Hit from rising dollar pushes Wizz Air deeper into the red

Budget airline Wizz Air has seen its losses widen dramatically as the company was forced to book a multimillion-euro charge because of the soaring US dollar.

The business said that pre-tax loss had jumped from 120 million euros (£103 million) in the six months to the end of September last year to 390 million euros (£335 million) this time around.

The London-listed Hungarian airline was hit by the strengthening dollar, which has hit an all-time high against the pound and the highest in decades against the euro.

It was forced to revalue its liabilities that are calculated in US dollars and as a result took a foreign exchange charge of 285 million euros (£245 million) during the period, compared with just 17 million a year earlier.

It marred what was otherwise a set of recovery results for the airline, which like the rest of the travel industry is trying to find its feet again following Covid-19 restrictions.

It carried 26.5 million passengers over the half year, more than double the number from a year ago, and as a result revenue naturally also soared, by 150% to 2.2 billion euros (£1.9 billion).

“Wizz Air delivered strong results in the second quarter of the fiscal year, after a difficult first quarter operationally,” said chief executive Jozsef Varadi.

“Revenue in the first half of the fiscal year was materially higher than it was in the same period last year, and up 31% versus the same period pre-Covid-19.”

Dimitris Hiotis, a travel expert from management consultancy Simon-Kucher, said: “Wizz Air’s results this morning are indicative of the tough balancing act facing budget airlines.

“On the one hand, they have experienced a rise in passenger demand as global Covid-19 restrictions continued to ease throughout the year, and holiday-hungry consumers flocked to airports to fly en masse to destinations they haven’t been able to visit the past couple of years.

“This has enabled airlines to achieve relatively higher yields per seat, driving profitable growth after two very challenging years.

“However, such growth has been constrained and impacted by staff shortages at airports.

“Low-cost carriers are also facing a potentially worrying year ahead as a result of the rising fuel prices, which have an outsized impact on the industry.”