Wizz Air cuts annual forecast after first-quarter profit slumps 44%
Writes through, updates shares, adds analyst comment and context
By Joanna Plucinska and Yadarisa Shabong
Aug 1 (Reuters) -Wizz Air WIZZ.L lowered its annual profit forecast on Thursday after reporting a 44% drop in its first-quarter operating profit, partly owing to costs related to Pratt & Whitney RTX.N engine troubles and one-off wet leases to bolster capacity.
The shares tumbled 15% by 0802 GMT.
The low-cost airline, which flies an all-Airbus fleet, has faced challenges related to Pratt and Whitney RTX engines, with 46 of its planes set to be grounded for inspections this summer, placing constraints on capacity.
European airlines have faced a difficult first half of the year because of spiralling costs and normalising customer demand after an initial post-pandemic boom. Air France-KLM AIRF.PA, Lufthansa LHAG.DE and Ryanair RYA.I all reported challenging second quarters.
Wizz Air Chief Executive Jozsef Varadi said the airline will have to moderate its expectations.
"Our fares are still improving, but our competitors are dropping theirs and that impacts us," Varadi said.
The budget carrier forecast net income for the year in the range of 350 million euros to 450 million euros ($379 million to $487 million), down from its previous forecast of 500 million euros to 600 million euros.
Operating profit in the company's first quarter to June 30 was 44.6 million euros, against the 144.3 million euro consensus in an LSEG analyst poll.
Analysts pointed to higher than expected costs and warned that the cut in the annual forecast would probably be poorly received by investors.
PLANE DELIVERIES TO BOOST CAPACITY
Wizz Air said demand remained strong and that it still planned substantial capacity growth in coming years, with new Airbus AIR.PA planes boosting its fleet.
The aviation sector has struggled with delays from manufacturers Boeing BA.N and Airbus in the years since the COVID-19 pandemic, with constraints at Boeing compounded by safety concerns.
Airbus warned of further delivery delays in June and said it faced supply chain challenges.
Shares in Europe's airline stocks are broadly down in the Past six months but some have said that a return to a more normal delivery schedules should help.
"We remain on track to return to annual capacity growth in 2026, underpinned by the pipeline of Airbus deliveries," Varadi said in a statement.
He added that issues with Pratt & Whitney engines remained "unpredictable" and wet leases to protect Wizz Air's routes and capacity led to a cost hit this quarter and will spill over into the second quarter.
($1 = 0.9239 euros)
Reporting by Joanna Plucinska and Yadarisa Shabong in Bengaluru
Editing by David Goodman and Sharon Singleton
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
