TIDMWIZZ
RNS Number : 5093A
Wizz Air Holdings PLC
02 June 2021
WIZZ AIR HOLDINGS PLC - RESULTS FOR THE 12 MONTHS TO 31 MARCH
2021
UNDERLYING LOSS OF EUR482M ON 75% PASSENGER DECREASE IN F21
FOCUS ON COST, CASH AND FAST RECOVERY IN F22
LSE Ticker: WIZZ
Geneva, 2 June 2021: Wizz Air Holdings Plc ("Wizz Air" or the
"Company"), the fastest growing European low-cost airline, today
announces its audited results for the full year ended 31 March 2021
('F21") for the Company:
Full year to 31 March 2021 2020 Change
------------------------------------------ ------- ------- ---------
Passengers carried (million) 10.2 40.0 (74.6%)
Revenue (EUR million) 739.0 2,761.3 (73.2%)
EBITDA (EUR million) (182.8) 719.8 n.m.*
EBITDA margin (%) (24.7%) 26.1% (50.8ppt)
Profit/(loss) for the year (EUR million) (576.0) 281.1 n.m.*
Profit/(loss) margin (%) (77.9%) 10.2% n.m.*
Underlying net profit/(loss) for the year
(EUR million) (482.4) 344.8 n.m.*
Underlying net profit/(loss) margin (%) (65.4%) 12.5% n.m.*
RASK (EUR cent) 2.89 3.95 (26.8%)
Ex-fuel CASK (EUR cent) 3.86 2.27 70.0%
Total Cash (EUR million) 1,616.6 1,496.3 8.0%
Load factor (%) 64.0 93.6 (29.6ppt)
Year-end fleet 137 121 13.2%
------------------------------------------ ------- ------- ---------
*n.m.: not meaningful as a variance is more than (-)100%.
Commenting on the results, József Váradi, Wizz Air Group Chief
Executive Officer said:
"This was probably one of the most challenging years for the
aviation industry, heavily impacted by COVID-19 related
regulations. Wizz Air's F21 revenue was down 73 per cent and we
incurred an underlying loss of EUR482 million. Despite these
unprecedented challenges, we stayed in control of our cost
structure, preserved our cash position and maintained our
investment grade balance sheet.
During F21 we carried ten million passengers, a 75 per cent
decrease compared to the previous fiscal year. Passenger and
revenue figures reflect the sharp cut back in capacity throughout
the year as a result of travel restrictions across Europe.
Agility has been key in navigating the year. We expanded from 25
to 43 operating or announced bases, which inherently increases
flexibility. We continuously realigned capacity with ever-changing
restrictions, ramping up to 80 percent capacity in the span of
weeks over summer 2020 and then down to 20 per cent only weeks
later.
Load factors were markedly down compared to F20 at 64 per cent,
while average revenue per passenger improved by 5.2 per cent to
EUR72.6 in F21.
We finished the year with a total cash position of EUR1,617
million, representing a quarterly cash burn of EUR84m during the
last quarter (Q4 F21).
Our swift and decisive actions, taken at the onset of the
COVID-19 pandemic, allowed us to better protect our financial
position, and 80 per cent of the Wizz Air jobs, in a context of a
75 per cent business decline. These decisions were not easy and the
work delivered by our colleagues in this past year was nothing
short of heroic. We want to thank each of our employees and each of
our customers for their continued support of Wizz Air and are
looking forward to rebuilding and eventually doubling the Wizz Air
business in the next year and years to come.
Commenting on the outlook for the Company, József Váradi
added:
We are cautiously optimistic about the recovery of the business,
which has started later than what we would have liked as COVID-19
restrictions have remained in place longer than anticipated.
Therefore, F22 will continue to be a transition year. Whereas the
recovery pattern continues to be difficult to forecast, the trends
are encouraging and we are ready as ever. We have prepared the
company to be an even more formidable player and to take advantage
of the next phase of market opportunities that await post pandemic.
The investments we have made in our fleet and in our network over
the past 12 months will soon yield results.
We expect to fly around 30 per cent of our capacity in the first
quarter of F22 and are resuming all cash contributing flying
subject to government imposed restrictions. Furthermore, unless we
see an accelerated and permanent lifting of restrictions we expect
a reported net loss during F22. For F23 we see a strong trading
environment and we plan to operate our full capacity .
F21 FINANCIAL NET LOSS AND STRENGTH IN BALANCE SHEET
-- Net loss was EUR576 million with an underlying net loss of
EUR482.4 million (compared to EUR344.8 million underlying net
profit in F20).
-- Underlying net loss recognizes the impact of exceptional
expense (included in Fuel costs) of EUR93.6 million (F20: EUR63.7m
exceptional expense)
-- Total cash at the end of March 2021 was EUR1,617 million (of
which EUR169.1 million was restricted cash and EUR346.8 million
were cash deposits with a maturity of more than 3 months. Deposits
with an original maturity of longer than 3 months (EUR432.5 million
at the end of F20) are presented separately from cash and cash
equivalents going forward.
REVENUE AND COST HIGHLIGHTS
Revenues: Total revenue declined by 73 per cent to EUR739
million.
-- ASKs and passenger numbers both declined 63.5 per cent and
74.6 per cent respectively year on year.
-- Passenger ticket revenue declined by 78 per cent to EUR325.7
million to make up 44 per cent of total revenue.
-- Ancillary revenue declined by 67 per cent to EUR412.6 million
representing 56 per cent of total revenue (compared to 45 per cent
of revenue in F20).
During the COVID-19 pandemic we adhered to the principle of
maximizing cash-positive flying. We continued to operate, enabled
by our low cost structure, whilst many of our peers were forced to
ground larger parts of their fleets. In addition to scheduled
flights we added charter flights, helping governments and
businesses repatriate their citizens and employees during the early
months of the pandemic. At the same time we helped distribute
medical supplies and vaccines to deal with the COVID-19 pandemic.
As the demand for flying became more inelastic, we adjusted our
pricing algorithms. Ancillary revenue continued to perform well,
with strong results via higher conversion on core products, dynamic
pricing and a more relevant product portfolio.
Costs: Total operating expenses, excluding exceptional items,
decreased by 50.3 per cent to EUR1,173.4 million in F21 from
EUR2,359.3 million in F20, while total CASK increased by 48.0 per
cent to 5.22 Euro cents in F21 from 3.53 Euro cents in F20. CASK
excluding fuel expenses increased by 69.8 per cent to 3.86 Euro
cents in F21 from 2.27 Euro cents in F20. The increase in CASK in
large part was driven by fixed cost even after factoring in several
cost actions.
Even more so during F21, cost was a key theme. In April 2020, we
took the painful decision to reduce roles by 19 per cent across all
departments and reduce salaries by 14 per cent on average. We
renegotiated contracts with suppliers while reducing consumption.
As airports adjusted to the new reality we concluded beneficial
long term deals on existing and new bases and destinations. Our
fleet was managed carefully to allow for short to medium term
aircraft parking, optimizing for quick deployment as flying
opportunities emerged.
STRONGER GEOGRAPHICAL FOOTPRINT
-- Our CEE market leadership further improved with a market
share of 45.9 per cent in the low-cost sector and 20.9 per cent of
the total CEE market, up from 39.6 per cent and 17.5 per cent last
year respectively.
-- We increased the number of operating or announced bases from 25 pre-COVID to 43.
-- Within CEE, we added presence in markets where competition
retrenched. In total we announced or opened seven new bases in CEE
with St. Petersburg, Lviv, Bacau, Larnaca, Sarajevo, Tirana and
Burgas.
-- We strengthened historic positions in the West with more base
openings and routes in large markets like UK and Italy, markets
where we have been operating for more than 15 years, and where the
competitive landscape is changing significantly in the wake of
COVID-19. In total, we announced or opened 10 new bases in Western
Europe (London Gatwick, Doncaster and Cardiff, Malpensa, Catania,
Palermo, Rome Fiumicino and Bari, Oslo and Dortmund).
-- Our operation in Abu Dhabi started in January 2021, paving
the way to replicate the success of Wizz Air Hungary in the Middle
East and surrounding markets, making our service over time
available for up-to 5 billion people within a 5-hour flight
radius.
-- At the end of F21 we operated 824 routes across Europe and Middle East.
AIRBUS NEO AND FLEET UPDATE
-- We expanded our fleet with a net 16 aircraft to 137 at the
end of F21 with 52 per cent of seats now served by A321 family of
aircraft. Airbus singled out Wizz Air as one of its customers who
continued to take deliveries of its order book aircraft throughout
F21. Despite the pandemic, Wizz Air actively pursued accelerating
its fleet renewal program and bringing forward the benefits of new
technology in ownership and operating cost, fuel consumption and
lower carbon and noise emissions. During F21 four older technology
aircraft A320 CEO (current engine option) were redelivered to
leasing companies.
-- Our committed order book for a further 248 A320neo family
aircraft ensures Wizz Air will increasingly operate only the latest
and most fuel efficient technologies. Our investment-grade rating -
Moody's (Baa3) and Fitch (BBB-) - and a proven quality of the
underlying asset continued to attract strong interest from
financiers.
-- The average aircraft age was 5.4 years and our average seat
density was 204.7 seats, making it one of the youngest and most
cost-efficient fleets of any European airline.
SUSTAINABILITY PERFORMANCE
-- GHG emissions were significantly lower than F20 in absolute
terms (-65.6 per cent), however our emission intensity was higher
due to the lower load factors on our flights.
-- CO(2) /RPK was 77.3 grams in F21 compared to 57.2 grams in
F20. In F20, Wizz Air had the lowest emissions in the industry
expressed in CO(2) per RPK amongst publicly reporting issuers as it
operates the youngest fleet at the highest seat load factors.
-- Wizz Air declared a target reduction to 43g CO(2) /RPK
emissions by F30 versus its F20 baseline of 57.2g CO(2) /RPK.
-- The key actions to deliver on CO(2) /RPK objective are: fleet
renewal (contributing to 22 per cent reduction with the current
orderbook); fuel savings initiatives (contributing one per cent
reduction) and Sustainable Aviation Fuels (contributing two per
cent reduction).
-- We improved Board gender diversity by nine per cent to a
total 27 per cent, Management Team gender diversity by 10 per cent
to 27 per cent.
-- Our team includes more than 50 different nationalities at all
levels in the organization, and we continue to make strides forward
towards more balanced gender representation.
-- We have worked diligently to better align our F21 disclosures
with TCFD recommendations and in support of this effort and
building our capability in this important area were advised by
Deloitte Hungary on best practises.
OTHER BUSINESS DEVELOPMENTS AND INNOVATION
-- During F21 liquidity position was strengthened by raising
GBP300 million from the Bank of England under the UK Government's
COVID Corporate Financing Facility (CCFF). The commercial paper
will be repaid in February 2022 when it matures. The Company also
raised EUR500 million from a Eurobond maturing in January 2024.
-- An employee engagement survey was conducted with a score of
8.1, slightly ahead (+0.2 points) of the industry average with a
participation rate of 79 per cent.
-- Mobile application traffic and revenue has increased
significantly over the past twelve months as we focused on a
frictionless customer journey across our digital channels.
-- Wizz Air was among the first airlines in Europe to offer
automated refunds for cancelled flights due to the pandemic, now
handling 95 per cent of cash conversion refund requests within a
week.
-- We launched the Travel Planning Map, an interactive tool
designed to help passengers to stay informed on coronavirus-related
travel restrictions.
-- We launched a new Electronic Flight Bag (EFB), a technical
solution that will replace all printed onboard manuals and
materials for pilots with iPads. The new system brings increased
efficiency to all aspects of flight planning.
-- We recently implemented Amelia, our very first chatbot that
will be serving our customers with speed, at scale.
-- Wizz Air Hungary became the first airline in Europe, to
obtain an Air Operator Certificate (AOC) from the European Union
Aviation Safety Agency (EASA).
-- Further to resolutions passed by the Board on 29 December
2020, to protect the EU airline operating licence of Wizz Air
Hungary Ltd's (a subsidiary of the Company), the Board has resolved
to continue to apply a disenfranchisement of Ordinary shares held
by non-EEA shareholders in the capital of the Company. This will
continue to be done on the basis of a 'Permitted Maximum' of 45 per
cent pursuant to the Company's articles of association (the
"Permitted Maximum"). The decision by the Board is considered
appropriate to ensure Wizz Air Hungary Ltd's continued compliance
with applicable ownership and control requirements. We will provide
details on or before 5 July 2021, simultaneously with the notice of
general meeting that is scheduled to take place on 27 July
2021.
-- World Finance Magazine informed us we will be receiving
during the month of June 2021 the recognition of the 'most
sustainable company in the airline industry in 2021'. According to
the World Finance Magazine, who gave consent to pre-announce this
award, the award was based amongst others on having the lowest
emission intensity in the industry (as measured by CO2 per
revenue/passenger/km) and our leadership potential in short-medium
haul transport.
FULL YEAR GUIDANCE
Whereas we believe that the worst impact of the COVID-19
pandemic is behind us, forecasting the key financial KPIs for F22
remains a challenge given the lack of clarity on the timing of
lifting mobility restrictions. We have outlined how we see our
capacity progress for F22 and unless we see an accelerated and
permanent lifting of restrictions we have outlined that we continue
to expect a net income loss. As ever, we will remain disciplined on
cash and cost. We do not see a need to raise additional liquidity
for general purposes, and we will be repaying the outstanding
commercial paper with the Bank of England when it matures in
2022.
Directors' confirmations
The Directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
financial position and performance, business model and
strategy.
Each of the Directors, whose names and functions are listed in
the Directors' Report, confirm that to the best of his or her
knowledge:
-- the Consolidated financial statements, which have been
prepared in accordance with IFRSs, give a true and fair view of the
assets, liabilities, financial position and loss of the Group;
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces; and
-- there is no relevant audit information of which the Company's
auditor is unaware. Each Director has taken all steps that he or
she ought to have taken as a director in order to make himself or
herself aware of any relevant audit information and to establish
that the Company's auditor is aware of that information.
By order of the Board
Jozsef Varadi
ABOUT WIZZ AIR
Wizz Air, the fastest growing European low-cost airline, operates
a fleet of 140 Airbus A320 and A321 aircraft. A team of dedicated
aviation professionals delivers superior service and very low
fares, making Wizz Air the preferred choice of 10.2 million passengers
in the financial year F21 ended 31 March 2021. Wizz Air is listed
on the London Stock Exchange under the ticker WIZZ. The company
was recently named one of the world's top ten safest airlines
by airlineratings.com, the world's only safety and product rating
agency, and 2020 Airline of the Year by ATW, the most coveted
honour an airline or individual can receive, recognizing individuals
and organizations that have distinguished themselves through outstanding
performance, innovation, and superior service.
For more information:
Zlatko Custovic, Wizz Air +36 1 777 9407
Sanja Pavel, Wizz Air +36 70 685 1418
Edward Bridges / Jonathan Neilan, FTI Consulting
LLP +44 20 3727 1017
- Ends -
Chief Executive's Review
Dear Shareholders,
F21 was unprecedented in the 17-year history of Wizz Air. The
aviation industry was heavily impacted by COVID-19 related
regulations, with passenger airlines around the world going into
prolonged hibernation to survive whilst calling upon extensive
financial support. Wizz Air's F21 revenue was down 73 per cent for
the year and we incurred a net loss of EUR576 million.
This said, Wizz Air proved to be very resilient during F21. Wizz
Air entered the pandemic from a position of strength, with an
investment grade balance sheet and strong liquidity position, with
the lowest cost business model, and strength from its culture of
entrepreneurship, agility and can-do mentality personified in each
and every one of our employees. This not only allowed us to better
weather the storm, but positioned Wizz Air for even bigger wins in
the future.
Within a separate section, we have included the COVID-19 year in
review, including the interventions that Wizz Air has undertaken
during the past twelve months. Outlining these events and our
actions reminded us of what a difficult year this has been, yet at
the same time we have positioned ourselves to emerge from the
crisis as a structural winner.
Operational efficiency, cost leadership, innovation and service
excellence are the cornerstone of Wizz Air's success, and to this
day continue to inspire Wizz Air's future growth. Our mission is
very singular. At Wizz Air, we believe that air travel provides
opportunities that can enhance lives and make the world around us
better, bringing people and businesses together. We're committed to
making sure that everyone, everywhere can benefit from air travel
at the lowest possible prices, whilst setting high benchmarks for
safety, customer experience and sustainability.
For the year in review we run through the progress on our
strategic priorities, to close with our view on the industry, an
industry that will not look like anything we have known before the
pandemic.
A focused ultra-low-cost business model
In the current environment, and in light of the low levels of
operation due to widespread travel restrictions, our total cash
balance is the single most important performance indicator. With
our total cash balance at EUR1,617 million and an investment grade
balance sheet, we remain one of the strongest players in the
industry.
Maintaining this strong cash position has only been possible
through our ultra-low-cost base, which has allowed two things: 1)
to sustain periods of severe business interruption significantly
longer than other airlines in terms of cash burn, moreover 2) to
operate cash-positive flights serving our customers and helping the
cash position of our Company even during periods of restricted
demand. Nonetheless, we were not immune to the crisis. During F21,
we strengthened our liquidity position by raising GBP300 million
from the Bank of England under the UK Government's COVID Corporate
Financing Facility (CCFF), maturing in February 2022, and EUR500
million proceeds from a Eurobond maturing in January 2024. Both
financing facilities were issued on highly competitive terms
without burdening our cost structure materially.
Whilst we secured a strong position to weather the crisis, we
also focused on widening our competitive cost advantage by
continuing to invest in the network (securing new attractive
long-termed airport contracts as we opened new bases and routes),
continuing to invest in our fleet (securing an even lower cost base
by further up-gauging our fleet, now at an average of 205 seats per
aircraft), and working with our partners to get better cost and
payment terms going forward.
Strong balance sheet and lowest-cost in this industry prevails,
and, with our ultra-low cost business model we will have the
ability to take advantage of opportunities which may arise as
competitors are withdrawing capacity.
A stronger geographical footprint
The strength of our balance sheet and fleet order allowed us to
grow our footprint - even during this crisis. While doing so, we
not only improved our odds for a faster recovery once restrictions
lift, we also improved our structural cost. In total we increased
our number of announced or operating bases from 25 pre-COVID-19 to
43 point in time.
