Wizz Air shares drop as plane groundings hit profits
One of Europe’s largest budget airlines has cut its profit forecast as it grapples with the grounding of its aircraft owing to long-running engine problems, sending shares down by as much as 15% on Thursday. Wizz Air reported a sharp fall in profits in the three months to the end of June as it was hit with higher leasing costs for planes, triggering a drop in shares to their lowest levels since October. The company has been forced to lower its growth ambitions as it pays to hire spare planes to fill gaps in its flight schedules, with about a fifth of its aircraft grounded because of potential problems with their Pratt & Whitney engines. Airbus engine supplier Pratt & Whitney began recalling planes for inspections last year, amid concerns over contaminants in the powdered metal used to make their turbofan engines. Wizz was the worst-hit airline in Europe, with 46 of its 218 aircraft grounded by the end of June. On Thursday, CE József Váradi said the airline decided to lease eight aircraft to preserve its flight schedules and not cede ground to rivals during the peak summer travel months. “In March we had a miserable forecast coming out of Pratt & Whitney, showing a significant capacity decline for this summer. We took a decision to strategically protect capacity, and not to hand over markets to competitors,” he said. Wizz Air’s decision to bring in eight aircraft led to a one-off cost of E39m in the three months to the end of June, the company’s fiscal first quarter. Leasing costs are high given a global shortage of aircraft amid supply-chain problems across the aviation industry. Operating profits for the period fell to E45m from E80m a year earlier, as the airline also suffered from the cost of keeping older and less efficient planes in the air for longer. “The June quarter results missed expectations by a wide margin,” analysts Gerald Khoo, analyst at Panmure Liberum said. Wizz said it expected to return to growth next summer, adding that Pratt & Whitney was returning planes faster than expected. <br/>
https://portal.staralliance.com/cms/news/hot-topics/2024-08-02/unaligned/wizz-air-shares-drop-as-plane-groundings-hit-profits
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Wizz Air shares drop as plane groundings hit profits
One of Europe’s largest budget airlines has cut its profit forecast as it grapples with the grounding of its aircraft owing to long-running engine problems, sending shares down by as much as 15% on Thursday. Wizz Air reported a sharp fall in profits in the three months to the end of June as it was hit with higher leasing costs for planes, triggering a drop in shares to their lowest levels since October. The company has been forced to lower its growth ambitions as it pays to hire spare planes to fill gaps in its flight schedules, with about a fifth of its aircraft grounded because of potential problems with their Pratt & Whitney engines. Airbus engine supplier Pratt & Whitney began recalling planes for inspections last year, amid concerns over contaminants in the powdered metal used to make their turbofan engines. Wizz was the worst-hit airline in Europe, with 46 of its 218 aircraft grounded by the end of June. On Thursday, CE József Váradi said the airline decided to lease eight aircraft to preserve its flight schedules and not cede ground to rivals during the peak summer travel months. “In March we had a miserable forecast coming out of Pratt & Whitney, showing a significant capacity decline for this summer. We took a decision to strategically protect capacity, and not to hand over markets to competitors,” he said. Wizz Air’s decision to bring in eight aircraft led to a one-off cost of E39m in the three months to the end of June, the company’s fiscal first quarter. Leasing costs are high given a global shortage of aircraft amid supply-chain problems across the aviation industry. Operating profits for the period fell to E45m from E80m a year earlier, as the airline also suffered from the cost of keeping older and less efficient planes in the air for longer. “The June quarter results missed expectations by a wide margin,” analysts Gerald Khoo, analyst at Panmure Liberum said. Wizz said it expected to return to growth next summer, adding that Pratt & Whitney was returning planes faster than expected. <br/>
