Wizz Air misses profit estimates, delays return of grounded jets
The company's shares plunged almost 10% in early trading.
It said existing problems had been compounded by "poorer than specified" performance of the GTF engines, leading to significantly lower time in service before needing an inspection.
Wizz has struggled in recent years to compete financially with other European carriers as it grapples with the engine challenges, with the groundings limiting its ability to increase capacity to meet demand. It has issued two profit warnings in the past year.
Wizz said it had 41 aircraft grounded due to GTF engine-related inspections as of June 30, and now expects the affected planes to return to the air in the financial year ending March 2027, a year later than previously predicted.
"Our management team has demonstrated a high degree of adaptability in recent years when faced by severe challenges, and this year will likely continue to call on that strength as we refocus our business," CEO Jozsef Varadi said in a statement.
Wizz reported an operating profit of 27 million euros ($31.8 million) for the three months to June 30, much lower than the 87 million euros projected by analysts polled by LSEG, and down 38.3% from a year ago.
ABU DHABI
Wizz, founded in Hungary for eastern European travellers, expanded first into western Europe, before opening a base in Abu Dhabi six years ago, and pinning its hopes for future growth on a major expansion into the Middle East.
But it announced its exit from Abu Dhabi last week, blaming recent geopolitical instability for frequent airspace closures and disruptions, which have hit travel demand and meant there was no hope for recovery at the loss-making unit.
Investors took the move positively, with shares up soon after the announcement, but cautioned of tough competition in Eastern Europe.
"The change should improve operational performance (by moving activity out of the harsh environments). However, it means they will have to compete far more directly with Ryanair in Eastern Europe," one budget airline investor told Reuters.
(Reporting by Joanna Plucinska in London and Shashwat Awasthi in Bengaluru. Editing by Eileen Soreng and Mark Potter)
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