Budget airline Wizz Air has revealed quarterly profits crashed nearly 90%, but confirmed its UK arm has been granted a route licence to keep flying after Brexit.
The Hungarian airline reported an 87.7% plunge in pre-tax profits to 1.8 million euros (£1.6 million) for the three months to December 31, down from 14.6 million euros (£12.8 million) a year earlier.
It said costs had jumped 25.6% to 512.7 million euros (£446.9 million) after fuel expenses soared 22% and a hit from pilot salary increases made last April.
Wizz Air also said it was granted a UK route licence to enable it to continue flying to non-EU destinations from Britain after Brexit.
It set up Wizz Air UK in May 2018 as part of Brexit contingency plans and said it was granted a UK route licence by the transport minister in its third quarter to the end of December.
The group said: “This future-proofs the status of Wizz Air UK Limited as a British airline, regardless of the outcome of the negotiations.”
Wizz Air said the fall in third quarter profits also came as it used its planes less often, although it stressed this was temporary and would be increasing from the start of the next financial year.
Jozsef Varadi, Wizz Air chief executive, said: “Our industry-leading aircraft utilisation, which helps drive our unit costs lower, was negatively impacted by the capacity adjustments in the quarter, but with the recent fall in fuel prices we will be increasing our utilisation levels back to the high levels from the start of full-year 2020.”
It carried 14.9% more passengers, at 8.1 million, and saw quarterly revenues rise 21.2% to 512.7 million euros (£446.9 million).
Its load factor – a measure of how well an airline fills its planes – rose to 91.4% from 89.4% a year earlier.
The carrier, which had warned over profits in November, said it remained on track for the revised forecasts of between 270 million euros (£236 million) and 300 million euros (£262 million) for the full year.
But Mr Varadi said: “Where we will be within this range will depend on the extent of March yield pressures which will be affected year-on-year given Easter falls after the financial year-end in April and external factors such as Brexit uncertainty.”
Shares fell 3% after the update.
Emma-Lou Montgomery, associate director from Fidelity Personal Investing’s share dealing service, said: “Self-styled ultra-low cost airline Wizz Air is seeing passenger numbers take off as it positions itself as the leading carrier to central and eastern Europe.”