Wizz Air shares drop as airline downgrades profit outlook

Wizz Air (LSE: WIZZ) saw its share price fall by over 7% on Thursday, after the Hungary-based budget airline lowered its full-year profit guidance for the 12 months ending March 2023. This overshadowed Wizz Air swinging to a first-half pre-tax profit of €450.2 million, from a loss of €389.7 million a year earlier.

The downgrade came despite Wizz Air reporting a 39% jump in revenue to €3.05 billion in the six months to September 30, up from €2.19 billion last year, as passenger numbers improved. Wizz Air’s load factor, a measure of how full planes are, also rose to 92.6% from 86.9% a year ago. However, this remains below the 95% seen in the first half of financial 2020, before the pandemic disrupted travel.

Wizz Air chief executive Jozsef Varadi said the airline delivered ‘significantly improved operational performance compared to last year’, with fewer cancellations and better fleet usage. He said demand remained robust in both established and new markets, allowing Wizz Air to continue adding frequencies and capacity in areas like the Middle East.

Looking ahead, Wizz Air expects its full-year net profit for the 12 months ending March 2023 to be between €350-€400 million, downgraded from previous guidance of up to €450 million. The airline cited ‘macro environment uncertainty’ and ‘difficult operating conditions’ for the downgrade. Its load factor is expected to remain above 90% for the full financial year.

Wizz Air shares have fallen around 20% over the last 12 months. The downgrade adds to a difficult 2022 for airlines globally, as rising inflation, higher fuel costs, and airport disruption have put pressure on the sector. However, Wizz Air swinging back to first-half profit will provide some optimism after widespread losses during the pandemic.

The airline said it would continue monitoring conditions but remains focused on delivering profitable growth over the long-term. Investors will be hoping the demand environment improves to allow Wizz Air to return to upgrading guidance.