Wizz Air today missed first-quarter profit estimates as the budget airline struggles with plane groundings due to problems with Pratt and Whitney engines and warned grounded jets would return to service a year later than expected.
It said existing problems had been compounded by "poorer than specified" performance of the GTF engines, leading to significantly lower time in service before needing an inspection.
Wizz has struggled in recent years to compete financially with other European carriers as it grapples with the engine challenges, with the groundings limiting its ability to increase capacity to meet demand. It has issued two profit warnings in the past year.
Wizz said it had 41 aircraft grounded due to GTF engine-related inspections as of June 30, and now expects the affected planes to return to the air in the financial year ending March 2027, a year later than previously predicted.
"Our management team has demonstrated a high degree of adaptability in recent years when faced by severe challenges, and this year will likely continue to call on that strength as we refocus our business," CEO Jozsef Varadi said in a statement.
Wizz reported an operating profit of €27m for the three months to June 30, much lower than the €87m projected by analysts polled by LSEG, and down 38.3% from a year ago.
There was no explicit outlook offered for the year, but some analysts pointed to positive signs, given attempts to cut costs and build a better maintenance partnership with Pratt and Whitney.
"Despite the near-term cuts, we do see some early 'green shoots' in the results around strategy and upcoming structural action being taken," JP Morgan analysts said in a note.
Wizz, founded in Hungary for eastern European travellers, expanded first into western Europe, before opening a base in Abu Dhabi six years ago, and pinning its hopes for future growth on a major expansion into the Middle East.
But it announced its exit from Abu Dhabi last week, blaming recent geopolitical instability for frequent airspace closures and disruptions, which have hit travel demand and meant there was no hope for recovery at the loss-making unit.
Investors took the move positively, with shares up soon after the announcement, but cautioned of tough competition in Eastern Europe.
"The change should improve operational performance (by moving activity out of the harsh environments). However, it means they will have to compete far more directly with Ryanair in Eastern Europe," one budget airline investor told Reuters.
