Budget airline sees significant shift from its €38.4m gains the prior year
Wizz Air has seen a dip in profits(Image: Wizz Air)
Rocketing jet fuel prices driven by the ongoing conflict in the Middle East have hit profits at Wizz Air.
Surging fuel costs and “extreme volatility” stemming from the war in Iran pushed the budget carrier to a €198.2m net loss, a stark reversal from the €38.4m profit it recorded the previous year.
The FTSE 250 operator saw total revenue edge up 5.5 per cent to €1,507.4m, buoyed by a 25.1 per cent rise in passenger numbers, bringing the total to 21.2m. However, revenue per available seat kilometre fell 8.1 per cent as softening fares ate into margins.
Garry White, chief investment commentator at Raymond James, said: “Wizz Air’s first-quarter results were disappointing.
“Despite strong growth in passenger numbers and revenue…higher fuel costs and weaker fares squeezed yields, highlighting how cost pressures continue to offset the benefits of capacity growth.”, as reported by City AM.
Shares tumbled 4.9 per cent to 1,089.9p. The stock has shed 16.3 per cent since the start of the year.
The airline expects industry headwinds to persist, prompting it to redirect its fleet capacity towards sought-after European destinations such as Spain, rather than long-haul routes to the Middle East.
The group had already suspended operations in Vienna and withdrew from Abu Dhabi last year. Jozsef Varadi, chief executive officer, said: “This supports higher sector productivity, creates more attractive schedules for customers, improves network integrity, and delivers incremental growth at a lower cost.”
Fleet availability has also seen improvement, bouncing back from disruption brought about by the grounding of aircraft that had engine and powder metal difficulties. As of 30 June, 27 aircraft remain grounded, down from 41 at the end of last year.
The affected fleet is anticipated to be fully operational by the close of the 2027 calendar year, though Alex Pugh, analyst at Freetrade, noted the problem is “still hurting Wizz” despite progress being made.
Analysts are now questioning if “strong summer demand” can “help drive recovery”.
Pugh said: “There are signs of punctuality and completion rates improving even in a difficult quarter. The ultra-budget airline is expanding fast, but the market will want proof bigger means better, not just more seats sold at thinner returns.”
Wizz Air flies from UK airports including Liverpool, Birmingham, Luton and Leeds-Bradford.
