Wizz Air cuts profit forecast as groundings threaten growth plans
Wizz Air has cut its annual profit forecast as the low-cost carrier is hit by an “unprecedented operational challenge” and geopolitical uncertainty. The London-listed airline on Thursday said it would be forced to ground 45 of its roughly 200 planes because of potential problems with their Pratt & Whitney engines. József Váradi, CE, said the company expected to be compensated by the engine maker for its direct financial losses, but was facing an “unprecedented operational challenge” that could last 18 months as the engines are removed for inspections amid concerns over contaminants in the powdered metal used to make the turbofan engines. “I don’t think the industry has ever gone through this,” he said. “This is new territory. But we think we are ready for it. We will be covered for the financial losses but we have to still protect capacity and remain intact as a competing force.” Wizz has tried to contain the worst impact of the groundings by using its remaining aircraft more intensively and extending leases, while it has also continued to take deliveries of new Airbus planes. But the engine problems will hit the airline’s ambitious growth plans, with flight schedules in the year beginning March 2024 forecast to be “at similar levels” to the current year. “While the group is offsetting the headwind as best it can . . . it is not enough to maintain expansion, and a lower number of operating aircraft will mean numbers have to come down,” said analysts at Bernstein. Wizz said it expected to report a net profit for the current financial year of between E350m and E400m, down from guidance in June of E350m to E450m. Other airlines have also faced supply chain problems, including delays in the deliveries of new aircraft. Ryanair, Wizz’s rival in the European low-cost market, has said it is concerned its summer season next year could be hit by delays in receiving new aircraft from Boeing. Váradi said the narrowed guidance was also down to geopolitical uncertainty and war in the Middle East. Wizz has suspended flights to Israel, which account for 5-6% of its flight schedules, and reported a slowdown in sales to neighbouring countries.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-11-10/unaligned/wizz-air-cuts-profit-forecast-as-groundings-threaten-growth-plans
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Wizz Air cuts profit forecast as groundings threaten growth plans
Wizz Air has cut its annual profit forecast as the low-cost carrier is hit by an “unprecedented operational challenge” and geopolitical uncertainty. The London-listed airline on Thursday said it would be forced to ground 45 of its roughly 200 planes because of potential problems with their Pratt & Whitney engines. József Váradi, CE, said the company expected to be compensated by the engine maker for its direct financial losses, but was facing an “unprecedented operational challenge” that could last 18 months as the engines are removed for inspections amid concerns over contaminants in the powdered metal used to make the turbofan engines. “I don’t think the industry has ever gone through this,” he said. “This is new territory. But we think we are ready for it. We will be covered for the financial losses but we have to still protect capacity and remain intact as a competing force.” Wizz has tried to contain the worst impact of the groundings by using its remaining aircraft more intensively and extending leases, while it has also continued to take deliveries of new Airbus planes. But the engine problems will hit the airline’s ambitious growth plans, with flight schedules in the year beginning March 2024 forecast to be “at similar levels” to the current year. “While the group is offsetting the headwind as best it can . . . it is not enough to maintain expansion, and a lower number of operating aircraft will mean numbers have to come down,” said analysts at Bernstein. Wizz said it expected to report a net profit for the current financial year of between E350m and E400m, down from guidance in June of E350m to E450m. Other airlines have also faced supply chain problems, including delays in the deliveries of new aircraft. Ryanair, Wizz’s rival in the European low-cost market, has said it is concerned its summer season next year could be hit by delays in receiving new aircraft from Boeing. Váradi said the narrowed guidance was also down to geopolitical uncertainty and war in the Middle East. Wizz has suspended flights to Israel, which account for 5-6% of its flight schedules, and reported a slowdown in sales to neighbouring countries.<br/>