First and foremost, we improved our position in our core CEE
region and consolidated our undisputed market leadership, with a
market share of 45.9 per cent in the low-cost sector and 20.9 per
cent of the total CEE market, up from 39.6 per cent and 17.5 per
cent last year respectively. Within CEE, we made big strides
forward in certain markets where competition retrenched. In total
we announced or opened seven new bases in CEE with St. Petersburg,
Lviv, Bacau, Larnaca, Sarajevo, Tirana and Burgas.
Second, we strengthened historic positions in the West, with
more base openings and routes in the UK and Italy, markets where we
have been operating for more than 15 years, and markets where the
competitive landscape is changing significantly in the wake of
COVID-19. In total we announced or opened 10 new bases in Western
Europe (London Gatwick, Doncaster and Cardiff, Oslo, Milan
Malpensa, Catania, Palermo, Bari, Rome and Dortmund).
Thirdly, we opened our operation in Abu Dhabi, paving the way to
replicate the success of Wizz Air Hungary in the Middle East and
surrounding markets, a total of 5 billion people within a five hour
flight radius. Wizz Air Abu Dhabi has received an Air Operator
Certificate issued by the General Civil Aviation Authority of the
United Arab Emirates and started operations in the Middle East in
January 2021.
The table below illustrates Wizz Air's market leadership in the
low-cost sector, which grew to 45.9 per cent, an increase of 6.3
per cent year on year. We are the number one carrier in nine out of
13 CEE countries.
Number 1 Number 2 Number 3
======================= ====================== =========================
Market Carrier Share Airline Share Airline Share
======================== =============== ====== ============== ====== ================ =======
CEE Wizz Air 45.9% Ryanair Group 26.0% Easyjet 3.6%
======================== =============== ====== ============== ====== ================ =======
Poland Wizz Air 48.2% Ryanair Group 47.3% Easyjet 1.9%
======================== =============== ====== ============== ====== ================ =======
Romania Wizz Air 66.8% Blue Air 20.1% Ryanair Group 9.6%
======================== =============== ====== ============== ====== ================ =======
Hungary Wizz Air 52.2% Ryanair Group 34.6% Easyjet 5.2%
======================== =============== ====== ============== ====== ================ =======
Bulgaria Wizz Air 64.1% Ryanair Group 23.6% Easyjet 2.5%
======================== =============== ====== ============== ====== ================ =======
Ukraine SkyUp 28.6% Wizz Air 26.6% Ryanair Group 16.2%
======================== =============== ====== ============== ====== ================ =======
Lithuania Ryanair Group 49.3% Wizz Air 46.7% Norwegian Group 4.0%
======================== =============== ====== ============== ====== ================ =======
Latvia Ryanair Group 62.3% Wizz Air 31.2% Norwegian Group 6.0%
======================== =============== ====== ============== ====== ================ =======
Slovakia Ryanair Group 58.4% Wizz Air 37.7% SkyUp 1.5%
======================== =============== ====== ============== ====== ================ =======
Albania Wizz Air 29.6% Blue Panorama 27.3% Air Albania 23.8%
======================== =============== ====== ============== ====== ================ =======
Serbia Wizz Air 67.1% flydubai 12.5% Pegasus 11.4%
======================== =============== ====== ============== ====== ================ =======
Moldova Wizz Air 76.2% FlyOne 23.8%
======================== =============== ====== ============== ====== ================ =======
North Macedonia Wizz Air 77.1% Pegasus 11.3% Chair 11.1%
======================== =============== ====== ============== ====== ================ =======
Bosnia and Herzegovina Wizz Air 61.7% Pegasus 13.0% flydubai 11.9 %
======================== =============== ====== ============== ====== ================ =======
Taking into account all airlines operating to CEE, we kept our
position as the number one carrier with 20.9 per cent market share,
up from 17.5 per cent in F20.
Number 1 Number 2 Number 3
=============================== ============================= ============================
Market Carrier Share Airline Share Airline Share
======================== ======================= ====== ===================== ====== ==================== ======
CEE Wizz Air 20.9% Ryanair Group 11.8% LOT Polish Airlines 7.3 %
======================== ======================= ====== ===================== ====== ==================== ======
Poland LOT Polish Airlines 27.7% Wizz Air 25.3% Ryanair Group 24.9%
======================== ======================= ====== ===================== ====== ==================== ======
Romania Wizz Air 42.6% TAROM 17.1% Blue Air 12.8%
======================== ======================= ====== ===================== ====== ==================== ======
Ukraine Ukraine International 30.4% SkyUp 10.9% WizzAir 10.1%
======================== ======================= ====== ===================== ====== ==================== ======
Hungary Wizz Air 31.5% Ryanair Group 20.8% Lufthansa 7.3%
======================== ======================= ====== ===================== ====== ==================== ======
Bulgaria Wizz Air 34.9% Bulgaria Air 13.4% Ryanair Group 12.9%
======================== ======================= ====== ===================== ====== ==================== ======
Latvia airBaltic 66.7% Ryanair Group 13.6% Wizz Air 6.8%
======================== ======================= ====== ===================== ====== ==================== ======
Serbia Air Serbia 44.8% Wizz Air 15.0% Lufthansa 5.0%
======================== ======================= ====== ===================== ====== ==================== ======
Lithuania Ryanair Group 26.6% Wizz Air 25.2% airBaltic 16.8%
======================== ======================= ====== ===================== ====== ==================== ======
Albania Wizz Air 23.5% Blue Panorama 21.6% Air Albania 18.8%
======================== ======================= ====== ===================== ====== ==================== ======
Moldova Air Moldova 34.6% Wizz Air 33.2% FlyOne 10.4%
======================== ======================= ====== ===================== ====== ==================== ======
Slovakia Ryanair Group 32.8% Travel Service Group 26.0% Wizz Air 21.2%
======================== ======================= ====== ===================== ====== ==================== ======
North Macedonia Wizz Air 56.5% Austrian Airlines 5.4% Pegasus 8.3%
======================== ======================= ====== ===================== ====== ==================== ======
Bosnia and Herzegovina Wizz Air 38.1% Austrian Airlines 10.1% Pegasus 8.0%
======================== ======================= ====== ===================== ====== ==================== ======
(Source data for both tables: Innovata adjusted with Eurocontrol
analysis, April 2020 - March 2021.)
Our fleet as a driver of competitiveness and sustainability
Despite the prevailing uncertainty, we committed to investing
into our future by continuing with our fleet delivery programme. In
F21, 14 A321neos joined the fleet, taking the total number of
aircraft to 137 at the end of March 2021. Today, 52 per cent of the
Company's total seat capacity is on the A321 family of
aircraft.
March 2021 March 2022 March 2023
Actual Planned Planned
====================================== =========== =========== ===========
A320ceo without winglets (180 seats) 31 17 6
A320ceo with winglets (180 seats) 28 26 23
A320ceo with winglets (186 seats) 9 9 9
A320neo with winglets (186 seats) 6 6 6
A321ceo with winglets (230 seats) 41 41 41
A321neo with winglets (239 seats) 22 49 82
====================================== =========== =========== ===========
Fleet size 137 148 167
====================================== =========== =========== ===========
Proportion of seats on A321 52% 67% 78%
====================================== =========== =========== ===========
Average number of seats per aircraft 204.7 213.6 221.5
====================================== =========== =========== ===========
The new neo aircraft are powered by Pratt & Whitney GTF
engines, featuring the widest single-aisle cabin with 239 seats in
a single class configuration. The combination of these technologies
reduces fuel burn by 16 per cent, nitrogen oxide emissions by 50
per cent and delivers close to a 50 per cent reduction in noise
footprint compared to previous generation aircraft.
Our emission intensity, measured by CO(2) per Revenue Passenger
Kilometre (CO(2) /RPK), was already the lowest in the industry in
F20 and our continued investment into fleet innovation ensures we
maintain a strong edge versus any competitor. During F21, while
Green House Gases (GHG) emissions were significantly lower than F20
in absolute terms, our emission intensity was higher due to the
lower load factors on our flights. Nevertheless, this is
indisputably of transient nature as we remain highly committed to
lowering our emission intensity and a low-carbon future, hence our
disclosed targets, strategic priorities and actions on
sustainability.
Creating the leading digital platform
Our customers' digital journey remains a key focus area for us.
Digital is the key to making travel as frictionless, safe and easy
as possible in a cost-effective manner. Today, over 94 per cent of
our distribution is done directly to customers through our digital
channels.
This number increases each year as we continue work to deliver
exceptional online products and services to each customer in every
country we serve. Today we are Europe's fourth most visited airline
website and within the next two years we aim to leap into the
number two spot.
Over the past year, Wizz Air delivered in the following
areas:
1. Mobile-first experience. Our ratio of mobile traffic has
increased significantly over the past twelve months and our mobile
platforms continue to account for greater share of total revenue.
We have focused on making our app easier and faster to use in order
to continue to enhance mobile-first customer engagement.
2. Customer self-service and automation. Wizz Air was among the
first airlines in Europe to offer automated refunds for cancelled
flights due to the pandemic, now handling 95 per cent of cash
conversion refund requests within a week. We also launched the
Travel Planning Map, an interactive tool designed to help
passengers to stay informed on coronavirus-related travel
restrictions. We also recently implemented our very first chatbot,
that will be serving our customers with speed, at scale.
Despite the pandemic, Wizz Air continued to execute its digital
roadmap. Wizz Air is building a better understanding of its
customers so it can offer them new products and services based on
their preferences. In addition, we continue to improve our speed of
innovation by adopting new infrastructure and architectures. This
enables us to not only stay a leader on cost efficiency but enables
better scalability and responsiveness to customers' needs. Within
all of this, cyber security remains a top priority as nothing is
more important than protecting our customers' data.
Focus on our people
Our people are at the core of our business. More than 90 per
cent of our employees face our customers on a daily basis. We
strive to maximise employee engagement, increase the quality of
service, bring novel solutions to complex problems, and to become a
more agile organisation to survive during a crisis and, more
importantly, thrive coming out of it.
During F21 employee engagement score was at 8.1, slightly ahead
(+0.2 points), versus industry average with a participation rate of
79 per cent. As we outlined during our COVID-19 timeline of events,
our employees have endured a lot of hardship, and to see engagement
at these levels is a testimony of their dedication to Wizz Air's
success.
We aspire for our workforce at Wizz Air to reflect our broad
customer base. As such, we are proud to have a diverse team of
passionate aviation professionals. Our team includes more than 50
different nationalities at all levels in the organisation, and we
continue to make strides on more balanced gender representation.
While we improved Board gender diversity by nine per cent to a
total 27 per cent, Management Team diversity by 10 per cent to 27
per cent, we will continue to do more, as also reflected in our
strategic sustainability targets. We are also determined to effect
a step-change the underrepresentation of women in the flight deck -
a long-standing issue within the industry - with the help of our
Cabin Crew to Captain programme.
To preserve the Wizz Air culture and offer more meaningful
career opportunities, we have set ourselves a goal to fill
vacancies with internal talent in at least 50 per cent of these
positions. During this year, we were successfully able to achieve
this in 67 per cent of the open positions, while continuing to
deliver world-class training to our people and giving them the
right tools so that they can own their development and progress in
their career. We believe that Wizz Air offers the best career
progression opportunity in the industry, irrespective if you are a
Pilot, Cabin Crew or an Office employee Wizz Air opens up
opportunities for diverse talents to learn, develop and
succeed.
Outlook
F21 brought significant challenges to the entire airline
industry and F22 foresees the continued impact of COVID-19 related
travel restrictions. We expect 2022 to be a transition year where
we will experience a slow but gradual recovery, mostly subject to
the pace of vaccinations globally including in Europe.
Wizz Air Group performance in F22 is largely dependent on the
capacity flown throughout the summer period, as well as the revenue
performance in the second half of F22, a period over which we, and
other airlines, have limited visibility.
Nevertheless, we remain confident that once travel will resume,
Wizz Air will emerge as a structural winner. We will become an even
more formidable company, that will continue to create shareholder
value and top of the class profitability through cost and cash
discipline, organisational and operational agility, and sustainable
and diversified growth.
Financial Review
Wizz Air's results have been strongly impacted by the COVID-19
pandemic. The ensuing regulatory restrictions in various
jurisdictions affected nearly all aspects of our operation and
necessitated Wizz Air to respond swiftly. Wizz Air intervened on
all income statement and balance sheet lines in order to reduce
cost, lower cash burn and maintain our investment grade balance
sheet.
Wizz Air carried ten million passengers during F21, a decrease
of 75 per cent compared to the previous fiscal year. Revenues
declined by 73 per cent to EUR739 million. Passenger and revenue
figures reflect the sharp cut back in capacity throughout the year,
as a result of mobility restrictions imposed by policy makers
across Europe.
Notwithstanding this challenge and thanks to our swift and
decisive actions, our financial position remained one of the
strongest in the aviation industry.
Wizz Air reported a net loss of EUR576.0 million and an
underlying net loss of EUR482.4 million (compared to EUR344.8
million underlying net profit in F20).
The unit revenue measured in terms of ASKs declined by 26.7 per
cent to 2.89 Euro cents, while unit costs grew by 41.3 per cent to
4.85 Euro cents in F21 from 3.44 Euro cents in F20. CASK excluding
fuel expenses increased by 69.8 per cent to 3.86 Euro cents in F21
from 2.27 Euro cents in F20. The increase in CASK in large part was
driven behind cost lines that are more fixed in nature even after
incisive cost actions, which, as a result of lower ASKs, resulted
in higher unit costs.
Our interventions during the financial year to reduce the
dramatic impact of COVID-19 included:
From a cost point of view
-- We have intervened on all cost lines, reducing roles by 19
per cent in April 2020 and compensation on average by 14 per
cent;
-- We renegotiated discretionary unit cost rates with all
suppliers next to cutting back on consumption to match lower
transaction volumes;
-- We renegotiated the costs of operating at existing airports
whilst locking in beneficial long-term deals on new bases and
airports; and
-- Hot and cold parking of parts of our fleet, to further reduce costs.
From a revenue point of view
-- We established a clear principle of cash-positive flying;
-- We aligned pricing algorithms with more inelastic demand; and
-- We continued to leverage our strong capabilities in ancillary
revenue - posting record growth month in month out via higher
conversion of core products, dynamic pricing and a more relevant
product portfolio (e.g. flexibility product offerings).
From a cash point of view
-- We embarked on an ambitious "payment days" extension
programme with suppliers, leveraging the strength of our balance
sheet and credit rating which allowed suppliers to better
differentiate Wizz Air from other airlines, supported by our
ability to offer true long-term partnerships;
-- We optimised key elements of our investment cash flow by
focusing on optimised fleet deliveries, early lease returns (where
contractually feasible); and
-- We reduced capital expenditure with regards to aircraft orders.
From investment and financing point of view
-- We extended, at competitive terms, the aircraft financing
window to about twelve months, covering expected fleet deliveries
up until the end of calendar year 2021, to lock in financing for
future orders and eliminate financing uncertainty going
forward;
-- We enhanced our liquidity position with a EUR500 million
three year bond issued in January 2021 on favourable terms which
reflected our investment grade credit rating; and
-- We extended the GBP300 million facility from the Bank of
England under the UK Government's CCFF until February 2022.
The macro variables with significant influence on the financial
performance of the Group developed during the year as follows:
F21 F20 Change
========================================== ===== ===== =======
Average jet fuel price ($/metric tonne,
including into-plane premium and impact
of effective hedges) 674 729 (7.5%)
Average USD/EUR rate (including impact
of effective hedges) 1.17 1.16 0.9%
Year-end USD/EUR rate 1.21 1.10 10.0%
========================================== ===== ===== =======
====================================================================
Financial overview
Summary statement of comprehensive income
EUR million F21 F20 Change in results
------------------------------------------------ --------- --------- -----------------
Total revenue 739.0 2,761.3 (73.2%)
------------------------------------------------ --------- --------- -----------------
Fuel costs (including exceptional expense) (347.4) (876.5) (60.4%)
Operating expenses excluding fuel (919.7) (1,546.5) (40.5%)
------------------------------------------------ --------- --------- -----------------
Total operating expenses (1,267.1) (2,423.0) (47.7%)
------------------------------------------------ --------- --------- -----------------
Operating (loss)/profit (528.1) 338.3 n.m.*
Comprising:
- Operating profit excluding exceptional
expense (434.5) 402.0 n.m.*
- Exceptional expense (93.6) (63.7) 46.9%
------------------------------------------------ --------- --------- -----------------
Operating profit margin (excluding exceptional
expense) (58.8%) 14.6% n.m.
Net financing expense (38.4) (44.2) (13.1%)
(Loss)/Profit before income tax (566.5) 294.1 n.m.*
Income tax expense (9.5) (13.1) (27.5%)
------------------------------------------------ --------- --------- -----------------
(Loss)/Profit for the year (576.0) 281.1 n.m.*
------------------------------------------------ --------- --------- -----------------
Exceptional expense net of income tax (93.6) (63.7) +47.0%
------------------------------------------------ --------- --------- -----------------
Underlying (loss)/profit after tax (482.4) 344.8 n.m.*
================================================ ========= ========= =================
* n.m.: not meaningful as a variance is more than (-)100 per cent.
Earnings per share
Earnings per share, EUR (Note 9) F21 F20 Change
================================== ======= ===== =======
Basic earnings per share (6.73) 3.76 n.m.**
Diluted earnings per share (6.73) 2.22 n.m.**
Underlying earnings per share* (5.64) 2.72 n.m.**
---------------------------------- ------- ----- -------
* Excluding the impact of exceptional items, as explained in
Note 7 to the financial statements.
** n.m.: not meaningful as a variance is more than (-)100 per cent.
Return on capital employed and capital structure
Return on capital employed (ROCE) is a non-statutory performance
measure commonly used to measure the financial returns that a
business achieves on the capital it uses. ROCE for the F21 was
(19.4) per cent, compared to 20.8 per cent for the previous
year.
The Company maintained its investment grade credit rating by
Moody's (Baa3) and Fitch (BBB-).
