Wizz Air (WIZZ.L) reported a larger-than-expected operating loss in the third quarter, primarily attributed to engine inspections grounding parts of its fleet and flight suspensions due to Middle East conflicts.
Despite these challenges, the airline maintained its fiscal 2024 net income projections following a positive start to the fourth quarter ending in March, although its shares dipped over 6% at 0910 GMT.
While other European airlines have posted strong results due to robust travel demand, the industry’s future outlook remains uncertain due to geopolitical instability, soaring jet fuel costs, and economic unpredictability.
Wizz Air was notably affected by issues with RTX (RTX.N) engines, resulting in a capacity reduction.
The airline confirmed that it would not deviate from its plan to ground 40 aircraft by the end of the 2023-24 financial year, with capacity remaining stagnant into the 2024-25 financial year.
In the third quarter ending on December 31, Wizz Air reported an operating loss of 180 million euros ($196 million), surpassing last year’s third-quarter loss of 155 million euros, primarily due to flight cancellations. Analysts had anticipated a loss of 93 million euros, according to an LSEG poll.
Jozsef Varadi, the Chief Executive of Wizz Air, acknowledged the impact of the Israel conflict and suspension on financial performance in the last quarter but reiterated their expectations for net income in fiscal year 2024.
The airline intends to resume routes to Israel in March, contingent on the development of security conditions in the Middle East and the returning demand.
Wizz Air’s shares had previously experienced a substantial drop at the end of the previous year but showed signs of recovery in early 2024, only to decline again in response to the third-quarter results.
These shares are currently trading at six times the forecasted earnings for the next 12 months, lagging behind budget rivals like easyJet (EZJ.L) and Ryanair (RYA.I).
Varadi expressed optimism regarding the fourth quarter’s performance and commended the airline’s efforts in mitigating external risks, despite having to navigate challenges related to engine problems and regional conflicts.
Wizz Air continues to monitor the dynamic situation, hoping for improved conditions in the aviation industry.