Low cost flights, Wizz Air loses more than 23 euros per passenger. Ryanair and Vueling review benefits

Low cost flights: Wizz Air loses 23 euros per passenger, Ryanair and Vueling review benefits

The record expansion amid the pandemic, refunds for canceled flights and the decision not to buy fuel months ago at controlled prices do not reward Wizz Air. In the almost normal first quarter – between April and June of this year – the Hungarian company lost more than 23 euros per passenger transported, the worst figure among European low cost companies. On the other hand, Ryanair and even more so Vueling, the low-cost company of Iag, a holding company that also includes British Airways, Iberia, Aer Lingus, are making profits. In the middle are easyJet, Transavia and Eurowings. what emerges from the analysis carried out by the Corriere on the financial statements published by the companies.

Low cost flights: Wizz Air loses 23 euros per passenger, Ryanair and Vueling review benefits

The passengers

In the second quarter of 2022, Ryanair transported 45.5 million people, that is, more or less the -together- embarked by the direct pursuers easyJet (22 million), Wizz Air (12.2 million) and Vueling (8.8 millions). Compared to the same quarter of 2019, before the coronavirus, Ryanair, Wizz Air, Transavia (the low-cost division of the Air France-KLM group) had more. The negative data of Eurowings stands out, which transported less than half of the clients in the April-June period three years ago.

Low cost flights: Wizz Air loses 23 euros per passenger, Ryanair and Vueling review benefits

The average income

But how much did passengers pay on average? In this case, the classification is almost reversed. Because in the analyzed quarter those who flew with Transavia spent -between basic and extra fare- 114.5 euros, four euros more than those who traveled with Eurowings (110.4). In third place easyJet, with an average income per passenger of 94.8 euros, above Vueling’s 81.5 euros. The race to the bottom continues between Ryanair and Wizz Air: the Irish low-cost airline earned an average of 57.2 euros, the Hungarian 66.4 euros.

Earnings and loses

But more income doesn’t automatically mean more income. And in fact the ranking changes again, strongly conditioned by the record rise in the cost of kerosene, the unfavorable euro-dollar exchange rate (with the strengthening of the US currency), the inconvenience in European skies and flight cancellations. Only two low-cost airlines make a profit: Vueling (5.2 euros per passenger) and Ryanair (3.7 euros). The other airlines lost: Transavia (-3.4 euros per customer), easyJet (-6.2 euros), Eurowings (-13.4 euros) and, in fact, Wizz Air (-23.35).

Low cost flights: Wizz Air loses 23 euros per passenger, Ryanair and Vueling review benefits

costs

How is this record loss possible for Wizz Air? There are several reasons that explain the red of 451 million euros. The debt of the Hungarian airline, which in dollars, grew by 140 million when the US currency was stopped with the euro: this loss is virtual for now, but if it remains so it risks costing Wizz Air dearly. But the main reason is the company’s decision not to resort, during Covid, to fuel coverage: a contract in which the purchase of a quantity of fuel (even 90%) is agreed at a certain price that remains locked for the duration of the contract, usually 12-18 months.

Low cost flights: Wizz Air loses 23 euros per passenger, Ryanair and Vueling review benefits

fuel coverage

Direct rival Ryanair uses fuel hedging and in recent months is paying more than 60% of its daily needs at the fixed price of $62 a barrel. For the entire 2023 financial year (April 2022-March 2023) Ryanair has locked in the price of 80% of the kerosene it will need (and already at 30% for the following twelve months). All at a time when the price of a barrel has exceeded 100 dollars since last winter (132.2 these days). Wizz Air has decided to protect itself from the fluctuation of kerosene (for 40% of its needs this year) but only at prices that are now rising strongly and this meant an extra cost of 195 million euros in the quarter. To these must be added 60 million costs for the management of canceled flights (returns, compensation, etc.).

extra income

In the financial statements of the main European low cost companies we also discover the weight of the extras. In this case, for Wizz Air, 51.5% of the income of each passenger derives from the sale of services such as hand or hold luggage, priority boarding, seat selection, meals on board. The other 48.5% is the basic rate, that is, only the flight. The percentage of extras -looking at the financial statements of the companies that separate the profits- drops to 39.4% for Ryanair and 34.4% for easyJet.

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