The Company's leverage ratio is (19.2) at the end of the 2021
financial year, while Liquidity* increased to 195.9 per cent from
47.5 per cent at the end of the 2020 financial year.
F21 F20 Change
================= ======== ====== =======
ROCE* (19.4%) 20.8% n.m.**
Leverage ratio* (19.2) 0.9 n.m.**
Liquidity* 195.9% 47.5% n.m.**
================= ======== ====== =======
* See the definition of these non-statutory measures and their
calculation under Key statistics on page 14.
** n.m.: not meaningful as a variance is more than (-)100 per cent.
Financial performance
Revenue
The following table sets out an overview of Wizz Air's revenue
items for F21 and F20 and the percentage change in those items:
F21 F20
======================= ============================
Total Percentage Percentage
(EUR of total Total of total Percentage
million) revenue (EUR million) revenue change
========================== ========== =========== =============== =========== ===========
Passenger ticket revenue 325.7 44.1% 1,508.5 54.6% (78.4%)
Ancillary revenue 413.3 55.9% 1,252.8 45.4% (67.0%)
========================== ========== =========== =============== =========== ===========
Total revenue 739.0 100% 2,761.3 100% (73.2%)
========================== ========== =========== =============== =========== ===========
The decline in passenger ticket revenue was driven by a 74.6 per
cent decline in passengers. Similarly, ancillary (or "non-ticket")
revenue declined, although to a smaller extent due to the strong
performance of ancillary products, as a result its share of the
total revenue increased to 55.9 per cent.
Average revenue per passenger improved by 5.2 per cent from
EUR69.0 in F20 to EUR72.5 in F21. Average ticket revenue per
passenger decline from EUR37.7 in F20 to EUR32.0 in F21 (by 15.2
per cent), while average ancillary revenue per passenger increased
to EUR40.6 from EUR31.3 (by 29.6 per cent).
Operating expenses
Total operating expenses excluding exceptional expense decreased
by 50.3 per cent to EUR1,173.4 million in F21 from EUR2,359.3
million in F20.
The following table sets out for F21 and F20 the expenses
relevant for the CASK measure (thus excluding exceptional expense),
and the percentage changes in those expenses:
F21 F20
Percentage Percentage
of total of total Percentage
Total operating Unit cost Total operating Unit cost change of
(EUR million) expenses (EURcts/ASK) (EUR million) expenses (EURcts/ASK) total cost
======================== ============== =========== ============= ============== =========== ============= ===========
Staff costs 132.9 11.3% 0.52 231.8 9.8% 0.33 (42.7%)
Fuel costs (excluding
exceptional expense) 253.8 21.6% 0.99 812.8 34.5% 1.16 (68.8%)
Distribution and
marketing 19.6 1.7% 0.08 44.1 1.9% 0.06 (55.5%)
Maintenance, materials,
repairs 165.7 14.1% 0.65 176.4 7.5% 0.25 (6.1%)
Airport, handling,
en-route charges 254.9 21.7% 1.00 641.6 27.2% 0.92 (60.3%)
Depreciation and
amortisation 345.3 29.4% 1.35 381.4 16.2% 0.55 (9.5%)
Net other expenses 1.2 0.1% 0.00 71.2 3.0% 0.10 (98.3%)
======================== ============== =========== ============= ============== =========== ============= ===========
Total operating
expenses (excluding
exceptional expense) 1,173.4 100% 4.59 2,359.3 100.0% 3.37 (50.3%)
======================== ============== =========== ============= ============== =========== ============= ===========
Net cost from financial
income and expense 66.8 0.26 44.2 0.06 (51.1%)
======================== ============== =========== ============= ============== =========== ============= ===========
Total 1,240.2 4.85 2,403.5 3.44 (48.4%)
======================== ============== =========== ============= ============== =========== ============= ===========
Staff costs were EUR132.9 million in F21, down by 42.7 per cent
from EUR231.8 million in F20, driven primarily by headcount
reduction, salary reduction for crew and office employees in
addition to decrease in variable pay elements.
Fuel expenses (excluding exceptional expense) decreased by 68.8
per cent to EUR253.8 million in F21, down from EUR812.8 million in
F20. The main driver for this decrease was an ASK decline of 63.5
per cent as well as lower fuel prices. The average fuel price,
including hedging impact and into-plane premium, paid by Wizz Air
in F21 was $674.0 per tonne, a decrease of 7.5 per cent from the
previous year's figure of $729.1 per tonne. The average Euro/US
Dollar exchange rate, including the impact of hedging, was 1.17 in
F21 compared to a rate of 1.16 in F20. The impact of effective fuel
hedges was a EUR93.6 million loss in F21 (compared to a EUR43.5
million gain in F20).
The decrease in distribution and marketing costs of 55.5 per
cent to EUR19.6 million in F21 from EUR44.1 million in F20 is
driven by ASK decline of 63.5 per cent in F21.
Maintenance, materials and repair costs declined by 6.1 per cent
to EUR165.7 million in F21 from EUR176.4 million in F20.
Maintenance costs are largely driven by size of the fleet,
pre-determined maintenance schedules and aircraft utilisation.
Airport, handling and en-route charges decreased by 60.3 per
cent to EUR254.9 million in F21 from EUR641.6 million in F20. This
decrease is primarily driven by the decrease in both capacity and
passenger numbers, which declined by 62.8 per cent and 74.6 per
cent respectively.
Depreciation and amortisation charges decreased by 9.5 per cent
to EUR345.3 million in F21, down from EUR381.4 million in F20 due
to reduction in variable element of the depreciation that is based
on number of hours flown.
Net other expenses include primarily (i) office overhead and
crew-related costs other than direct staff costs, (ii) passenger
welfare and compensation costs, (iii) aviation and other insurance
costs, and (iv) credits that do not classify as revenue from
customers. The decrease in net other expenses to EUR1.2 million was
primarily driven by income in F21, when compared to F20, relating
to various aircraft asset sale and leaseback transactions.
Net financing income and expense
The Group's net financing expense was EUR38.4 million in F21
after an expense of EUR44.2 million in F20. This aggregate change
was driven by foreign exchange impacts partly offset by increase in
net financial expense mainly due to lower interest income earned by
the Group on its term deposits, as shown in the table below:
EUR million F21 F20 Change
Net financial expense (66.8) (44.2) (22.6)
Net foreign exchange gains/(losses) 28.4 0.1 28.3
===================================== ======= ======= =======
Net financing income/(expense) (38.4) (44.2) 5.8
===================================== ======= ======= =======
See also Note 6 to the financial statements.
Taxation
The Group recorded and income tax expense of EUR9.5 million in
F21 compared to the EUR13.1 million in F20.
The effective rate for the Group in F21 was (1.7%) compared to
4.4% in F20. The main components of the tax charge in F21 were
local business tax and innovation tax paid in Hungary and change in
deferred tax balances.
Profit for the year
The Group generated an underlying net loss of EUR482.4 million
in F21, compared to the underlying net profit of EUR344.8 million
in F20.
Other comprehensive income and expenses
In F21 the Group had other comprehensive income of EUR240.3
million compared to an expense of EUR254.5 million in F20. This
change was driven primarily by the movements in the fair value of
open hedge instruments, as reflected in the balance of the cash
flow hedging reserve in equity. It excludes the open fuel hedges
that were classified as discontinued at 31 March 2021 and were
therefore recognised as an exceptional expense already in F21.
Cash flows and financial position
Cash burn
The monthly average cash burn rate of Wizz Air was EUR61 million
during F21.
Summary statement of cash flows
The following table sets out selected cash flow data and the
Group's cash and cash equivalents for F21 and F20:
EUR million F21 F20 Change
(restated)
=========================================== ======== ============ ========
Net cash (used in)/generated by operating
activities (224.6) 751.6 (976.2)
Net cash used in investing activities (146.5) (1,110.1) 963.6
Net cash generated by/(used in) financing
activities 624.6 (93.7) 718.3
Effect of exchange rate fluctuations
on cash and cash equivalents (30.9) 14.3 (45.2)
=========================================== ======== ============ ========
Cash and cash equivalents at the end
of the year 1,100.7 878.0 222.7
------------------------------------------- -------- ------------ --------
Cash flows from operating activities
The majority of Wizz Air's cash inflows from operating
activities are derived from passenger ticket sales. Net cash flows
from operating activities are also affected by movements in working
capital items.
Operating cash flows decreased from EUR751.6 million in F20 to
EUR(224.6) million in F21 primarily due to the following
factors:
-- Operating cash flows before adjusting for changes in working
capital deteriorated by EUR1,058 million year on year. This was
driven primarily by the significantly impaired underlying
profitability of the business due to the COVID-19 pandemic (see
earlier).
-- The positive contribution of working capital changes to
operating cash flows was EUR49.9 million in F21, compared to
EUR(23.2) million in F20, being an improvement of EUR73.1 million
year on year. The main driver behind this improvement was the
significantly lower drop in deferred income and receivables related
to forward bookings, partially offset by only modest increase in
liabilities towards suppliers at the end of F21 compared to end of
F20, when certain actions were already implemented to protect the
liquidity of the Company.
Cash flows from investing activities
Net cash used in investing activities decreased to EUR(146.5)
million in F21 from EUR(1,110.1) million in F20. The significantly
lower investment in F21 is due to the following factors:
-- Advances paid for aircraft (pre-delivery payments, PDPs): The
net PDP payments to Airbus net of refunds received were an outflow
of EUR33.8 million in F21 compared to a net outflow of EUR298.2
million in F20. The decrease in net outflow was the result of a
favourable renegotiation of the Company's delivery schedule and
associated PDP commitments with Airbus.
-- Purchase of tangibles and intangibles, net of proceeds from
the sale of tangible assets: The net outflow was EUR110.8 million
in F21 compared to EUR273.5 million in F20. The key drivers of this
significant decrease in F21 are: a) the purchase of less new
aircraft (see Note 14 to the financial statements), refinanced
through JOLCO lease contracts (see below under financing
activities) and b) the postponement of the purchase of
non-essential spare parts in F21.
-- In agreement with the Corporate Reporting Review Team of the
Conduct Committee of the Financial Reporting Council the Company
has decided to separate from cash and cash equivalents deposits
with a maturity of longer than three months. The Company has
restated its F20 balance sheet and cash flow statement for this
change.
Cash flows from financing activities
The net cash from financing activities was EUR624.6 million
inflow in F21 and a EUR93.7 million outflow in F20. The cash inflow
in F21 was the net of the following two factors:
-- Proceeds from new loan: this was an inflow of EUR195.6
million in F21 and EUR297.7 million inflow in F20, relating to the
JOLCO financing raised on several new aircraft. Additionally, we
also received proceeds of EUR836.2 million from the bond issue and
commercial paper issuance under the CCFF facility.
-- Repayment of loans plus interest paid on loans: The cash
outflow from these items was EUR410.2 million in F21 compared to
EUR392.8 million in F20, which is EUR17.4 million higher than in
F20. These were primarily related to aircraft and spare engine
leasing fees paid, under IFRS 16.
Summary statement of financial position
The following table sets out summary statements of financial
position of the Group for F21 and F20:
EUR million F21 F20 Change
====================================== ========= ======== ========
ASSETS
Property, plant and equipment 2,878.2 2,553.0 325.2
Restricted cash* 169.1 185.9 (16.8)
Derivative financial instruments* 5.1 18.2 (13.1)
Trade and other receivables* 135.3 189.7 (54.4)
Short term cash deposits 346.8 432.5 (85.7)
Cash and cash equivalents 1,100 .7 878.0 222.7
Other assets* 87.3 101.0 (13.6)
====================================== ========= ======== ========
Total assets 4,722.6 4,358.1 364.5
====================================== ========= ======== ========
EQUITY AND LIABILITIES
Equity
Equity 903.7 1,234.8 (331.1)
Liabilities
Trade and other payables 465.7 469.6 (3.9)
Borrowings (incl. convertible debt)* 3,137.3 2,039.4 1,097.9
Deferred income* 111.5 185.4 (73.9)
Derivative financial instruments* 9.0 307.8 (298.8)
Provisions* 88.9 121.1 (32.2)
Other liabilities 6.5 - 6.5
Total liabilities 3,818.9 3,123.3 695.7
====================================== ========= ======== ========
Total equity and liabilities 4,722.6 4,358.1 364.5
====================================== ========= ======== ========
* Including both current and non-current asset and liability balances, respectively.
Property, plant and equipment increased by EUR325.2 million as
at 31 March 2021 compared to 31 March 2020, primarily driven by the
investment made in JOLCO-financed aircraft and sale and leaseback
financed right-of-use assets (see also Note 10 to the financial
statements).
Restricted cash (current and non-current) decreased by EUR16.8
million as at 31 March 2021 compared to the year before. The great
majority of this balance is linked to Wizz Air's aircraft lease
contracts, being cash deposits behind letters of credit issued by
Wizz Air's banks related primarily to lease security deposits and
maintenance reserves.
Derivative financial assets (current and non-current) decreased
by EUR13.1 million as at 31 March 2021 compared to 31 March 2020
(see also Notes 2 and 11 to the financial statements). In 2021
these hedge receivable balances are mainly related to fuel hedge
instruments.
Trade and other receivables decreased by EUR54.4 million as at
31 March 2021 compared to 31 March 2020. This was primarily driven
by decrease in trade receivables as a result of COVID-19, and
decrease in maintenance reserve receivables due to maintenance
events performed during the financial year.
Cash and cash equivalents amounted to EUR1,100.7 million at 31
March 2021 (2020: EUR878.0 million), and short term cash deposits
to EUR346.8 million at 31 March 2021 (2020: EUR432.5 million).
Borrowings (including convertible debt) increased by EUR1,097.9
million as at 31 March 2021 compared to 31 March 2020. The increase
was primarily driven besides the bond issue and commercial paper
issuance under the CCFF facility by lease liabilities recognised
during the fiscal year (see Note 12 to the financial
statements).
Deferred income decreased by EUR73.9 million as at 31 March 2021
compared to 31 March 2020 (see Note 13 to the financial
statements). This was primarily driven by the lower business
activity and shorter booking windows during and towards the end of
the fiscal year, both due to the coronavirus pandemic.
Derivative financial liabilities (current and non-current)
decreased by EUR298.8 million as at 31 March 2021 compared to 31
March 2020 (see Notes 2 and 11 to the financial statements). The
EUR9.0 million liability at 31 March 2021 was related to foreign
currency and fuel hedges. The losses associated with discontinued
hedges were fully recognised in F21.
Provisions decreased by EUR32.2 million as at 31 March 2021
compared to 31 March 2020 (see Note 14 to the financial
statements). The reduction is due mainly to the utilisation of some
maintenance provisions in 2021 as the respective maintenance events
were performed during the year.
Hedging strategy
Following the COVID-19 outbreak, the activity level and
consequently the fuel consumption was significantly lower in F21
than that on which the Group hedging programme was originally
based. As a consequence, hedge accounting for certain derivatives
has been discontinued and the associated loss on these instruments
of EUR93.6 million (2020: EUR63.7 million) was charged to the
statement of comprehensive income as exceptional expense.
In light of ongoing travel restrictions as a result of the
COVID-19 pandemic and the subsequent uncertainty in demand for
travel, a decision was taken in September 2020 to cease until
further notice US Dollar and jet fuel hedging in order to reduce
the risk of over-hedging.
In June 2021 the Board of Directors approved the Company's 'no
hedge' policy for the post-COVID period with respect to US dollar
and jet fuel price risk after carefully evaluating the economic
costs and benefits of the company's hedging programme.
Going forward, the intent of the Company is to no longer engage
in cash-flow hedging of US dollar denominated expenses and jet fuel
price risk:
-- The Group's has a significantly stronger balance sheet
compared to when the hedging programme was launched, which
positions the Company well to absorb the financial impact of
potential increases in input costs from stronger US dollar or
higher jet fuel prices;
-- The Group is less vulnerable to input price inflation
relative to certain of its industry peers due to the shorter
booking window;
-- The Group has a more limited competitive overlap of operated
routes compared to those competitors;
-- Material liquidity risk can be introduced by hedging
activities especially during times of volatile trading
environment;
-- Hedging activities come at substantial additional cost in
terms of spreads, yields and management time, which may provide
greater income statement stability but does not evidently create
shareholder value.
Among other things, the Group will be fully exposed to
fluctuations in fuel prices in periods after September 2021.
The treasury department, under the supervision of the Audit and
Sustainability Committee, will continue to monitor the Company's
risk environment, market and business opportunities to reduce or
transfer its exposure to market risks.
Details of the current hedging positions (as at 31 March 2021)
are set out below:
Foreign exchange (FX) hedge coverage of Euro/US Dollar
Period covered F21
12 months
Exposure (million) $474
Hedge coverage (million)* $130
Hedge coverage for the period* 27%
================================ ============
Weighted average ceiling* $1.1621
Weighted average floor* $1.1164
================================ ============
Fuel hedge coverage
Period covered F21
12 months
Exposure in metric tonnes ('000) 890
Coverage in metric tonnes ('000)* 370
Hedge coverage for the period* 42%
=================================== ============
Blended capped rate* $554
Blended floor rate* $503
=================================== ============
* Including discontinued hedges.
Excluding discontinued hedges, the Company`s foreign currency
and fuel hedge coverage for F22 is 22 per cent and 28 per cent
respectively.
KEY STATISTICS
F21 F20 Change*
========================================== =========== =========== ==========
CAPACITY
Number of aircraft at end of period 137 121 13.2%
Equivalent aircraft 129.7 117.4 10.4%
Utilisation (block hours per aircraft
per day) 4.13 12.02 (65.6%)
Total block hours 195,601 516,478 (62.1%)
Total flight hours 172,469 452,043 (61.8%)
Revenue departures 80,820 214,207 (62.3%)
Average departures per day per aircraft 1.71 4.98 (65.7%)
Seat capacity 15,927,709 42,788,903 (62.8%)
Average aircraft stage length (km) 1,604 1,635 (1.9%)
Total ASKs ('000 km) 25,551,625 69,972,524 (63.5%)
========================================== =========== =========== ==========
OPERATING DATA
RPKs (revenue passenger kilometre)
('000 km) 16,691,569 65,680,231 (74.6%)
Load factor (%) 64.0% 93.6% (29.6ppt)
Number of passenger segments 10,186,077 40,027,914 (74.6%)
Fuel price (US$ per tonne, including
hedging impact and into-plane premium) 674 729 (7.5%)
Foreign exchange rate (US$/EUR including
hedging impact) 1.17 1.16 0.1%
========================================== =========== =========== ==========
FINANCIAL MEASURES (for the airline
only)
Yield (revenue per RPK, EUR cents) 4.43 4.20 5.3%
Average revenue per seat (EUR) 46.4 64.5 (28.1%)
Average revenue per passenger (EUR) 72.5 69.0 5.2%
RASK (EUR cents) 2.89 3.95 (26.7%)
CASK (EUR cents)** 4.85 3.44 41.3%
Ex-fuel CASK (EUR cents)** 3.86 2.27 69.8%
------------------------------------------ ----------- ----------- ----------
* Percentage changes in this table are calculated by division of
the two years' KPIs also when the KPIs are expressed in
percentage.
