The Wizz Air Holdings Plc (LSE: WIZZ) share price seems exhausted after a tumultuous year of volatility. After enjoying the highs of 4,500p plus price levels, for the major part of the previous year, the Wizz Air shares have been consistently bearish in 2022.

From a price of 4,188p at the start of the year, the share price has dropped by a whopping 45% to date. Today the stock is currently trading at 2,279p with a market cap of £2.29bn.

What’s going on? How is the airline company performing? And is this actually a buying opportunity for my portfolio?

What does Wizz Air do?

Wizz Air is a low-cost carrier and Hungary’s largest airline. It flies non-stop to more than 166 smaller or secondary airports in 44 countries, including Austria, Bulgaria, Denmark, Germany, France, Switzerland, the United Arab Emirates, and the United Kingdom, amongst others.

In a relatively short span of time, the firm has earned a spot amongst the top ten European airlines. And today, the president, William A. Frank, and CEO, József Váradi, proudly run a fleet of 137 Airbuses with a talent pool of 4,700 employees.

However, the one thing that differentiates this airline from others is its one-class all-economy configuration. That is why the airline has managed to maintain its reputation as a low-cost carrier.

The competitive environment

The fast-track success of Wizz Air is not a fluke. It’s the result of smartly articulated strategies and a well-executed business plan. At least, that’s what I think.

Firstly, it is the lowest-cost airline in the travel industry that has managed to succeed more so than its competitors. Secondly, the airline’s ultra-low-cost business model has enabled the airline to survive during the toughest time.

During the pandemic, it not only lost passengers but also suffered a 73% decline in revenue, as reported in the FY 2021 annual report. Yet it continues to operate with a solid amount of liquidity even with substantial losses.

Management was far quicker to adapt to the changing operating environment triggered by Covid-19. After all, Wizz Air sought a faster return to normalcy post-pandemic than its competitors Easy Jet, Jet2.com, Ryanair, British Airways, and Norwegian Air Shuttle. All thanks to the quick and smart decision-making of adjusting the route network and increasing the number of operating bases.

All these factors contribute toward the company standing well-poised to take advantage of opportunities that may arise as competitors are withdrawing capacity. That’s why I believe Wizz Air has been able to achieve and maintain its leading position within the industry.

Wizz Air’s financials versus share price

The company proudly announced its strong fiscal year 2022, ending in March. Owing to the timely investments in staffing, fleet, and diversification of the network, the Budapest-headquartered airline was able to generate a €1.66bn revenue, a whopping 125% increase from the previous year. This impressive performance came on the back of reporting a 78% load factor and a total of 27.1 million passengers being transported in the 12-month period.

Having said that, the budget airline is still struggling to generate profits. The net loss for its 2022 fiscal year was €642m. While the company was still recovering, the conflict in Eastern Europe popped up as a new challenge to tackle that profoundly impacted the budget airline’s cash flow. Why? Because it was the only EU carrier to have a base in Ukraine and operated 45 routes out of the country.

As of now, management has downgraded its business growth target because it stopped the sale of flights to and from Russia and Ukraine. Amidst all this, the soaring fuel prices have further aggravated the challenging times.

Irrespectively, this business stands optimistic about the coming year. It plans to deliver the largest ever summer flying program and the fastest growth in the industry. The plan is to expand capacity by a further 30% and 40% with the addition of new Airbus A321 aircraft in its fleet across the first and second quarters of its 2023 fiscal year.

That’s quite an ambitious target. Only time will tell whether the firm can deliver on these milestones. And we’ll soon find out once the firm releases its interim results in November. But assuming it does, it could send the Wizz Air share price back in the right direction.

Do I plan to invest at the current Wizz Air share price?

There is a lot I like about this stock and its comeback potential. However, there is no denying that travel stocks, in general, have quite a few hurdles to overcome. That’s why it’s not surprising that stock market analyst forecasts have a general consensus of hold. Although the current target price forecast does sit around 3,100p per share.

Management seems to have a high degree of confidence for the coming year. The group has hedged for the coming summer season providing partial protection against any looming fuel price surges. And with travel restrictions becoming a thing of the past, the average flight load factor is expected to hit above 90% again as passenger numbers improve.

But, as a long-term investor, my concern surrounds the creation of value. As operations aren’t generating positive earnings, the low-cost carrier does not offer any dividends. And I imagine this isn’t going to change anytime soon.

All things considered, I’m cautiously optimistic about the future performance of the Wizz Air share price. But I’m going to sit on the sidelines for now until a clearer picture of the road to recovery emerges.

Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.