Wizz Air has today reported a bigger third-quarter operating loss than expected, as the budget carrier grapples with engine inspections that have grounded parts of its fleet and the suspension of flights due to the Middle East conflict.
The airline, however, maintained its fiscal 2024 net income expectations after a positive start to its fourth quarter ending March. Its shares were down over 6% this morning.
European airlines have continued to report strong results on the back of unrelenting travel demand, but the outlook is murky due to geopolitical instability, rising jet fuel costs and economic uncertainty.
Wizz Air was also one of the main airlines hit by issues with RTX engines and had said it would face a capacity reduction as a result.
There were no changes in expected aircraft groundings over the engine inspections, with 40 set to be grounded by the end of the 2023-24 financial year and capacity set to remain flat into the 2024-25 financial year.
The €180m operating loss in Wizz Air's third quarter, which ended on December 31, was larger than last year's third quarter loss of €155m, driven by flight cancellations.
Analysts had forecast a loss of €93m, according to an LSEG poll.
"While financial performance in the last quarter was materially affected by the suspension and reallocation of Israel capacity, we maintain our expectations for F24 net income," chief executive Jozsef Varadi said in a statement.
The budget carrier will restart routes to Israel in March, it said.
"As we understand (the situation) is much better than what it was a few months ago. Everything that we do is subject to the development of security circumstances in the Middle East, we see demand coming back," Varadi told Reuters in a call.
Wizz Air shares at the end of the last year dropped substantially and recovered in early 2024, only to fall over 6% on the back of the third quarter results.
The shares trade at six times forecast earnings over the next 12 months, lagging budget rivals EasyJet and Ryanair. The so-called price-earnings ratio is a widely used gauge of the relative value of stocks.
Varadi said results were set to improve in the fourth quarter and that the airline had done a good job mitigating ongoing external risks.
"We have two wars in our territories and significant exposure on the engines," he told Reuters.