** Excluding the impact of exceptional items, as explained in
Note 7 to the financial statements.
Glossary of technical terms
Available seat kilometres (ASK): available seat kilometres, the
number of seats available for scheduled passengers multiplied by
the number of kilometres those seats were flown.
Block hours: each hour from the moment an aircraft's brakes are
released at the departure airport's parking place for the purpose
of starting a flight until the moment the aircraft's brakes are
applied at the arrival airport's parking place.
CASK: cost per ASK , where cost is defined as operating expenses
and financial expenses net of financial income, excluding
exceptional items.
Ex-fuel CASK: cost per ASK, where cost is defined as operating
expenses and financial expenses net of fuel expenses and financial
income, excluding exceptional items.
The definition of cost applied in the CASK measures until the
2019 financial year was based only on operating expenses. Financial
income and expenses are now incorporated into the definition of
cost because following the adoption of IFRS 16 this results in a
more appropriate measure of cost development for the Company.
Equivalent aircraft: the number of aircraft available to Wizz
Air in a particular period, reduced on a per aircraft basis to
reflect any proportion of the relevant period that an aircraft has
been unavailable.
Flight hours: each hour from the moment the aircraft takes off
from the runway for the purposes of flight until the moment the
aircraft lands at the runway of the arrival airport.
JOLCO (Japanese Tax Lease) and French Tax Lease: special forms
of structured asset financing, involving local tax benefit for
Japanese and French investors, respectively.
Load factor: the number of seats sold divided by the number of
seats available.
PDP: the pre-delivery payments under the Group's aircraft
purchase arrangements.
Revenue passenger kilometres (RPK): revenue passenger
kilometres, the number of seat kilometres flown by passengers who
paid for their tickets.
RASK: total revenue divided by ASK.
Underlying net profit (from continuing operation): profit after
tax for the year as per IFRS excluding the impact of exceptional
items.
Utilisation: the total block hours for a period divided by the
total number of aircraft in the fleet during the period and the
number of days in the relevant period.
Yield: the total revenue per RPK.
Cash and cash equivalents comprise bank balances on current
accounts and on deposit accounts that are readily convertible into
cash without there being significant risk of a change in value to
the Group. Cash and cash equivalents do not include restricted
cash.
Short term cash deposits comprise deposits maturing within three
to twelve months of inception, the balance of which was EUR346.8
million at 31 March 2021.
Total cash comprises cash and cash equivalents, short term cash
deposits and restricted cash.
Definition and reconciliation of non-statutory financial
performance measures
Return on capital employed (ROCE) is operating profit after tax
(excluding exceptional items) divided by average capital employed,
expressed as a percentage.
Average capital employed is the sum of annual average equity and
interest-bearing borrowings (including convertible debt), less
annual average cash and cash equivalents.
EUR million F21 F20
============ ==== ====
Operating profit (excluding exceptional expense) (434.5) 402.0
Effective tax rate for the year (1.7%) 4.4%
============================================================ ========== ==========
Operating profit after tax (excluding exceptional expense) (441.8) 384.3
------------------------------------------------------------ ---------- ----------
Average shareholders' equity 1,069.3 1,220.5
Average borrowings 2,588.4 1,940.4
Average cash and cash equivalents (989.3) (1,097.1)
Average short term cash deposits (389.7) (216.2)
------------------------------------------------------------ ---------- ----------
Average capital employed 2,278.6.0 1,847.6
------------------------------------------------------------ ---------- ----------
ROCE (%) (19.4%) 20.8%
============================================================ ========== ==========
Leverage ratio: net debt divided by EBITDA (excluding
exceptional items).
Net debt is interest-bearing borrowings (including convertible
debt) less cash and cash equivalents.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) is profit (or loss) before net financing costs (or gain),
income tax expense (or credit), depreciation, amortisation and
exceptional items.
EUR million F21 F20
Operating profit (excluding exceptional expense) (434.5) 402.0
Depreciation and amortisation 345.3 381.4
EBITDA (excluding exceptional expense) (89.2) 783.4
-------------------------------------------------- ---------- --------
Borrowings 3,137.3 2,039.4
Cash and cash equivalents (1,100.7) (878.0)
Short term cash deposits (346.8) (432.5)
-------------------------------------------------- ---------- --------
Net debt 1,689.8 728.9
-------------------------------------------------- ---------- --------
Leverage (18.9) 0.9
================================================== ========== ========
Liquidity is cash and cash equivalents and short term cash
deposits divided by the last twelve months' revenue, expressed as a
percentage.
EUR million F21 F20
--------------------------- -------- --------
Cash and cash equivalents 1,100.7 878.0
Short term cash deposits 346.8 432.5
--------------------------- -------- --------
Revenue 739.0 2,761.3
--------------------------- -------- --------
Liquidity 195.9% 47.6%
--------------------------- -------- --------
Consolidated statement of comprehensive income
FOR THE YEARED 31 MARCH 2021
2021 2020
Continuing operations Note EUR million EUR million
=================================================================== ==== =========== ===========
Passenger ticket revenue 4 325.7 1,508.5
Ancillary revenue 4 413.3 1,252.8
=================================================================== ==== =========== ===========
Total revenue 4 739.0 2,761.3
=================================================================== ==== =========== ===========
Staff costs (132.9) (231.8)
Fuel costs (including exceptional expense) (347.5) (876.5)
Distribution and marketing (19.6) (44.1)
Maintenance materials and repairs (165.7) (176.4)
Airport, handling and en-route charges (254.9) (641.6)
Depreciation and amortisation (345.3) (381.4)
Net other expenses 5 (1.2) (71.2)
=================================================================== ==== =========== ===========
Total operating expenses (1,267.1) (2,423.0)
------------------------------------------------------------------- ---- ----------- -----------
Operating (loss)/profit 5 (528.1) 338.3
Comprising:
* Operating (loss)/profit excluding exceptional expense (434.5) 402.0
* Exceptional expense (included in fuel costs) 7 (93.6) (63.7)
------------------------------------------------------------------- ---- ----------- -----------
Financial income 6 11.6 47.3
Financial expenses 6 (78.4) (91.5)
Net foreign exchange gain 6 28.4 0.1
Net financing expense 6 (38.4) (44.2)
(Loss)/profit before income tax (566.5) 294.1
Income tax expense 8 (9.5) (13.1)
=================================================================== ==== =========== ===========
Net (loss)/profit for the year (576.0) 281.1
=================================================================== ==== =========== ===========
Net (loss)/profit for the period attributable
to:
Non-controlling interest (3.9) -
Owners of Wizz Air Holdings Plc (572.1) 281.1
------------------------------------------------------------------- ---- ----------- -----------
Other comprehensive income/(expense) -
items that may be subsequently reclassified
to profit or loss:
Movements in cash flow hedging reserve,
net of tax
Net change in fair value 39.2 (187.8)
Recycled to profit or loss 200.3 (66.4)
Currency translation differences 0.8 (0.3)
=================================================================== ==== =========== ===========
Other comprehensive income/(expense) for
the year, net of tax 240.3 (254.5)
Total comprehensive (expense)/income for
the year (335.7) 26.6
=================================================================== ==== =========== ===========
Total comprehensive (expense)/income for
the year attributable to:
Non-controlling interest (4.0) -
Owners of Wizz Air Holdings Plc (331.7) 26.6
------------------------------------------------------------------- ---- ----------- -----------
Basic earnings per share ( EUR /share) 9 (6.73) 3.76
Diluted earnings per share ( EUR /share) 9 (6.73) 2.22
=================================================================== ==== =========== ===========
Consolidated statement of financial positioN
AT 31 MARCH 2021
2020
2021 (restated*)
Note EUR million EUR million
====================================== ==== =================== ============
ASSETS
Non-current assets
Property, plant and equipment 10 2,878.2 2,553.0
Intangible assets 30.4 27.2
Restricted cash 134.1 179.7
Deferred tax assets 1.1 3.1
Derivative financial instruments 11 - 0.9
Trade and other receivables 21.6 19.9
====================================== ==== =================== ============
Total non-current assets 3,065.4 2,783.7
====================================== ==== =================== ============
Current assets
Inventories 53.7 70.6
Trade and other receivables 113.7 169.8
Current tax assets 2.1 -
Derivative financial instruments 11 5.1 17.3
Restricted cash 35.0 6.1
Short term cash deposits 346.8 432.5
Cash and cash equivalents 1,100.7 878.0
====================================== ==== =================== ============
Total current assets 1,657.2 1,574.4
====================================== ==== =================== ============
Total assets 4,722.6 4,358.1
====================================== ==== =================== ============
EQUITY AND LIABILITIES
Equity attributable to owners of the
parent
Share capital - -
Share premium 381.2 380.6
Reorganisation reserve (193.0) (193.0)
Equity part of convertible debt 8.3 8.3
Cash flow hedging reserve (2.2) (241.7)
Cumulative translation adjustments 1.2 0.2
Retained earnings 712.3 1,280.3
-------------------------------------- ---- ------------------- ------------
Capital and reserves attributable to
the owners of Wizz Air Holdings Plc 907.7 1,234.8
Non-controlling interests (4.0) -
-------------------------------------- ---- ------------------- ------------
Total equity 903.7 1,234.8
====================================== ==== =================== ============
Non-current liabilities
Borrowings 12 2,388.7 1,671.9
Convertible debt 26.2 26.4
Deferred income 13 43.5 13.1
Deferred tax liabilities 6.3 -
Derivative financial instruments 11 - 41.3
Provisions for other liabilities and
charges 14 51.1 46.9
====================================== ==== =================== ============
Total non-current liabilities 2,515.8 1,799.5
====================================== ==== =================== ============
Current liabilities
Trade and other payables 465.7 469.6
Current tax liabilities 0.2 -
Borrowings 12 722.1 340.8
Convertible debt 0.3 0.3
Derivative financial instruments 11 9.0 266.5
Deferred income 13 68.0 172.3
Provisions for other liabilities and
charges 14 37.8 74.3
====================================== ==== =================== ============
Total current liabilities 1,303.1 1,323.8
====================================== ==== =================== ============
Total liabilities 3,818.9 3,123.3
====================================== ==== =================== ============
Total equity and liabilities 4,722.6 4,358.1
====================================== ==== =================== ============
Consolidated statement of changes in equity
FOR THE YEARED 31 MARCH 2021
Equity part Cash
of flow Cumulative
Share Share Reorganisation convertible hedging translation Retained Non-controlling Total
capital premium reserve debt reserve adjustment earnings Total interests equity
EUR EUR EUR EUR EUR
million million EUR million EUR million million EUR million million million EUR million EUR million
Balance at
1 April 2020 - 380.6 (193.0) 8.3 (241.7) 0.2 1,280.3 1,234.8 - 1,234.8
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== ===================
Comprehensive
income/(expense):
Loss for the year - - - - - - (572.1) (572.1) (3.9) (576.0)
Fair value gains
in the year - - - - 39.2 - - 39.2 - 39.2
Losses transferred
to income
statement - - - - 68.4 - - 68.4 - 68.4
Hedge
discontinuation
losses
transferred to
income statement - - - - 131.9 - - 131.9 - 131.9
Currency
translation
differences - - - - - 0.9 - 0.9 (0.1) 0.8
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== ===================
Total other
comprehensive
income/(expense) - - - - 239.5 0.9 - 240.4 (0.1) 240.2
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== ===================
Total
comprehensive
income/(expense)
for the year - - - - 239.5 0.9 (572.1) (331.7) (4.0) (335.7)
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== ===================
Transactions with
owners:
Proceeds from
shares issued - 0.6 - - - - - 0.6 - 0.6
Share-based
payment charge - - - - - - 4.1 4.1 - 4.1
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== ===================
Total transactions
with owners - 0.6 - - - - 4.1 4.7 - 4.7
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== ===================
Balance at
31 March 2021 - 381.2 (193.0) 8.3 (2.2) 1.1 712.3 907.7 (4.0) 903.7
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== ===================
FOR THE YEARED 31 MARCH 2020
Equity
part Cash
of flow Cumulative
Share Share Reorganisation convertible hedging translation Retained Non-controlling Total
capital premium reserve debt reserve adjustment earnings Total interests equity
EUR EUR EUR EUR EUR EUR EUR EUR
million million EUR million EUR million million million million million million million
Balance at
1 April 2019 - 379.1 (193.0) 8.3 12.5 0.5 995.0 1,202.4 - 1,202.4
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== =======
Comprehensive
income:
Profit for the
year - - - - - - 281.1 281.1 - 281.1
Other
comprehensive
income/(expense):
Fair value losses
in the year - - - - (187.8) - - (187.8) - (187.8)
Gains transferred
to income
statement - - - - (4.6) - - (4.6) - (4.6)
Hedge
discontinuation
gains transferred
to income
statement - - - - (61.8) - - (61.8) - (61.8)
Currency
translation
differences - - - - - (0.3) - (0.3) - (0.3)
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== =======
Total other
comprehensive
expense - - - - (254.2) (0.3) - (254.5) - (254.5)
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== =======
Total
comprehensive
income/(expense)
for the year - - - - (254.2) (0.3) 281.1 26.6 - 26.6
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== =======
Transactions
with owners:
Proceeds from
shares issued - 1.5 - - - - - 1.5 - 1.5
Share-based
payment
charge - - - - - - 4.2 4.2 - 4.2
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== =======
Total transactions
with owners - 1.5 - - - - 4.2 5.7 - 5.7
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== =======
Balance at
31 March 2020 - 380.6 (193.0) 8.3 (241.7) 0.2 1,280.3 1,234.8 - 1,234.8
================== ======= ======= ============== =========== ======= =========== ======== ======= =============== =======
Consolidated statement of cash flows
FOR THE YEARED 31 MARCH 2021
2020
2021 (restated*)
Note EUR million EUR million
Cash flows from operating activities
(Loss)/profit before income tax (566.5) 294.1
Adjustments for:
Depreciation 10 336.1 374.0
Amortisation 8.8 7.5
Financial income (11.6) (47.3)
Financial expenses 78.4 91.5
Unrealised fair value gains on derivative financial instruments (65.5) 79.0
Unrealised foreign currency gains and losses (69.1) (11.9)
Realised non-operating foreign currency gains and losses 55.1 12.3
Gain on sale of property, plant and equipment (40.7) (16.2)
Share-based payment charges 4.1 4.2
================================================================== ======= =========
(270.8) 787.2
================================================================== ======= =========
Changes in working capital
Decrease/(increase) in trade and other receivables 48.3 108.4
Decrease/(increase) in restricted cash 4.6 6.8
Decrease/(increase) in inventory 16.9 (39.0)
(Decrease)/increase in provisions (4.3) 8.0
(Decrease)/increase in trade and other payables 6.4 113.4
(Decrease)/increase in deferred income (22.0) (220.8)
================================================================== ======= =========
Cash (used) in/generated by operating activities before tax (221.0) 764.1
================================================================== ======= =========
Income tax paid (3.6) (12.6)
================================================================== ======= =========
Net cash (used) in/generated by operating activities (224.6) 751.6
================================================================== ======= =========
Cash flows from investing activities
Purchase of aircraft maintenance assets (80.6) (155.3)
Purchase of tangible and intangible assets (169.5) (296.9)
Proceeds from the sale of tangible assets 58.7 23.4
Advances paid for aircraft 10 (165.1) (383.4)
Refund of advances paid for aircraft 10 131.3 85.2
Interest received 13.2 44.5
Decrease/(increase) in short term cash deposits 65.6 (427.7)
================================================================== ======= =========
Net cash used in investing activities (146.5) (1,110.1)
================================================================== ======= =========
Cash flows from financing activities
Proceeds from the issue of share capital 0.6 1.5
Interest paid - IFRS 16 lease liability (67.9) (85.2)
Interest paid - JOLCO (1.4) (1.5)
Interest paid - other (4.4) (1.2)
Proceeds from new loan** 195.6 297.7
Proceeds from unsecured debt 1,177.0 -
Transactions with non-controlling interests - -
Repayment of unsecured debt (338.2) -
Repayment of loans** (336.5) (304.9)
Net cash generated by/(used) in financing activities 624.6 (93.7)
================================================================== ======= =========
Net increase/(decrease) in cash and cash equivalents 253.6 (452.3)
Cash and cash equivalents at the beginning of the year 878.0 1,316.0
Effect of exchange rate fluctuations on cash and cash equivalents (30.9) 14.3
================================================================== ======= =========
Cash and cash equivalents at the end of the year 1,100.7 878.0
================================================================== ======= =========
* The prior year was restated - refer to Note 18 for more detail.
** Mostly JOLCO and IFRS16
Notes forming part of the financial statements
1. Accounting policies
Basis of preparation
These consolidated financial statements consolidate those of the
Company and its subsidiaries. The consolidated financial statements
have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards as adopted by the EU
("Adopted IFRSs" and IFRS IC interpretations).
Based on the exemption provided in Article 105 (11) of the
Companies (Jersey) Law 1991 the Company does not present its
individual financial statements and related notes.
The financial statements are presented in Euros (EUR), which is
the functional currency of all companies in the Group other than
Wizz Air UK Limited, Wizz Air Abu Dhabi Limited, Wizz Air Abu Dhabi
LLC. and two dormant entities, Dnieper Aviation LLC and Wizz Air
Ukraine Airlines LLC.
