Wizz Air H1 profits drop on aircraft groundings
By Michele Maatouk
Date: Thursday 07 Nov 2024
(Sharecast News) - Wizz Air reported a drop in first-half profit on Thursday as the budget airline was hit by engine-related aircraft groundings.
In the six months to 30 September, earnings before interest, tax, depreciation and amortisation fell to €826m from €878.1m in the same period a year earlier.
Wizz said this reflects cost inefficiencies carried as a result of grounded aircraft due to geared turbofan engine inspections and the cost of one-off wet leased aircraft during the summer peak period, not fully offset by compensation from engine maker Pratt & Whitney.
Operating profit fell 33.2% to €349.2m.
Wizz said 41 aircraft were grounded as of 30 September, down from 46 at the end of June. The airline expects average groundings to be around 40-45 aircraft over the next 18 months, versus a previous assumption of 50.
Wizz carried a total of 33.3m passengers in the first half, just a smidgen higher than the 33m in the same period a year earlier, while the load factor was 92.4%, down from 92.6%. The load factor gauges how full the planes are.
Chief executive József Váradi said: "Bookings since the period end show no softening of demand, and we are anticipating a positive momentum into the second half in terms of both bookings and yield, notwithstanding the volatile geopolitical situation in the Middle East. Our operations in Tel Aviv have been suspended until the middle of January 2025 with capacity reallocated across our network focusing on route densification, and we continue to monitor the situation closely in the region.
"In the second half, GTF issues will continue to inflate costs which will be counterbalanced by action taken on improving fuel and operational efficiency, and optimizing the network mix. As at the end of October, all one-off wet leases have been terminated and a new compensation scheme is being negotiated with Pratt & Whitney, providing stability for the rest of the financial year.
"As we look ahead, we now have better visibility to manage the GTF issues to their expected conclusion in F27 and our timetable of deliveries from Airbus means we will gradually return to growth from next year."
At 0955 GMT, the shares were down 3.3% at 1,336.84p.
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