period. Capacity and demand will continue to be affected in the short term due to the spread of the omicron variant, but the group remains optimistic it can achieve capacity levels 50% higher than precoronavirus levels by summer 2022. Overcapacity in the market is expected to lead to yield pressure in the short term as promotional activity picks up once travel restrictions ease. We maintain our GBX 6,800 fair value estimate and believe Wizz Air offers the most attractive risk-adjusted upside among the European airlines under our coverage.