The Company has a policy of rounding each amount and percentage
individually from the fully accurate number to the figure disclosed
in the financial statements. As a result, some amounts and
percentages do not total - though such differences are all
small.
The consolidated financial statements have been prepared under
the historical cost convention, as modified by the revaluation of
financial assets and financial liabilities (including derivative
instruments) at fair value through profit or loss.
The preparation of the consolidated financial statements in
conformity with IFRS legislates the use of certain critical
accounting estimates and requires management to exercise judgments
in the process of applying the Group's accounting policies. The
areas involving a high degree of judgment or complexity or areas
where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 3.
Going concern
Wizz Air's business activities, financial performance and
financial position, together with factors likely to affect its
future development and performance, are described on pages 5 to 13.
Emerging and principal risks and uncertainties facing the Group are
described in the section named 'Emerging and principal risks and
uncertainties' of our Annual Report for the financial year. Note 2
to the financial statements sets out the Group's objectives,
policies and procedures for managing its capital and liquidity and
provides details of the risks related to financial instruments held
by the Group.
At 31 March 2021, the Group held cash and cash equivalents of
EUR1,100.7 million (total cash of EUR1,616.6 million including
EUR346.8 million of short term cash deposits and EUR169.1 million
of restricted cash), while net current assets were EUR327.4
million. In legal terms, the external borrowings of the Group
consist of EUR340.0 million (GBP300 million) Commercial Paper with
the Bank of England maturing in February 2022, EUR500 million bonds
maturing in January 2024 and convertible debt with a balance of
EUR26.5 million. In accounting terms a further EUR2,247.3 million
are presented as borrowings in relation to future commitments from
lease contracts.
The Directors have reviewed financial forecasts including
available committed financing and plans to finance future aircraft
deliveries. After making enquiries and testing the assumptions
against different forecast scenarios, the Directors have satisfied
themselves that the Group is expected to be able to meet its
commitments and obligations for a period of at least the next
twelve months from the date of signing this report.
These enquiries and testing included a base case model of how
the operations of the business would gradually emerge from
COVID-19. Wizz Air has been one of the first airlines to restart
operations and, whereas the airline operated in F21 only 37.2 per
cent of its capacity compared to F20, the base case assumes a
gradual increase in operation quarter on quarter, with around 35
per cent of its available capacity flying in spring and, a peak of
75 per cent of capacity flying over summer, to reduce to 70 per
cent of capacity flying during the second half of the financial
year.
In addition, the Directors have also modelled a severe but
plausible downside scenario based on flying levels compared to F20
levels of 20 per cent of flying in April, May and June 2021, 50 per
cent for summer 2021 and 30 per cent for the second half of the
financial year. In this scenario the Group is still forecasting
significant liquidity throughout this period and there are no
material uncertainties that may cast doubt on the Group's going
concern status.
Accordingly, the Directors concluded it was correct to retain
the going concern basis of accounting in preparing the financial
statements.
2. Financial risk management
Financial risk factors
The Group is exposed to market risks relating to fluctuations in
commodity prices, interest rates and currency exchange rates. The
objective of financial risk management at Wizz Air is to minimise
the impact of commodity price, interest rate and foreign exchange
rate fluctuations on the Group's earnings, cash flows and equity.
To manage commodity and foreign exchange risks, Wizz Air uses
various derivative financial instruments, including foreign
currency and commodity zero-cost collar contracts.
Risk management is carried out by the treasury department under
policies approved by the Board of Directors. The Board provides
written principles for overall risk management, as well as written
policies covering specific areas, such as foreign exchange risk,
fuel price risk, credit risk, use of derivative financial
instruments, adherence to hedge accounting, and hedge coverage
levels. The Board has mandated the Audit and Sustainability
Committee of the Board to supervise the hedging activity of the
Group and the compliance with the policies approved by the
Board.
Risk analysis
Market risks
Pre-COVID, Wizz Air hedged a minimum of 50 per cent of the
projected US Dollar and jet fuel requirements for the next twelve
months or 40 per cent on an 18-month hedge horizon. Exceeding the
18-month time horizon was subject to Board approval.
Due to the volatile environment, managing the cash balance of
the Company was the key priority. As a result, in April 2020 the
Company suspended its fair value hedging programme with respect to
foreign currency exposures on lease liabilities.
Following the COVID-19 outbreak, the majority of the Group's
fleet was grounded for a period from mid-March 2020. The activity
level and consequently the fuel consumption were significantly
lower in F21 than that on which the Group hedging programme was
originally based. As a consequence, hedge accounting for certain
derivatives has been discontinued and the associated net loss on
these instruments of EUR93.6 million (2020: EUR63.7 million) was
charged to the statement of comprehensive income and presented
separately as an exceptional operating expense.
In light of ongoing travel restrictions as a result of the
COVID-19 pandemic and the subsequent uncertainty in demand for
travel, fuel hedging was ceased until further notice and only
minimal US Dollar hedges were entered into during the period in
order to reduce the risk of over-hedging. As a result the closing
cash flow hedge reserve balance is immaterial, however significant
loss was recognized during the period, see at Hedge transactions
during the year.
In June 2021 the Board of Directors approved the Company's "no
hedge" policy for the post-COVID-19 period with respect to US
Dollar and jet fuel price risk after carefully evaluating the
economic costs and benefits of the Company's hedging programme.
Going forward, the intent of the Company is to no longer engage
in cash-flow hedging of US Dollar denominated expenses and jet fuel
price risk:
-- The Group's has a significantly stronger balance sheet
compared to when the hedging programme was launched, which
positions the Company well to absorb the financial impact of
potential increases in input costs from stronger US Dollar or
higher jet fuel prices;
-- The Group is less vulnerable to input price inflation
relative to certain of its industry peers due to the shorter
booking window;
-- The Group has a more limited competitive overlap of operated
routes compared to competitors;
-- Material liquidity risk can be introduced by hedging
activities especially during times of volatile trading
environment;
-- Hedging activities come at substantial additional cost in
terms of spreads, yields and management time, which may provide
greater income statement stability but does not evidently create
shareholder value.
The treasury department, under the supervision of the Audit and
Sustainability Committee, will continue to monitor the Company's
risk environment, market and business opportunities to reduce or
transfer its exposure to market risks.
Foreign currency risk
The Group is exposed to foreign currency risk on sales,
purchases and commitments that are denominated in a currency other
than the functional currency of the operating entities. The foreign
currency exposure of the Group is predominantly attributable to:
(i) only a small portion of the Group's revenues are denominated in
or linked to the US Dollar while a significant portion of the
Group's expenses are US Dollar denominated, including fuel,
aircraft leases, maintenance reserves; and (ii) there are various
currencies in which the Group has significantly more revenues than
expenses, primarily the British Pound (GBP) and - to a smaller
extent - the Polish Zloty (PLN).
Euro/US Dollar foreign currency rate is the most significant
underlying foreign currency exposure to the Group.
The table below analyses the financial instruments by the
currencies of future receipts and payments as follows:
EUR USD Other Total
At 31 March 2021 EUR million EUR million EUR million EUR million
============================================ =========== =========== =========== ===========
Financial assets
Trade and other receivables 34.8 64.3 10.2 109.3
Derivative financial assets - 5.1 - 5.1
Cash and cash equivalents 214.1 495.2 391.4 1,100.7
Short term cash deposits 300.0 46.8 - 346.8
Restricted cash - 168.9 0.2 169.1
============================================ =========== =========== =========== ===========
Total financial assets 548.9 780.3 401.8 1,731.0
============================================ =========== =========== =========== ===========
Financial liabilities
Unsecured debts* 499.2 - 350.3 849.5
IFRS 16 aircraft and engine lease liability 304.7 1,478.1 - 1,782.8
IFRS 16 other lease liability 8.6 - 2.5 11.1
JOLCO and FTL liability 319.6 107.6 27.5 454.7
Loans from non-controlling interests - 12.8 - 12.8
Convertible debt 26.5 - - 26.5
Trade and other payables 172.9 40.4 18.4 231.7
Derivative financial liabilities - 9.0 - 9.0
============================================ =========== =========== =========== ===========
Total financial liabilities 1,331.5 1,647.9 398.7 3,378.1
============================================ =========== =========== =========== ===========
Net (liabilities)/assets (782.6) (867.6) 3.1 (1,647,1)
============================================ =========== =========== =========== ===========
*Unsecured debts represent the European Mid Term Note and the
Covid Corporate Financing Facility
EUR USD Other Total
At 31 March 2020 EUR million EUR million EUR million EUR million
============================================ =========== =========== =========== ===========
Financial assets
Trade and other receivables 71.7 68.3 13.3 153.3
Derivative financial assets - 18.3 - 18.3
Cash and cash equivalents 82.1 743.7 52.2 878.0
Short term cash deposits 100.0 332.5 - 432.5
Restricted cash - 185.5 0.3 185.8
============================================ =========== =========== =========== ===========
Total financial assets 253.8 1,348.3 65.8 1,667.9
============================================ =========== =========== =========== ===========
Financial liabilities
IFRS 16 aircraft and engine lease liability 298.7 1,414.4 - 1,713.1
IFRS 16 other lease liability 8.2 - - 8.2
JOLCO and FTL liability 177.8 113.6 - 291.4
Convertible debt 26.7 - - 26.7
Trade and other payables 200.7 16.5 33.9 251.1
Derivative financial liabilities - 307.8 - 307.8
============================================ =========== =========== =========== ===========
Total financial liabilities 712.1 1,852.3 33.9 2,598.3
============================================ =========== =========== =========== ===========
Net (liabilities)/assets (458.3) (504.0) 31.9 (930.4)
============================================ =========== =========== =========== ===========
Trade and other receivables in this table, and also in the other
disclosures in this Note, exclude balances that are not financial
instruments, being prepayments, deferred expenses, accrued income,
and part of other receivables. Similarly, trade and other payables
in this table, and also in the other disclosures in this Note,
exclude balances that are not financial instruments, being accruals
and other payables.
Commodity risks
One of the most significant costs for the Group is jet fuel. The
price of jet fuel can be volatile and can directly impact the
Group's financial performance.
Interest rate risk
The Group's objective to reduce cash flow risk arising from the
fluctuation of interest rates on financing.
The Group has future commitments under certain lease contracts
that are based on floating interest rates. The floating nature of
the interest charges on the leases exposes the Group to interest
rate risk. Interest rates charged on Eurobond, convertible debt
liabilities and on short and long-term loans to finance the
aircraft are not sensitive to interest rate movements as they are
fixed until maturity.
The Group has not used financial derivatives to hedge its
interest rate risk during the year.
The Group has floating rate instruments within restricted cash,
but given their short term (within three months) maturity, the
interest rates are not expected to move significantly during this
short period.
Hedge transactions during the year
The Group used zero-cost collar instruments and outright forward
contracts to hedge its foreign exchange exposures and used
zero-cost collar instruments to hedge its jet fuel exposures.
The gains and losses arising from hedge transactions during the
year were as follows:
a) Foreign exchange hedge:
2021 2020
EUR million EUR million
===================================================================== =========== ===========
Gain/(loss) recognised within fuel costs
Effective cash flow hedge - 26.4
Discontinued cash flow hedge expiring in the financial year (0.3) -
Discontinued cash flow hedge expiring in following financial year(s) (0.3) -
--------------------------------------------------------------------- ----------- -----------
Total (loss)/gain recognised within fuel costs (0.6) 26.4
--------------------------------------------------------------------- ----------- -----------
Gain/(loss) recognised within financial income/(expense)
Effective fair value hedge 0.4 7.7
Effective cash flow hedge - 0.8
Discontinued cash flow hedge expiring in the financial year - -
Discontinued cash flow hedge expiring in following financial year(s) - 1.9
--------------------------------------------------------------------- ----------- -----------
Total gain/(loss) recognised within financial income/(expense) 0.4 10.4
===================================================================== =========== ===========
Gain/(loss) recognised within net foreign exchange gains/(losses)
Effective fair value hedges 5.1 0.9
--------------------------------------------------------------------- ----------- -----------
5.1 0.9
--------------------------------------------------------------------- ----------- -----------
b) Fuel hedge:
2021 2020
EUR million EUR million
=========================================================== =========== ===========
Gain/(loss) recognised within fuel costs
Effective hedge (68.4) (31.8)
Discontinued hedge expiring in the financial year (91.7) (9.9)
Discontinued hedge expiring in following financial year(s) (1.2) (53.8)
----------------------------------------------------------- ----------- -----------
Total loss recognised within fuel costs (161.3) (95.5)
=========================================================== =========== ===========
Hedge year-end open positions
At the end of the year and the prior year the Group had the
following open hedge positions:
a) Foreign exchange hedge with derivatives:
Derivative financial instruments
------------------------------------------------------
Notional Non-current Current Non-current Current Net
amount assets assets liabilities liabilities asset/(liability)
At 31 March 2021 US$ million EUR million EUR million EUR million EUR million EUR million
---------------------------- ------------ ------------ ------------ ------------ ------------ ------------------
Effective fair value hedge
positions - - - - - -
Effective cash flow hedge
positions 104.7 - 0.2 - (2.2) (2.0)
Discontinued cash flow hedge
positions 25.0 - - - (0.4) (0.4)
---------------------------- ------------ ------------ ------------ ------------ ------------ ------------------
Total foreign exchange hedge 129.7 - 0.2 - (2.6) (2.4)
============================ ============ ============ ============ ============ ============ ==================
Derivative financial instruments
------------------------------------------------------
Notional Non-current Current Non-current Current Net
amount assets assets liabilities liabilities asset/(liability)
At 31 March 2020 US$ million EUR million EUR million EUR million EUR million EUR million
---------------------------- ------------ ------------ ------------ ------------ ------------ ------------------
Effective fair value hedge
positions 391.0 - 7.1 - - 7.1
Effective cash flow hedge
positions 430.0 0.9 8.4 - - 9.3
Discontinued cash flow hedge
positions 88.0 - 1.9 - - 1.9
---------------------------- ------------ ------------ ------------ ------------ ------------ ------------------
Total foreign exchange hedge 909.0 0.9 17.4 - - 18.3
============================ ============ ============ ============ ============ ============ ==================
The total EUR9.3 million asset related to effective cash flow
hedge position as at 31 March 2021 can be analysed further into
EUR7.4 million intrinsic value and EUR1.9 million time value
components.
For the movements in other comprehensive income refer to the
Consolidated Statement of Changes in Equity.
The open foreign currency cash flow hedge positions at year end
can be analysed according to the maturity periods and price ranges
of the underlying hedge instruments as follows:
Euro/US Dollar foreign exchange hedge:
F 22 F 23
At 31 March 2021 12 months 6 months
================= ========== =========
Maturity profile of notional amount (million) $129.7 -
Weighted average ceiling $1.1621 -
Weighted average floor $1.1164 -
============================================== ========
F21 F22
At 31 March 2020 12 months 6 months
================= ========== =========
Maturity profile of notional amount (million) $436.0 $82.0
Weighted average ceiling $1.1622 $1.1485
Weighted average floor $1.1263 $1.1039
=============================================== ======== ========
b) Foreign exchange hedge with non-derivatives:
Non-derivatives, such as cash, are existing financial assets
that hedge highly probable foreign currency cash flows in the
future and therefore act as a natural hedge.
c) Fuel hedge:
Derivative financial instruments
------------------------------------------------------
Non-current Current Non-current Current Net
'000 assets assets liabilities liabilities asset/(liability)
At 31 March 2021 metric tonnes EUR million EUR million EUR million EUR million EUR million
-------------------------- -------------- ------------ ------------ ------------ ------------ ------------------
Effective cash flow hedge
positions 253.0 - 3.6 - (3.8) (0.2)
Discontinued cash flow
hedge positions 117.0 - 1.3 - (2.6) (1.3)
-------------------------- -------------- ------------ ------------ ------------ ------------ ------------------
Total fuel hedge 370.0 - 4.9 - (6.4) (1.5)
========================== ============== ============ ============ ============ ============ ==================
Derivative financial instruments
------------------------------------------------------
Non-current Current Non-current Current Net
'000 assets assets liabilities liabilities asset/(liability)
At 31 March 2020 metric tonnes EUR million EUR million EUR million EUR million EUR million
------------------------ -------------- ------------ ------------ ------------ ------------ ------------------
Effective cash flow
hedge positions 1,291.0 - - (41.3) (210.1) (251.4)
Discontinued cash flow
hedge positions 170.0 - - - (53.8) (53.8)
------------------------ -------------- ------------ ------------ ------------ ------------ ------------------
Total fuel hedge 1,461.0 - - (41.3) (263.9) (305.2)
======================== ============== ============ ============ ============ ============ ==================
The total EUR251.4 million liability at 31 March 2020 can be
analysed further into EUR337.9 million intrinsic value loss and
EUR85.3 million time value gain components.
For the movements in other comprehensive income refer to the
Consolidated Statement of Changes in Equity.
The fuel hedge positions at year end can be analysed according
to the maturity periods and price ranges of the underlying hedge
instruments as follows:
F22 F23
At 31 March 2021 12 months 6 months
-------------------------------------- ---------- ---------
Maturity profile ('000 metric tonnes) 370.0 -
Blended capped rate $554.0 -
Blended floor rate $503.0 -
====================================== ========== =========
F21 F22
At 31 March 2020 12 months 6 months
--------------------------------------- ---------- ---------
Maturity profile ('000 metric tonnes) 1,091.0 370.0
Blended capped rate $632.0 $554.0
Blended floor rate $576.0 $503.0
======================================= ========== =========
Hedge effectiveness
Following the COVID-19 outbreak, the majority of the Group's
fleet was grounded for a period from mid-March 2020. The fuel
consumption in F21 was significantly lower than that on which the
Group hedging programme was originally based, resulting in fuel and
foreign currency hedge instruments being discontinued for hedge
accounting. As a consequence, hedge accounting for certain
derivatives has been discontinued and the associated net loss on
these instruments of EUR93.6 million (2020: EUR61.8 million),
including hedges expiring between April 2021 and May 2021, was
charged to the statement of comprehensive income and presented as
an exceptional operating expense within the consolidated statement
of comprehensive income. No material hedge positions are
outstanding after this maturity date.
Sensitivity analysis
The table below shows the sensitivity of the Group's profits to
various market risks for the current and the prior year, excluding
any hedge impacts.
