Key points
- Results for the last two fiscal years demonstrates the severe impact of the pandemic
- Countries like Sweden and Switzerland are tipped to fully reopen their borders, that may positively impact this FTSE 250 company’s share price
- Passenger numbers are up 318% for January 2022, year-on-year
The airline industry is perhaps the sector that has been battered most throughout the pandemic. Wizz Air (LSE: WIZZ) has been no exception. The share price of this FTSE 250 firm plummeted about 50% on the outbreak of Covid-19 in March 2020. With the improving situation globally, however, I think the prospects for this Hungary-based short-haul airline are significantly more positive. I’m following this stock closely to see if I should add it to my portfolio. Let’s take a closer look.
A hellish two years for this FTSE 250 stock
Recent results do not make pleasant reading for Wizz Air shareholders. Between fiscal 2020 and 2021, revenue fell sharply from €2.7bn to just €739m. This reflected the collapse in passenger demand during this time. Furthermore, the FTSE 250 company fell to a €566m loss with the previous year profit of €294m.
Consequently, earnings-per-share (EPS) were hit, swinging into negative territory. The travel sector’s recovery was further dented by the recent Omicron scare. This caused many countries around the world to tighten border restrictions. Results for the three months to 31 December 2021, however, showed a revenue increase of 172.5% year-on-year.
Some good news
As that shows, the news is not all negative. The Omicron variant indicated that the virus itself was becoming less severe. A number of countries have recently suggested that they will be reopening their borders. This may be regardless of vaccination or testing status and would benefit the FTSE 250 firm.
Sweden will soon be opening to EU citizens in what will essentially be a return to pre-pandemic travel. Furthermore, a decision is due by the Swiss Federal Council on 16 February. This potentially means that all international travellers can enter Switzerland, regardless of vaccination and testing status. If such a decision is made, I suspect many more countries will follow suit. FTSE 250 travel firms, like Wizz Air, will surely benefit from these reopening moves.
The real benchmark for gauging the extent to which air travel is recovering, however, is passenger numbers. The company flew 2.39m passengers in January 2022, increasing 318% year-on-year. Furthermore, capacity for the same period increased 220% year-on-year, with a load factor of 79.6%.
This means that more aircraft are flying more passengers. This can be only good news for this business. All this news led JP Morgan to upgrade Wizz Air in January 2022. This was primarily because of its “unique growth opportunities” and “ultra-low costs”.
There is no denying that this firm has endured a torrid time during the pandemic. However, more countries are considering reopening their borders and passenger data is more encouraging. I’m optimistic about Wizz Air’s prospects in the long term and will be buying shares in this airline business without delay.
Andrew Woods has no position in any of the shares mentioned. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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