Wizz Air cuts full-year profit guidance, shares slide
By Michele Maatouk
Date: Thursday 30 Jan 2025
(Sharecast News) - Wizz Air tumbled on Thursday as it reported a narrowing of its third-quarter losses but cut its full-year profit forecast as it deals with issues related to engine groundings.
In the three months to the end of December 2024, operating losses narrowed to €75.9m from €180.4m in the same period a year earlier.
Total revenue rose 10.5% to €1.18bn as traffic hit a record 15.5m passengers in the third quarter, up from 15.1m a year earlier.
Wizz said it now expects full-year net income of €250m to €300m, down from previous guidance of €350m to €450m.
Chief executive József Váradi said: "Wizz Air has continued to navigate the complexity imposed on its operations from the ongoing grounding of some 20% of its fleet, due to the well-documented GTF engine issue. This is reflected in our unit cost performance, with Q3 ex-fuel CASK (cost per available seat kilometre) up 17% year-on-year, given the multiple inefficiencies these groundings generate across a number of our cost lines.
"Disappointingly the benefits of the stronger demand environment did not flow through to our reported profit level due to these cost headwinds and a significant €160m negative FX charge recognised in Q3. This reflects the requirement to mark-to-mark our US$ denominated lease exposure at the ruling rate at the end of each quarter."
Varadi said that while this is a non-cash item, it has the potential to introduce "significant" volatility to the company's reported profitability.
"Given the current volatility in FX, the board has approved a hedging program to help mitigate this in the future, the timing of which is yet to be determined given current ruling exchange rates," he added.
At 1100 GMT, the shares were down 8.4% at 1,257p.
Russ Mould, investment director at AJ Bell, said: "Wizz Air shares traded close to all-time lows after flagging cost headwinds. The airline has dramatically fallen out of favour with investors since 2021.
"Previously the market lapped up the narrative around rapid expansion; now, there is considerable scepticism because of high debt levels, cost pressures, engine problems and fierce competition."
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