2021 2020
Difference in profit after tax Difference in profit after tax
EUR million EUR million
=========================================== ============================== ==============================
* 35.0 * 107.1
Fuel price sensitivity
Fuel price $100 higher per metric tonne
Fuel price $100 lower per metric tonne +35.0 +107.1
=========================================== ============================== ==============================
FX rate sensitivity (USD/EUR)
FX rate 0.05 higher (meaning EUR stronger) +70.2 +99.4
FX rate 0.05 lower * 76.5 * 108.8
=========================================== ============================== ==============================
* 3.0 * 9.2
FX rate sensitivity (GBP/EUR)
FX rate 0.03 higher (meaning EUR stronger)
FX rate 0.03 lower +3.3 +10.1
=========================================== ============================== ==============================
* 0.9 * 5.1
FX rate sensitivity (PLN/EUR)
FX rate 0.15 higher (meaning EUR stronger)
FX rate 0.15 lower +1.0 +5.5
=========================================== ============================== ==============================
Interest rate sensitivity (EUR)
Interest rate is higher by 100 bps +15.4 +13.0
Interest rate is lower by 100 bps * 15.4 * 13.0
=========================================== ============================== ==============================
The interest rate sensitivity calculation above considers the
effects of varying interest rates on the interest income on bank
deposits and floating rate leases.
The table below shows the sensitivity of the Group's other
comprehensive income to various markets risks for the current and
the prior year. These sensitivities relate to the impact of the
market risks on the balance of the cash flow hedging reserve (which
includes gains and losses related to open cash flow hedges both for
foreign exchange rates and jet fuel price).
2021 2020
Difference Difference
EUR million EUR million
=========================================================== ============ =============
Fuel price sensitivity
Fuel price $100 higher per metric tonne +22,9 +117.6
Fuel price $100 lower per metric tonne * 22,9 * 117.6
=========================================================== ============ =============
FX rate sensitivity (USD/EUR)
FX rate 0.05 higher (meaning EUR stronger) +0.1 +10.5
FX rate 0.05 lower * 0.1 * 10.5
=========================================================== ============ =============
Fuel volume sensitivity (metric tonne s)
100,000 metric tonnes reduction in forecast fuel purchases +1.1 +14.4
100,000 metric tonnes increase in forecast fuel purchases * 1.1 * 14.4
=========================================================== ============ =============
The sensitivity analyses for 2021 above were performed with
reference to the following market rates, as the base case:
-- For profits, annual average rates: jet fuel price $582.0 per
metric tonne; EUR/USD FX rate 1.17; EUR/GBP FX rate 0.89; EUR/PLN
FX rate 4.50.
-- For other comprehensive income, year-end spot rates: jet fuel
price $512.0 per metric tonne; EUR/USD FX rate 1.17.
Liquidity risks
Prudent liquidity risk management implies maintaining sufficient
cash and the availability of funding. In recent years the Group has
been holding a high level of cash funds compared to the needs of
the business operations. Nevertheless, the unprecedented impact of
COVID-19 on the industry is affecting the liquidity of the Group in
2021 especially in light of prolonged travel restrictions. The
Group responded to these special challenges with a number of
actions to improve costs and liquidity, the most important ones
being as follows:
-- continue to ensure that the flights that are operated deliver positive cash contribution;
-- securing lease financing for aircraft delivery positions until end of calendar year 2021;
-- working with suppliers to reduce contracted rates and improve payment terms;
-- reducing discretionary spending and suspending non-essential capital expenditure;
-- issuance of a three-year EUR500 million bond in January 2021
that pays an annual fixed coupon of 1.35 per cent; and
-- raising GBP300 million through the Covid Corporate Financing
Facility (CCFF) that was extended by twelve months in February
2021.
As a result of these measures, Wizz Air is confident in its
ability to survive, even in case of potential prolonged
restrictions. For further notes, refer to the going concern
assessment under Note 1.
The Group paid EUR232.6 million in F21 to settle hedging
transactions. Liquidity risk from derivative financial liabilities
is not material at 31 March 2021 due to almost no hedging activity
since the start of the pandemic.
The Group invested excess cash primarily in USD, EUR and GBP
denominated short-term time deposits with high quality bank
counterparties.
The table below analyses the Group's financial assets and
liabilities (receivable or payable either in cash or net settled in
case of certain derivative financial assets and liabilities) into
relevant maturity groupings based on the remaining period at the
statement of financial position date to the contractual maturity
date.
The amounts disclosed in the table below are the contractual
undiscounted cash flows except for derivatives where fair values
are presented. Therefore, for certain asset and liability
categories the amounts presented in this table can be different
from the respective amounts presented in the statement of financial
position.
Between
Within three months Between
three and one one and More than
months year five years five years Total
At 31 March 2021 EUR million EUR million EUR million EUR million EUR million
=================== ================= ================= =================== ================= ===================
Financial assets
Trade and other
receivables 79.9 9.1 20.3 - 109.3
Derivative
financial
assets 2.0 3.1 - - 5.1
Cash and cash
equivalents 1,100.7 - - - 1,100.7
Short term cash
deposits - 346.8 - - 346.8
Restricted cash 22.2 12.8 119.4 14.6 169.0
=================== ================= ================= =================== ================= ===================
Total financial
assets 1,204.8 371.8 139.7 14.6 1,730.9
=================== ================= ================= =================== ================= ===================
Financial
liabilities
Unsecured debts - 358.8 513.5 - 872.3
IFRS 16 aircraft
and
engine lease
liability 107.4 292.3 1,137.6 454.4 1,991.7
IFRS 16 other lease
liability 0.4 1.3 6.2 3.4 11.3
JOLCO and FTL lease
liability 7.0 25.1 128.5 315.8 476.4
Loans from
non-controlling
interests - - - 12.8 12.8
Convertible debt - - 26.5 - 26.5
Other payables 206.3 25.4 - - 231.7
Derivative
financial
liabilities 6.4 2.6 - - 9.0
Financial
guarantees 0.7 - - - 0.7
=================== ================= ================= =================== ================= ===================
Total financial
liabilities 328.2 705.5 1,812.3 786.4 3,632.2
=================== ================= ================= =================== ================= ===================
Between
Within three months Between
three and one one and More than
months year five years five years Total
At 31 March 2020 EUR million EUR million EUR million EUR million EUR million
============================ ============ ============= ============ ============ =============
Financial assets
Trade and other receivables 118.3 15.1 19.9 - 153.3
Derivative financial
assets 10.5 6.9 0.9 - 18.3
Cash and cash equivalents 878.0 - - - 878.0
Short term cash deposits - 432.5 - - 432.5
Restricted cash 0.5 5.6 146.6 33.1 185.8
============================ ============ ============= ============ ============ =============
Total financial assets 1,007.3 460.1 167.4 33.1 1,667.9
============================ ============ ============= ============ ============ =============
Financial liabilities
IFRS 16 aircraft and
engine lease liability 104.2 292.8 1,222.1 325.0 1,944.1
IFRS 16 other lease
liability 0.3 0.9 3.0 2.4 6.7
JOLCO and FTL lease
liability 3.8 13.6 72.4 220.1 309.9
Convertible debt - 2.1 28.7 - 30.8
Trade and other payables 251.1 - - - 251.1
Derivative financial
liabilities 93.5 173.0 41.3 - 307.8
Financial guarantees 0.7 - - - 0.7
============================ ============ ============= ============ ============ =============
Total financial liabilities 453.7 482.4 1,367.5 547.5 2,851.1
============================ ============ ============= ============ ============ =============
The Group has obligations under financial guarantee contracts.
The most significant financial guarantee contracts relate to
aircraft leases, hedging and convertible notes. For these items the
respective underlying liabilities are reflected under the
appropriate line of the financial liabilities part of the table
above (for leases the liability is presented under borrowings).
Since the liability itself is already reflected in the table, it
would not be appropriate to also include the financial guarantee
provided by another Group entity for the same obligation. The only
guarantee separately disclosed in this table relates to a contract
for the provision of public services in Hungary, with respect to
which there is no liability recognised in the statement of
financial position. This possible obligation is disclosed in the
table above within financial guarantees.
Management does not expect that any payment under these
guarantee contracts will be required by the Company.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group's exposure to credit risk
from individual customers is limited as the large majority of the
payments for flight tickets are collected before the service is
provided.
However, the Group has significant banking, hedging, aircraft
manufacturer and card acquiring relationships that represent
counterparty credit risk. The Group analysed the creditworthiness
of the relevant business partners in order to assess the likelihood
of non-performance of liabilities due to the Group. The credit
quality of the Group's financial assets is assessed by reference to
external credit ratings (published by Standard & Poor's or
similar institutions) of the counterparties as follows:
A A- Other Unrated Total
At 31 March 2021 EUR million EUR million EUR million EUR million EUR million
============================ =========== =========== =========== =========== ===========
Financial assets
Cash and cash equivalents 899.1 50.9 150.3 0.4 1,100.7
Short term cash deposits 346.8 - - - 346.8
Restricted cash 168.8 0.1 0.2 - 169.0
Derivative financial assets 2.1 0.1 2.9 - 5.1
Trade and other receivables - - - 109.3 109.3
============================ =========== =========== =========== =========== ===========
Total financial assets 1,416.8 51.1 153.4 109.7 1,730.9
============================ =========== =========== =========== =========== ===========
A A- Other Unrated Total
At 31 March 2020 EUR million EUR million EUR million EUR million EUR million
============================ =========== =========== =========== =========== ===========
Financial assets
Cash and cash equivalents 601.1 271.4 4.6 0.9 878.0
Short term cash deposits 291.4 - 141.1 - 432.5
Restricted cash 185.6 0.1 0.2 - 185.8
Derivative financial assets 10.2 1.0 7.0 - 18.3
Trade and other receivables - - - 153.3 153.3
============================ =========== =========== =========== =========== ===========
Total financial assets 1,088.2 272.5 152.9 154.2 1,667.9
============================ =========== =========== =========== =========== ===========
From the unrated category within trade and other receivables the
Group has EUR35.3million (2020: EUR60.9 million) receivables from
different aircraft lessors in respect of maintenance reserves and
lease security deposits paid. However, given that the Group
physically possesses the aircraft owned by the lessors and that the
Group has significant future lease payment obligations towards the
same lessors (see Note 15), management does not consider the credit
risk on maintenance reserve receivables to be material. Most of the
remaining balance in this category in both years relates to ticket
sales receivables from customers and non-ticket revenue receivables
from business partners. These balances are spread between a
significant number of counterparties and the credit performance in
these channels has historically been good.
Within cash and cash equivalents in 2021, out of the EUR150.3
million in the category "other" EUR48.5 million (2020: EUR45.6
million) relates to cash deposits held with BBB+ rated banks. In
2020 the short term cash deposits in the other category relates to
cash deposits held with BBB+ rated banks.
Based on the information above management does not consider the
counterparty risk of any of the counterparties being material and
therefore no fair value adjustment was applied to the respective
cash or receivable balances.
Capital management
The Group's objectives when managing capital are: (i) to
safeguard the Group's ability to continue as a going concern in
order to provide returns for Shareholders and benefits for other
stakeholders; (ii) to secure funds at competitive rates for its
future aircraft acquisition commitments (see Note 15); and (iii) to
maintain an optimal capital structure to reduce the overall cost of
capital.
The current sources of capital for the Group are equity, bonds
and other borrowings (see Note 12), as well as to a smaller extent,
convertible debt.
Wizz Air's strategy is to hold significant cash and liquid funds
to mitigate the impact of potential business disruption events and
to invest in opportunities as they come along in an increasingly
volatile market environment. Accordingly, the Group has so far
retained all profits and paid no dividends and financed all its
aircraft and most of its spare engine acquisitions through sale and
leaseback agreements. In addition Wizz Air diversified further its
financing options through the establishment of a EUR3.0 billion
European Mid Term Note (EMTN) programme and issuance of its debut
bond by Wizz Air Finance Company B.V., unconditionally and
irrevocably guaranteed by Wizz Air Holdings Plc.
The existing aircraft orders of the Group create a need for
raising significant amounts of capital in the following years. The
strategy of the Group is to ensure that it has access to various
forms of long-term financing, which in turn allows the Group to
further reduce its cost of capital and the cost of ownership of its
aircraft fleet.
3. Critical accounting estimates and judgments made in applying
the Group's accounting policies
a) Maintenance policy
The estimations and judgements applied in the context of the
maintenance accounting policy of the Group impact the balance of
(i) property, plant and equipment (and, within that, of aircraft
maintenance assets, as detailed in Note 10) and (ii) aircraft
maintenance provisions (as detailed in Note 14).
Estimate: For aircraft held under lease agreements, provision is
made for the minimum unavoidable costs of specific future
maintenance obligations created by the lease at the time when such
obligation becomes certain. The amount of the provision involves
making estimates of the cost of the heavy maintenance work that is
required to discharge the obligation, including any end of lease
costs. A 10% increase in the planned costs of heavy maintenance
works at the 31 March 2021 year end would increase the balance of
both aircraft maintenance assets and aircraft maintenance
provisions by EUR7.8 million.
Estimate: The cost of heavy maintenance is capitalised and
recognised as a tangible fixed asset (and classified as an
"aircraft maintenance asset") at the earlier of: (a) the time the
lease re-delivery condition is no longer met; or (b) when
maintenance, including enhancement, is carried out. The calculation
of the depreciation charge on such assets involves making estimates
primarily for the future utilisation of the aircraft. A 43%
decrease in the F22 forecast aircraft utilisation would result in
the same average utilisation as in F21. This would cause EUR9.9
million decrease in the balance of aircraft maintenance assets.
The bases of these estimates are reviewed annually, and also
when information becomes available that is capable of causing a
material change to an estimate, such as renegotiation of end of
lease return conditions, increased or decreased utilisation of the
assets, or changes in the cost of heavy maintenance services.
Judgment: On a lease by lease basis the Group makes a judgment
whether it would perform future maintenance that would impact the
condition of the respective aircraft or spare engine asset in a way
that eliminates the need for paying compensation to the lessor on
the re-delivery of the leased asset. When such maintenance is not
expected then accrual is made for the compensation due to the
lessor in line with the terms of the respective lease contract.
Judgment: The policy adopted by the Group, as summarised above,
is only one of the policies available under IFRS in accounting for
heavy maintenance for aircraft held under lease agreements. A
principal alternative policy involves recognising provisions for
future maintenance obligations in accordance with hours flown or
similar measure, and not only when lease re-delivery conditions are
not met. In the judgment of the Directors the policy adopted by the
Group, whereby provisions for maintenance are recognised only when
lease re-delivery conditions are not met, provides the most
reliable and relevant information about the Company's obligations
to incur major maintenance expenditure on leased aircraft and at
the same time it best reflects the fact that an aircraft has lower
maintenance requirements in the early years of its operation. The
average age of the Group's aircraft fleet at 31 March 2021 was 5.4
years (same as a year before).
b) Hedge and derivative accounting
Estimate: The asset and liability balances at year end related
to open hedge instruments can be material. The fair value of
derivatives is estimated by the contracting financial institutions
as per their industry practice. As required, the fair values
ascribed to those instruments are verified also by management using
high-level models. These estimations are performed based on market
prices observed at year end and therefore, according to paragraph
128 of IAS 1, do not require further disclosure. Such fair values
might change materially within the next financial year but these
changes would not arise from assumptions made by management or
other sources of estimation uncertainty at the end of the year but
from the movement of market prices. The fair value calculation is
most sensitive to movements in the jet fuel and foreign currency
spot prices, their implied volatility and respective yields. A
sensitivity analysis for the jet fuel price and for the FX rate on
most relevant currency pairs is included in Note 2.
The open hedge instrument balances at 31 March 2021 were not
material. Due to the increase in jet fuel prices compared to 31
March 2020 and as a result of limited cash flow hedging activity
during 2021, the net carrying amount of cash flow hedges was only
EUR2.2 million liability at 31 March 2021 (2020: EUR242.2 million
liability). The carrying value of discontinued hedges was EUR1.6
million liability at 31 March 2021 (2020: EUR51.9 million
liability).
Estimate and judgment: The effectiveness of hedges is tested
both prospectively and retrospectively to determine the appropriate
accounting treatment of hedge gains and losses. Prospective testing
of open hedges requires making certain estimates, the most
significant one being for the future expected level of the business
activity (primarily the utilisation of fleet capacity) of the
Group. Estimating the expected level of future business activity is
particularly critical in periods of high uncertainty like the
current COVID-19 pandemic.
Building on these estimations of the future, management makes
judgment on the accounting treatment of open hedge instruments.
Hedge accounting for jet fuel and foreign currency cash flow hedges
was discontinued where the "highly probable" forecast criterion was
not met in accordance with the requirements of IFRS 9. The impact
of these estimations and judgments was material at 31 March 2020
but is no longer longer material for the asset and liability
balances at 31 March 2021.
None of the hedge counterparties had a material change in their
credit status that would have influenced the effectiveness of the
hedging transactions.
c) Net presentation of government taxes and other similar
levies
The Group's accounting policy stipulates that where charges
levied by airports or government authorities on a per passenger
basis represent a government tax in fact or in substance, then such
amounts are presented on a net basis in the statement of
comprehensive income (netted between the revenue and the airport,
handling and en-route charges lines).
Judgment: Management reviews all passenger-based charges levied
by airports and government authorities to ensure that any amounts
recovered from passengers in respect of these charges are
appropriately classified within the statement of comprehensive
income. Given the variability of these charges and the number of
airports and jurisdictions within which the Group operates, the
assessment of whether these items constitute taxes in nature is an
inherently complex area, requiring a level of judgment.
d) Accounting for aircraft and spare engine assets
Judgment: When the Group acquires new aircraft and spare
engines, it applies the following critical judgments in determining
the acquisition cost of these assets:
-- Engine contracts typically include the selection of an engine
type to be installed on future new aircraft, a commitment to
purchase a certain number of spare engines, and lump-sum (i.e. not
per engine) concessions from the manufacturer. Management
recalculates the unit cost of engines by allocating lump-sum
credits over all engines ordered and by adjusting costs between
installed and spare engines in a way that ensures that identical
physical assets have an equal acquisition cost.
