Wizz Air cuts FY profit guidance as disruption, fuel prices take toll

Low cost European airline Wizz Air cut its full year profit forecasts as it blamed “unprecedented” disruptions, higher fuel prices, air traffic control strikes and congested airports.

The company said full year net profit would now come in between €270m-€300m compared to a previous forecast of €310m - €340m. Higher fuel costs were expected to hit results by around €80m.

On the back of the rising fuel price in the first half the company trimmed second half capacity growth to 14% from 18%. It added that second half yields were “responding well” and tracking 7% higher than last year with load factors also higher.

Wizz said interim pre-tax profits fell 1.7% to €295.5m as the company absorbed a loss on the closure of its tour business.

Revenues soared 20% to €1.3bn on the back of a similar rise in passenger numbers to 18.8m. EBITDAR rose 2.7% to €505.5m.

Analysts at RBC Capital Markets said Wizz shares could double by 2021, "so worth wading into a short-term adverse momentum current".

"Wizz has scope to grow the market in a generally under-penetrated Central Eastern European (CEE) airline market, with potential to also take CEE legacy share (5%-31% in six key cities) if legacies struggle with cost inflation," the broker said in a note to clients.

"The company has market and revenue base diversity with no country greater than ~14% in full year 2018. Wizz has opportunity to deliver lower risk profit gains as it thickens-up service on existing routes. Wizz enjoys competitive advantages we think are hard to replicate which suggests any CEE consolidation would also require Wizz to be subject to a merger and acquisition premium, in our view."