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Expansion takes off for Wizz Air after strong last quarter

Wizz Air reports robust performance and planned expansion despite turbulent last quarter for other low cost airlines.

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The airline expanded its network by 19 extra routes

Wizz Air (LON:WIZZ), the largest low cost airline serving Central and Eastern Europe, is set to continue its expansion following a robust performance in its last quarter.

Passengers carried in the three months to December rose 23.2% from the previous year to 4.7mln, reflecting Wizz Air’s strong position in the region.

Its fleet expanded to 65 aircraft as it took delivery of its first two A321 aircraft with 110 Airbus A321neos on order as it positions itself for further growth.

“These larger and more fuel efficient aircraft will underpin our growth plans for the next decade and ensure that we maintain our industry leading ultra-low cost base” said Jozsef Varadi, chief executive.

The network expanded by 19 extra routes, which included destinations in Hungary, Lithuania, Macedonia, Poland, Romania and Serbia.

Wizz Air’s underlying net profit was a record €17.2mln, thanks to the increased passenger numbers. Ticket revenue was up 12.4% to £187mln.

After exceptional items and foreign exchange, net profit was down 20.9% to €15.6mln.

The airline benefited from the falling cost of fuel with average cost at US$710 per tonne, down 27% from the same period in 2014. But the decline in fuel also dragged ticket prices lower, as average revenue for passengers was down from €68.9 to €65.5.

Staff costs rose 22% to £25.9mln in reflecting an increase in pilot pay.

Wizz Air largely avoided the fallout following last year’s Paris terror attacks and the Russian Airliner crash in Egypt.

Other airlines were not as fortunate. EasyJet  (LON:EZJ) saw a revenue loss of £930mln, blamed on reduced bookings on flights to the French capital and the decision to cease flights to Sharm el Sheikh, both important destinations for the airline.

Meanwhile, Ryanair (LON:RYA) saw a 25% jump in passenger numbers in December, as fear started to dissipate and fares remained low.

In the highly competitive airline industry, price is an important factor. It is unclear whether Wizz Air will be able to pass on the cost to passengers once the oil price recovers.

Wizz Air shares dipped 16p to 1,845p.

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