-- Aircraft acquisition costs are recalculated to reflect the
impacts of: (i) any adjustment on the cost of installed engines (as
above); and (ii) concessions received from the manufacturers of
other aircraft components under selection agreements. Such
acquisition cost has relevance also for leased aircraft when
calculating the amount of total gain or loss on the respective sale
and leaseback agreement.
e) Accounting for leases
Judgment: Some of the Group's lease contracts contain lease
extension options. The extension option is taken into account in
the measurement of the lease liability only when the Group is
reasonably certain that it would later exercise the option. Such
judgment is made lease by lease, and is relevant both at inception,
for the initial measurement of the lease liability, and also for a
subsequent remeasurement of the lease liability if the initial
judgment is revised at a later date. As at 31 March 2021, there
were eight aircraft lease contracts that the Group is reasonably
certain to extend by 2-3 years from their original maturity in
2022. As at 31 March 2020, there were ten contracts planned to be
extended, but during F21 the Group revised its plans due to the
impacts of COVID-19 being more severe and longer lasting than
originally estimated, and decided not to extend two of these
leases.
Judgment: The Group takes the view that, as a lessee, it is not
able to readily determine the interest rate implicit in its lease
contracts. Therefore, it applies its incremental borrowing rate for
discounting future lease payments.
The estimations made by management in accounting for leases do
not materially impact the asset and liability balances of the
Group. The majority of aircraft and spare engine assets are leased
and as such their period of depreciation is the shorter of their
useful economic lives and lease duration. As these assets are new
at the inception of the lease and typically have a useful economic
life of at least twice the duration of the lease no further
estimation has been required.
f) Income taxes
Judgment: A significant judgment has been made by the Group in
relation to the position that the Swiss tax authority would take
with respect to the calculation of the income tax base for F18-F21
for one of the legal entities of the Group. In applying IFRIC 23
the Group applied the "most likely amount method" and, by relying
also on professional advice, took the view that the positions taken
by the Group represent the most likely outcome for the Swiss income
tax liabilities.
g) Revenue from contracts with other partners
As explained in Note 4, revenue from contracts with other
partners relates to commissions on the sale of on-board catering,
accommodation, car rental, travel insurance, bus transfers, premium
calls and co-branded cards.
Judgment: The Group considers that it is an agent (as opposed to
principal) in relation to all its contracts with other partners.
Accordingly, Wizz recognises revenue from these contracts on a net
(commission) basis.
Out of these contracts, the one for the provision of on-board
catering services is the most significant in value and it is also
the most complex from the perspective of making the 'agent versus
principal' assessment/ judgment. The Company's judgment was based
on the facts that it is the partner that (i) enters into contracts
with the passengers/customers and bears the liability towards them
for delivering the products and services; (ii) defines the majority
of the product portfolio, manages the inventory, is responsible for
product availability/ outage, has title to the inventory and bears
the risk of loss; and (iii) has discretion in establishing prices.
The difference on this contract between gross sales and net
commission revenue (as recognised in the statement of comprehensive
income) was EUR13.6 million (2020: EUR46.3 million).
4. Revenue
The split of total revenue presented in the statement of
comprehensive income, being passenger ticket revenue and ancillary
revenue, is a non-IFRS measure (or alternative performance
measure). The Group did not change the disaggregation of revenue to
that defined under IFRS 15. The existing presentation is considered
relevant for the users of the financial statements because: (i) it
mirrors disclosures presented outside of the financial statements;
and (ii) it is regularly reviewed by the Chief Operating Decision
Maker for evaluating financial performance of the (now only one)
operating segment.
Revenue from contracts with customers can be disaggregated as
follows based on IFRS 15:
2021 2020
EUR million EUR million
============================================ =========== ===========
Revenue from contracts with passengers 704.1 2,706.1
Revenue from contracts with other partners 34.9 55.2
Total revenue from contracts with customers 739.0 2,761.3
============================================ =========== ===========
These two categories represent revenues that are distinct from a
nature, timing and risks point of view. Revenue from contracts with
other partners relates to commissions on the sale of on-board
catering, accommodation, car rental, travel insurance, bus
transfers, premium calls and co-branded cards.
The contract assets reported in F21 as part of trade and other
receivables amounted to EUR0.4 million (2020: EUR1.2 million) and
the contract liabilities (unearned revenues) reported as part of
deferred income were EUR65.0 million (2020: EUR168.4 million). Of
the EUR704.1 million revenue recognised in F21 (2020: EUR2,706.1
million), EUR172.3 million (2020: EUR395.1 million) was included in
the contract liability balance at the beginning of the year (see
unearned revenue in Note 13).
5. Operating profit
Net other expenses
Net other expenses decreased from EUR71.2 million in F20 to
EUR1.2 million in F21, as there was a significant drop in other
expenses due to the coronavirus, and there were credit items
relating to various aircraft asset sale and leaseback transactions
and certain supplier contract negotiations in F21.
Inventories
Inventories totalling EUR6.7 million were recognised as
maintenance materials and repairs expense in the year (2020:
EUR11.0 million).
Gain on sale and leaseback
The gain on sale and leaseback transactions was EUR40.6 million
(2020: EUR11.7 million) due to the sale and leaseback of aircraft
and engines, and the loss on these transactions was EURnil (2020:
EURnil).
6. Net financing income and expense
2021 2020
EUR million EUR million
Interest income 9.0 45.4
Gain on discontinued FX hedges - 1.9
ETS put option fair value gain 2.6 -
Financial income 11.6 47.3
=============================== ============ ============
Interest expenses:
Convertible debt (2.0) (2.0)
IFRS 16 lease liability (68.1) (85.2)
JOLCO and FTL lease liability (3.0) (1.3)
Unsecured debts (3.7) -
Other (1.6) (3.0)
Financial expenses (78.4) (91.5)
=============================== ============ ============
Net foreign exchange gain 28.4 0.1
=============================== ============ ============
Exceptional financial expense - -
=============================== ============ ============
Net financing expense (38.4) (44.2)
=============================== ============ ============
Interest income and expense include interest on financial
instruments (earned on cash and equivalents and in F20 also on FX
forward hedges).
7. Exceptional items and underlying profit
Exceptional items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
material items of income or expense that are shown separately due
to the conditions created by COVID-19.
In F21 the Group had exceptional operating expense of EUR93.6
million (net of EUR5.7 million gain and EUR99.3 million loss)
relating to cash flow hedges regarding future fuel purchases that
were classified as discontinued (refer to Note 2) during 2021 as a
consequence of the grounding of the majority of the Group's fleet
under the COVID-19 situation. In F20 the Group had exceptional
operating expense of EUR63.7 million relating to cash flow hedges
regarding future fuel purchases that were classified as
discontinued during March 2020 as a consequence of the grounding of
the majority of the Group's fleet under the COVID-19 situation.
These items were used by management in the determination of the
non-IFRS underlying profit measure for the Group - see below.
Underlying profit
2021 2020
EUR million EUR million
================================================ =========== ===========
(Loss)/profit from continuing operations (576.0) 281.1
Adjustment for (exclusion of) exceptional items 93.6 63.7
================================================ =========== ===========
Underlying (loss)/ profit after tax (482.4) 344.8
================================================ =========== ===========
The tax effects of the adjustments made above are
insignificant.
8. Income tax expense
Recognised in the statement of comprehensive income:
2021 2020
EUR million EUR million
========================================================== ============ ============
Current tax on profits for the year 0.1 4.5
Adjustment for current tax of prior years (0.1) -
Other income-based taxes for the year 4.8 10.5
Adjustment for income-based taxes of prior years (3.1) -
---------------------------------------------------------- ------------ ------------
Total current tax expense 1.7 15.0
---------------------------------------------------------- ------------ ------------
Deferred tax - increase in deferred tax liabilities 6.3 -
Deferred tax - increase/(decrease) in deferred tax assets 1.5 (1.9)
========================================================== ============ ============
Total deferred tax charge/(benefit) 7.8 (1.9)
========================================================== ============ ============
Total tax charge 9.5 13.1
========================================================== ============ ============
The Company, that is Wizz Air Holdings Plc, has a tax rate of
13.97 per cent (2020: 13.97 per cent). The tax rate relates to
Switzerland, where the Company is tax resident. The income tax
expense is fully attributable to continuing operations. There was
no deferred tax asset recognised in relation to the losses incurred
by the Group in 2021 mainly because the losses incurred by the main
airline subsidiary of the Group are not eligible for utilisation
against taxable profits in the future.
Reconciliation of effective tax rate
The tax charge for the year (including both current and deferred
tax charges and credits) is different to the Company's standard
rate of corporation tax of 13.97 per cent (2020: 13.97 per cent).
The difference is explained below.
2021 2020
EUR million EUR million
========================================================================================== ============ ============
(Loss)/ profit before tax (566.5) 294.1
========================================================================================== ============ ============
Tax at the corporation tax rate of 13.97 per cent (2020: 13.97 per cent) (79.1) 41.1
Adjustment for current tax of prior years (0.1) -
Adjustment for income-based taxes of prior years (3.1) -
Increase/(decrease) in deferred tax liabilities due to changes in Swiss effective tax rate 1.7 (0.1)
Effect of different tax rates of subsidiaries versus the parent company 76.6 (38.4)
Effect of current year losses not being eligible for utilisation against taxable profits
in
future years 8.8 -
Other income-based foreign tax 4.7 10.5
========================================================================================== ============ ============
Total tax charge 9.5 13.1
========================================================================================== ============ ============
Effective tax rate (1.68)% 4.4%
========================================================================================== ============ ============
The effect of different tax rates of subsidiaries is a
composition of impacts primarily in Switzerland and the UK,
relating to the airline subsidiaries of the Group. The Company paid
EUR3.6 million tax in the year (2020: EUR12.6 million).
Substantially all the losses and the profits of the Group in F21
and F20, respectively, were made by the airline subsidiaries of the
Group, and substantially all the tax charges and credits presented
in this Note were incurred by these entities.
Other income-based foreign tax represents the local business tax
and the "innovation contribution" payable in Hungary in F21 and F20
by the Hungarian subsidiaries of the Group, primarily Wizz Air
Hungary Ltd. Hungarian local business tax and innovation
contribution are levied on an adjusted profit basis.
Recognised in the statement of other comprehensive income
2021 2020
EUR million EUR million
----------------------------------------------- ----------- -----------
Deferred tax related to movements in cash flow
hedging reserve (0.5) (0.6)
=============================================== =========== ===========
Total tax charge (0.5) (0.6)
=============================================== =========== ===========
Interpretation 23 "Uncertainty over Income Tax Treatments"
(IFRIC 23)
The Group has open tax periods in a number of jurisdictions
involving uncertainties of different nature and materiality, the
most important open ones being for F18-F21. The Group assessed the
impact of uncertainty of each of its tax positions in line with the
requirements of IFRIC 23. The outcome of this assessment in F2021
was to release EUR1.9 million of provisions previously made, due to
the facts that during the year: (i) some prior tax periods expired
for tax authority examination; or (ii) there was a tax examination
that confirmed the treatment applied by the Company. For all other
tax returns the Group concluded that it was probable that the tax
authority would accept the uncertain tax treatment that has been
taken or is expected to be taken in those tax returns and therefore
accounted for income taxes consistently with that tax treatment.
The final liabilities, as later assessed by the tax authorities,
may vary from the amounts that have been recognised by the
Group.
9. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or
loss attributable to equity holders of the Company by the weighted
average number of Ordinary Shares in issue during each year.
2021 2020
------------------------------------------- ---------- ----------
(Loss)/profit for the year, EUR million (576.0) 281.1
=========================================== ========== ==========
Weighted average number of Ordinary Shares
in issue 85,545,648 74,685,880
=========================================== ========== ==========
Basic earnings per share, EUR (6.73) 3.76
=========================================== ========== ==========
There were also 17,377,203 Convertible Shares in issue at 31
March 2021 (17,377,203 at 31 March 2020). These shares are
non--participating, i.e. the profit and loss attributable to them
is nil. These shares are not included in the basic earnings per
share calculation above.
Diluted earnings per share
Diluted earnings per share is calculated by adjusting the
weighted average number of Ordinary Shares in issue with the
weighted average number of Ordinary Shares that could have been
issued in the respective year as a result of the conversion of the
following convertible instruments of the Group:
-- Convertible Shares;
-- Convertible Notes; and
-- employee share options (vested share options are included in the calculation).
The profit for the year has been adjusted for the purposes of
calculating diluted earnings per share in respect of the interest
charge relating to the debt which could have been converted into
shares.
2021 2020
-------------------------------------------------------------------------- ---------- -----------
(Loss)/profit for the year, EUR million (576.0) 281.1
========================================================================== ========== ===========
Interest expense on convertible debt (net of tax), EUR million - 2.0
========================================================================== ========== ===========
(Loss)/profit used to determine diluted earnings per share, EUR million (576.0) 283.1
========================================================================== ========== ===========
Weighted average number of Ordinary Shares in issue 85,545,648 74,685,880
Adjustment for assumed conversion of convertible instruments - 52,572,127
========================================================================== ========== ===========
Weighted average number of Ordinary Shares for diluted earnings per share 85,545,648 127,258,007
========================================================================== ========== ===========
Diluted earnings per share, EUR (6.73) 2.22
========================================================================== ========== ===========
Underlying earnings per share
The underlying earnings per share is a fully diluted non-IFRS
measure defined by the Company, calculated as follows:
2021 2020
============================================================================= ========== ===========
Underlying (loss)/profit for the year (see Note 7), EUR million (482.4) 344.8
Interest expense on convertible debt, EUR million - 2.0
============================================================================= ========== ===========
(Loss)/profit used to determine underlying earnings per share, EUR million (482.4) 346.8
============================================================================= ========== ===========
Weighted average number of Ordinary Shares for underlying earnings per share 85,545,648 127,258,007
============================================================================= ========== ===========
Underlying earnings per share, EUR (5.64) 2.72
============================================================================= ========== ===========
The calculation of the underlying EPS is different from the
calculation of the IFRS diluted EPS measure in that for earnings
the underlying loss for the year was used (see Note 7) as opposed
to the statutory (IFRS) loss for the year. The underlying EPS
measure was introduced by the Company to better reflect the
underlying earnings performance of the business.
10. Property, plant and equipment
Advances
Aircraft Advances paid
Land Aircraft assets Fixtures paid for RoU assets
and maintenance and and for aircraft aircraft
building assets parts fittings aircraft maintenance and spares RoU assets Total
EUR EUR EUR EUR EUR assets EUR other EUR
million million million million million EUR million million EUR million million
Cost
At 1 April
2019 17.9 414.3 74.1 8.3 259.9 138.6 2,286.0 7.9 3,207.0
Additions 0.2 46.2 277.1 4.6 383.4 76.3 162.3 3.0 953.1
Disposals - (20.0) (8.4) (0.2) (85.2) - (25.8) - (139.6)
Transfers - 22.9 12.1 - (12.1) (22.9) - - -
============= ========= =========== ======== ========= ========== =========== ========== =========== ========
At 31 March
2020 18.1 463.4 354.9 12.6 546.0 192.0 2,422.5 10.9 4,020.5
------------- --------- ----------- -------- --------- ---------- ----------- ---------- ----------- --------
Additions 0.1 27.9 162.1 0.7 165.1 41.7 418.4 4.6 820.6
Disposals - (65.7) (25.3) (4.7) (129.8) (12.2) (40.4) - (278.1)
Transfers - 4.6 54.2 - (54.2) (4.6) - - -
FX
translation
effect - 0.1 - - - 0.5 9.1 - 9.7
At 31 March
2021 18.2 430.3 545.9 8.6 527.1 217.3 2,809.6 15.5 4,572.5
============= ========= =========== ======== ========= ========== =========== ========== =========== ========
Accumulated
depreciation
At 1 April
2019 1.6 223.7 26.4 4.8 - - 882.1 1.4 1,140.0
Depreciation
charge for
the
year 1.2 82.2 16.8 0.9 - - 271.7 1.2 374.0
Disposals (0.7) (19.0) (1.7) (0.2) - - (25.8) - (47.4)
FX
translation
effect - 0.1 0.2 - - - - 0.6 0.9
At 31 March
2020 2.1 287.0 41.7 5.5 - - 1,128.1 3.2 1,467.5
============= ========= =========== ======== ========= ========== =========== ========== =========== ========
Depreciation
charge for
the
year 1.2 77.3 25.9 0.9 - - 229.4 1.8 336.5
Disposals - (65.7) (5.7) - - - (40.4) - (111.8)
FX
translation
effect - 0.3 (0.3) - - - 2.0 - 2.0
At 31 March
2021 3.3 298.9 61.5 6.4 - - 1,319.1 5.0 1,694.2
============= ========= =========== ======== ========= ========== =========== ========== =========== ========
Net book
amount
At 31 March
2021 14.9 131.4 484.4 2.2 527.1 217.3 1,490.5 10.4 2,878.2
============= ========= =========== ======== ========= ========== =========== ========== =========== ========
At 31 March
2020 16.0 176.6 313.4 7.1 546.0 192.0 1,294.3 7.6 2,553.0
============= ========= =========== ======== ========= ========== =========== ========== =========== ========
The Group entered into various financing arrangements in order
to finance aircraft including Sale and Leaseback, Japanese
Operating Lease with Call Option (JOLCO) and French Tax Lease (FTL)
structures. Certain of these arrangements include Special Purpose
Vehicles (SPV) in the financing structure and in accordance with
IFRS 10, where the Group has control of these entities, these are
consolidated in the Group balance sheet. Aircraft assets and parts
leased under JOLCO as part of sale and leaseback arrangements are
not classified as leases under IFRS 16.
Other Right-of-Use (RoU) assets include leased buildings and
simulator equipment. Please refer to Note 12 for details on lease
liabilities.
Additions to aircraft maintenance assets (EUR27.9 million in F21
and EUR46.2 million in F20) were fixed assets created primarily
against provision, as the Group's aircraft or their main components
no longer met the relevant return conditions under lease
contracts.
Additions to "advances paid to aircraft maintenance assets"
reflect primarily the advance payments made by the Group to the
engine maintenance service provider under FHAs.
