Wizz Air Shares Fall 6.8% Due to Slower Fleet Delivery Growth

Wizz Air shares experienced a 6.8% decline on Wednesday following the release of its traffic figures for September 2024, coinciding with the company’s Capital Markets Day.

Investor sentiment appeared to be affected by concerns regarding a decrease in load factors for September as well as challenges related to fleet expansion and profitability.

In its September traffic report, Wizz Air announced that it transported 5.76 million passengers, which reflects a year-on-year increase of 3.9%, alongside a 4.8% increase in seat capacity to 6.28 million.

The airline’s load factor saw a slight decrease, falling to 91.7% from 92.4% the previous year. Despite setbacks from Pratt & Whitney engine-related groundings impacting capacity, the airline achieved its highest passenger growth rate of the year.

However, the insights shared during Wizz Air’s Capital Markets Day raised some investor concerns.

According to a note from Morgan Stanley, while the airline’s long-term growth potential remains optimistic, the anticipated pace of fleet deliveries is expected to be slower than previously thought. The company is projecting a fleet growth rate of 15% for the fiscal years 2025-2028, which is below the contracted growth rate but still anticipates a 25% increase in seat capacity over the same period.

Morgan Stanley noted, “One of the key concerns investors have for Wizz is the pace of growth. The company noted that while its contracted fleet suggests a considerable increase in capacity in the next three years (19%, 27% including 40-45 planes re-entering the fleet), slow aircraft deliveries may result in lower than expected fleet growth.”

The airline also indicated that FY25 profit margins could experience a potential 4.5 percentage point decline due to indirect costs associated with engine problems and other operational challenges.

Furthermore, Wizz Air hinted at a possible transition to a blended aircraft financing model, which would combine ownership with leasing.

While the company remains focused on expanding its presence in Central and Eastern Europe, investor caution has led to a decrease in share price. Morgan Stanley highlighted that slowing fleet growth and rising costs could create pressure on profit margins in the near future.