Wizz Air Profit Slumps, Shares Dive on Bleak Outlook

Shares of Wizz Air Holdings PLC experienced a significant drop on Thursday after the low-cost airline reported its first-quarter FY25 results, which fell short of market expectations. This led to a downward revision of its profit guidance for the fiscal year.

As of 6:14 am (1014 GMT), Wizz Air’s shares were down 11.5% at £1,692.8.

The company has adjusted its profit guidance for FY25 to a range between €350 million and €450 million, down from the previous forecast of €500 million to €600 million. The midpoint of the revised guidance is approximately 20% below the Eikon consensus estimate of €499 million, although it reflects an improvement compared to FY24’s net profit of €366 million.

In its first quarter, Wizz Air reported a net profit of only €1.2 million, significantly missing the Eikon consensus of €84 million and RBC Capital Markets’ estimate of €59 million. First-quarter revenues stood at €1,259 million, also below UBS’s estimate of €1,312 million and the consensus forecast of €1,331 million, although it showed a slight increase from €1,237 million reported in the same quarter last year.

Ticket revenue per available seat kilometer (RASK) increased by 3.2%, falling short of UBS’s projected growth of 6%. Earnings before interest and taxes (EBIT) amounted to €44.6 million, well below UBS’s forecast of €121 million and the consensus estimate of €154 million.

Operating profit saw a steep decline of 44% year-on-year, hitting €44.6 million, which was significantly under the Eikon consensus of €147 million and RBC’s forecast of €98 million. Furthermore, excluding fuel costs, the cost per available seat kilometer (CASK) rose by 8.2%, putting further pressure on profitability. The grounding of 46 aircraft due to GTF issues compounded these operational challenges.

Additionally, net debt saw a slight increase to €4.83 billion from €4.79 billion at the end of FY24. The revised outlook indicates challenges in unit revenue growth, with RASK now expected to increase by a mid-single-digit percentage year-on-year, compared to earlier expectations of high-single-digit growth.

Analysts at RBC noted that despite these challenges, Wizz Air possesses strong medium-term growth prospects, bolstered by its A321neo order and its presence in the rapidly expanding Eastern European and Middle Eastern markets.