Additions to "advances paid for aircraft" represent PDPs made in
the year, while disposals in the same category represent PDP
refunds received from the manufacturer where the respective
aircraft or spare engine was leased (i.e. not purchased) by the
Group. During F21 in the statement of cash flows the cash inflow
was EUR131.3 million "refund of advances paid for aircraft" and the
cash outflow was EUR165.1 million "Advances paid for aircraft".
The gross carrying amount of fully depreciated property, plant
and equipment is EUR20.0 million.
Due to COVID-19 and the consequential low level of asset
utilization an impairment review was performed. The Group's
aircraft fleet was considered a single cash generating unit, the
carrying value of which includes virtually all Property, plant and
equipment and intangible assets, of which recoverable amount was
estimated according to its value in use. The calculation is based
on the cash flow projections in the operating plans approved by the
Board for the following three financial years up to and including
2024, which take into account expectations of increased costs to
address climate change. The values assigned to the key assumptions
represent management's assessment of future trends, including its
view of trading (such as, passenger number expectations, capacity
utilisation, and average revenue per passenger kilometer) based on
market data and internal expectations. Jet fuel price and USD
exchange rate were estimated as per the following:
2022 2023 2024
Je t fuel price (EUR per metric tonne) 475 600 600
USD/EUR exchange rate 1.21 1.21 1.21
--------------------------------------- ---- ---- ----
A growth rate of 1.7% was used to extrapolate cash flow
projections beyond F24, which is the end of our normal three year
forecasting period, through to F33, being the end of the lease term
of the existing aircraft fleet. A pre-tax discount rate of 8.0% was
derived from the weighted average cost of capital of the Group.
Analysis was performed to model the possibility that travel
restrictions remain in place during 2022, and other adverse changes
in underlying assumptions and their impact on the headroom. As a
result management did not identify a need for impairment. As a
result management did not identify a need for impairment and there
were no reasonable possible changes in assumptions that would cause
an impairment.
11. Derivative financial instruments
2021 2020
EUR million EUR million
======================================= =========== ===========
Assets
Non-current derivatives
Cash flow hedges - 0.9
Current derivatives
Fair value hedges - 7.1
Cash flow hedges 3.8 8.3
Discontinued hedges 1.3 1.9
======================================= =========== ===========
Total derivative financial assets 5.1 18.2
======================================= =========== ===========
Liabilities
Non-current derivatives
Cash flow hedges - (41.3)
Current derivatives
Cash flow hedges (6.1) (212.6)
Discontinued hedges (2.9) (53.9)
======================================= =========== ===========
Total derivative financial liabilities (9.0) (307.8)
======================================= =========== ===========
Derivative financial instruments represent cash flow and fair
value hedges (see Note 2). The full value of a hedging derivative
is classified as a current asset or liability if the remaining
maturity of the hedged item is less than a year.
The changes in the net position of assets and liabilities in
respect of open cash flow hedges are detailed in the Consolidated
Statement of Changes in Equity.
During 2020 the Group used fair value hedges as well in order to
mitigate change in lease liability value. The value of fair value
hedge open positions is recorded immediately in the statement of
comprehensive income as financial gain or loss.
The mark-to-market gains (derivative financial assets) were
generated on gains on call options bought (as part of zero-cost
collar instruments) and FX forward transactions that were in the
money at year end.
The mark-to-market losses (derivative financial liabilities)
were generated on losses on put options sold (as part of zero-cost
collar instruments) that were out of the money at year end. In F20
losses related almost exclusively to fuel options and was
particularly high as the fuel price dropped significantly at the
end of the year.
12. Borrowings
2021 2020
EUR million EUR million
--------------------------------------------- ------------ -------------
Lease liability under IFRS 16 341.7 324.3
Unsecured debts 350.3 -
Liability related to JOLCO and FTL contracts 30.1 16.5
--------------------------------------------- ------------ -------------
Total current borrowings 722.1 340.8
--------------------------------------------- ------------ -------------
Lease liability under IFRS 16 1,452.2 1,397.0
Unsecured debts 499.2 -
Loans from non-controlling interests 12.8 -
--------------------------------------------- ------------ -------------
Liability related to JOLCO and FTL contracts 424.5 274.9
--------------------------------------------- ------------ -------------
Total non-current borrowings 2,388.7 1,671.9
--------------------------------------------- ------------ -------------
Total borrowings 3,110.8 2,012.7
============================================= ============ =============
The Company issued GBP300.0 million commercial paper in April
2020 through the Covid Corporate Financing Facility (CCFF) with the
Bank of England that was rolled over by twelve months in February
2021. Further to that, on 19 January 2021, Wizz Air Finance Company
B.V., a 100 per cent owned subsidiary of Wizz Air Holdings Plc.,
issued EUR500.0 million 1.35 per cent Eurobond, fully and
irrevocably guaranteed by the Company, under the EUR3,000.0 million
EMTN programme with a maturity in January 2024.
The maturity profile of borrowings as at 31 March 2021 is as
follows:
IFRS 16
aircraft IFRS 16 JOLCO and Loans from
and engine other lease FTL lease Unsecured non-controlling
lease liability liability liability debts interests Total
EUR million EUR million EUR million EUR million EUR million EUR million
------------------ ------------------ -------------- ------------ ------------ ----------------- ------------
Payments
due:
Within one
months 45.3 0.1 - - - 45.4
Between one
and three
months 45.6 0.7 6.4 - - 52.7
Within three
months and
one year 248.8 1.1 23.7 350.3 - 623.9
Between one
and five
years 1,013.9 5.7 122.5 499.2 - 1,641.3
More than
five years 429.2 3.5 302.0 - 12.8 747.5
------------------ ------------------ -------------- ------------ ------------ ----------------- ------------
Total borrowings 1,782.8 11.1 454.6 849.5 12.8 3,110.8
================== ================== ============== ============ ============ ================= ============
The maturity profile of borrowings as at 31 March 2020 is as
follows:
IFRS 16
aircraft IFRS 16 JOLCO and Loans from
and engine other lease FTL lease Unsecured non-controlling
lease liability liability liability debts interests Total
EUR million EUR million EUR million EUR million EUR million EUR million
------------------ ------------------ -------------- ------------ ------------ ----------------- ------------
Payments
due:
Within one
months 31.0 - - - - 31.0
Between one
and three
months 53.4 0.2 3.6 - - 57.2
Within three
months and
one year 239.0 0.7 12.9 - - 252.6
Between one
and five
years 1,078.7 2.0 69.5 - - 1,150.2
More than
five years 311.1 5.3 205.3 - - 521.7
------------------ ------------------ -------------- ------------ ------------ ----------------- ------------
Total borrowings 1,713.2 8.2 291.3 - - 2,012.7
================== ================== ============== ============ ============ ================= ============
The total cash outflow for leases during F21 was EUR405.9
million (2020: EUR391.6 million). Please refer to Note 10 for
details on right-of-use assets.
13. Deferred income
2021 2020
EUR million EUR million
================================== ============ ============
Non-current financial liabilities
Deferred income 43.5 13.1
================================== ============ ============
Current financial liabilities
Unearned revenue 65.0 168.4
Other 3.0 3.9
================================== ============ ============
68.0 172.3
================================== ============ ============
Total deferred income 111.5 185.4
================================== ============ ============
Non-current deferred income represents the value of benefit for
the Group coming from concessions (cash credits and free aircraft
components) received from aircraft and certain component suppliers
that will be recognised as a credit (an aircraft rentals expenses
decreasing item) on a straight-line basis over the lease term of
the respective asset.
Current deferred income represents the value of tickets paid by
passengers for which the flight service is yet to be performed
("unearned revenue"), the value of membership fees paid but not yet
recognised and the current part of the value of supplier credits
received. The decrease in unearned revenue was due to the
significant drop in ticket sales due to coronavirus.
The contract liabilities (unearned revenue) of EUR65.0 million
existing at 31 March 2021 (EUR168.4 million at 31 March 2020) will
become revenue during F22 (subject to further cancellations that
might happen after the year end). The decrease in contract
liabilities was driven by the lower business activity and shorter
booking windows during and towards the end of the financial year,
both due to coronavirus.
14. Provisions for other liabilities and charges
Aircraft maintenance Other Total
EUR million EUR million EUR million
================================================= ==================== =========== ===========
At 1 April 2019 138.3 10.9 149.2
================================================= ==================== =========== ===========
Non-current provisions 45.9 - 45.9
Current provisions 92.4 10.9 103.3
------------------------------------------------- -------------------- ----------- -----------
Capitalised within property, plant and equipment 42.4 - 42.4
Charged to comprehensive income - 24.4 24.4
Used during the year (74.8) (20.0) (94.8)
================================================= ==================== =========== ===========
At 31 March 2020 105.9 15.3 121.2
================================================= ==================== =========== ===========
Non-current provisions 44.2 2.7 46.9
Current provisions 61.7 12.6 74.3
================================================= ==================== =========== ===========
Capitalised within property, plant and equipment 25.9 - 25.9
Charged to comprehensive income - 5.7 5.7
Used during the year (53.7) (10.2) (63.9)
================================================= ==================== =========== ===========
At 31 March 2021 78.1 10.8 88.9
================================================= ==================== =========== ===========
Non-current provisions 49.3 1.8 51.1
Current provisions 28.8 9.0 37.8
================================================= ==================== =========== ===========
Non-current provisions relate to future aircraft maintenance
obligations of the Group on leased aircraft and spare engines,
falling due beyond one year from the balance sheet date. Current
aircraft maintenance provisions relate to heavy maintenance
obligations expected to be fulfilled in the coming financial year.
The amount of provision reflects management's estimates of the cost
of heavy maintenance work that will be required in the future to
discharge obligations under the Group's lease agreements (see Note
3). Maintenance provisions in relation to engines covered by FHA
agreements are netted off with the FHA prepayments made to the
engine maintenance service provider in respect of the same group of
engines. Maintenance provision decreased due to scheduled
maintenance events during F21.
The decrease in maintenance provisions from F19 to F20 and from
F20 to F21 both related primarily to engine Life Limited Part
replacements.
Other provisions mainly relate to liabilities for EU Regulation
(EC) No. 261/2004 (EU 261) compensation to customers, refunds made
to passengers, and uncertain tax positions. The value of the
provision is determined based on known eligible events and
historical claim patterns.
15. Capital commitments
At 31 March 2021 the Group had the following capital
commitments:
-- a commitment to purchase 248 Airbus aircraft of the
A320-family in the period 2021-2027. Of the 248 aircraft 228 relate
to the "neo" version of the A320-family (82 from the purchase
orders placed in June 2015 and 146 from the purchase order placed
in November 2017), while the remaining 20 relate to the "neo XLR"
version (from the purchase order placed in June 2019). The total
commitment is valued at US$34.1 billion (EUR29.1 billion) based on
list prices last published in 2018 and escalated annually until the
reporting date (2020: US$33.5 billion (EUR30.5 billion), valued at
2018 list prices). As at the date of approval of this document out
of the 248 aircraft 27 are to be delivered in F22 and 22 are
covered by sale and leaseback agreements; and
-- a commitment to purchase 35 IAE "neo" (GTF) spare aircraft
engines in the period 2021-2026. In July 2016 the Group entered
into an engine selection agreement with Pratt & Whitney that,
among other matters, included a commitment for the Group to
purchase 16 spare engines (of which six were already received). In
September 2019 the Group restated and amended this engine selection
agreement with certain other commitments including a purchase of 25
additional spare engines until 2026. The total commitment is valued
at US$557.4 million (EUR474.5 million) at list prices in 2020 US$
terms (2020: US$569.1 million (EUR518.4 million), valued at 2020
list prices). As at the date of approval of this document the 35
engines are not yet financed. Only a few of these 35 engines will
be delivered in F22.
16. Contingent liabilities
Legal disputes
European Commission state aid investigations
Between 2011 and 2015, the European Commission has initiated
state aid investigations with respect to certain arrangements made
between Wizz Air and the following airports, respectively: Timi
oara, Cluj-Napoca, Târgu Mure , Beauvais and Girona. In the context
of these investigations, Wizz Air has submitted its legal
observations and supporting economic analyses of the relevant
arrangements to the European Commission, which are currently under
review. The European Commission has given notice that the state aid
investigations involving Wizz Air will be assessed on the basis of
the new "EU Guidelines on State aid to airports and airlines" which
were adopted by the European Commission on 20 February 2014. Where
relevant, Wizz Air has made further submissions to the European
Commission in response to this notification. In relation to the
Timi oara arrangements, the European Commission confirmed on 24
February 2020 that the arrangements did not constitute state aid.
We are awaiting decisions in relation to the other airport
arrangements mentioned herein above. Ultimately, an adverse
decision by the European Commission could result in a repayment
order for the recovery from Wizz Air of any amount determined by
the European Commission to constitute illegal state aid. None of
these ongoing investigations are expected to lead to exposure that
is material to the Group.
Claims by Carpatair
Between 2011 and 2013, Carpatair, a regional airline based in
Romania, has initiated a number of legal proceedings in Romania
alleging that Wizz Air has been receiving state aid from Timi oara
airport, demanding that Wizz Air reimburse any such state aid. In
addition, Carpatair has initiated an action for damages demanding
recovery from Wizz Air of approximately EUR93.0 million in alleged
damages, which damages claim was dismissed by the Bucharest court
of appeals on the basis of the substantive argument that Carpatair
lacks an interest in the matter. The decision by the Bucharest
court of appeals is currently subject to appeal. Importantly, in
light of the favourable European Commission decision on the Timi
oara arrangements referred to above, it is expected that the
Romanian courts will eventually rule in favour of Wizz Air
dismissing the respective requests and claims filed by
Carpatair.
No provision has been made by the Group in relation to these
issues because there is currently no reason to believe that the
Group will incur charges from these cases.
17. Related parties
Identity of related parties
Related parties are:
-- Indigo Hungary LP and Indigo Maple Hill LP (collectively
referred to as "Indigo" here), because it has appointed two
Directors to the Board of Directors (all in service at 31 March
2021); and
-- key management personnel (Directors and Officers).
Indigo, Directors and Officers altogether held 11.4 per cent of
the voting shares of the Company at 31 March 2021 (2020: 20.0 per
cent).
Transactions with related parties
There were no transactions with related parties during the
financial year except as indicated below.
Transactions with Indigo
At 31 March 2021 Indigo held 7,307,692 Ordinary Shares (equal to
8.5 per cent of the Company's issued share capital) and 17,377,203
Convertible Shares of the Company (2020: 15,000,000 Ordinary Shares
and 17,377,203 Convertible Shares).
Indigo has interest in convertible debt instruments issued by
the Company. The Company's liability to Indigo, including principal
and accrued interest, was EUR26.7 million at 31 March 2021 (2020:
EUR26.8 million).
During the year ended 31 March 2021 the Company entered into
transactions with Indigo as follows:
-- the Company recognised interest expense on convertible debt
instruments held by Indigo in the amount of EUR2.0 million (2020:
EUR2.0 million); and
-- fees of EUR0.2 million (2020: EUR0.2 million) were paid to
Indigo in respect of the remuneration of two of the Directors who
were delegated by Indigo to the Board of Directors of the
Company.
18. Prior period restatements
Short term cash deposits
In agreement with the Financial Reporting Council (FRC), the
Company has decided to present deposits with an original maturity
of longer than three months separately from cash and cash
equivalents. Please refer to Note 1 on the revised accounting
policy for more details.
Presentation of foreign currency gains and losses in the
Consolidated statement of cash flows
The management restated the presentation of foreign exchange
gains and losses on cash and cash equivalents as these amounts were
previously reported as part of Changes in working capital of
EUR11.4 million. Further EUR9.0 million gains on bank deposits were
reclassified from operating cash flow to "effect of exchange rate
fluctuations on cash and cash equivalents". The Statement of Cash
Flows for F20 was restated in order for the corresponding amounts
to be presented appropriately.
Interest received in the amount of EUR44.3 million were
previously incorrectly presented within financial expense and are
now presented within financial income. Furthermore, other
reclassifications have also been made within Net cash generated by
operating activities to better align the financial expenses and
financial income in the Statement of Cash Flows to the Statement of
Comprehensive Income.
Impact of these changes on the F20 Statement of Balance Sheet
and F20 Statement of Cash Flows are shown below. The restatements
do not have significant impact on the opening balances of F20.
The Consolidated statement of financial position for the year
ended 31 March 2020 has been restated as follows:
2020 Impact of deposit reclassification 2020
As previously stated As restated
EUR million EUR million
ASSETS
Current assets
Short term cash deposits - 432.5 432.5
Cash and cash equivalents 1,310.5 (432.5) 878.0
The Consolidated statement of cash flows for the year ended 31
March 2020 has been restated as follows:
2020 2020
As previously stated Impact of separating FX gains and losses Impact of deposit reclassification As restated
EUR million EUR million EUR million
Cash flows from operating
activities
(Loss)/profit before income tax 294.1 - - 294.1
Adjustments for:
Financial income (3.1) (44.2) - (47.3)
Financial expenses 120.6 (29.1) - 91.5
Unrealised fair value gains on
derivative financial instruments - 79.0 - 79.0
Unrealised foreign currency gains
and losses (11.9) (11.9)
Realised non-operating foreign
currency gains and losses - 12.3 - 12.3
Changes in working capital
(excluding the effects of
exchange differences on
consolidation)
Decrease in trade and other
receivables 115.6 (7.1) - 108.4
Increase/(decrease) in restricted
cash (6.8) 13.7 - 6.8
Increase in trade and other
payables 146.5 (33.1) - 113.4
Cash (used) in /generated by
operating activities before tax 784.5 (20.4) - 764.1
Decrease/(increase) in short term
cash deposits - 4.7 (432.5) (427.7)
Net cash (used) in/generated in
investing activities (682.4) 4.7 (432.5) (1,110.1)
Net decrease in cash and cash
equivalents (4.1) (15.7) (432.5) (452.3)
Effect of exchange rate
fluctuations on cash and cash
equivalents (1.4) (15.7) - 14.3
Cash and cash equivalents at the
end of the year 1,310.5 - (432.5) 878.0
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END
FR FTMBTMTJMMMB
(END) Dow Jones Newswires
June 02, 2021 02:00 ET (06:00 GMT)
Wizz Air (LSE:WIZZ)
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