Wizz Air losses mount as Israel-Gaza war and Pratt & Whitney engine issues bite
Wizz Air said it had swung to a loss in the last quarter as supply chain issues at a key engine provider and costs associated with the Israel-Gaza conflict hit the bottom line.
The low-cost carrier reported a loss of £90.20m (€105.4m) in the three months to December, down from a profit of €33.5m the prior year. Operating losses increased by 16 per cent, from €155.5m to €180.4m.
Shares fell nearly 5 per cent on the announcement.
It came despite the Hungarian airline carrying a record 15.1m passengers, up 22 per cent on the year prior and helping book in revenues of €1.06bn. Earnings before interest, taxation, depreciation and amortization rose to €18.7m from a prior loss of €2.8m.
Alongside its rivals, Wizz Air has been hit by resurgent conflict in the Middle East following Hamas’s attack on Israel in November.
It revealed it had been forced to cancel six per cent of its planned capacity as the crises unfolded, adding that the conflict had caused a “spillover effect” to seasonal demand for travel in the nearby markets of Jordan and Egypt. Flights to Israel will resume in March.
Europe’s fastest growing airline has also had to contend with significant supply chain issues with its GTF engines, produced by Pratt & Whitney.
Wizz said it expects around 40 aircraft to be grounded at the end of 2024, having already grounded 33 as of January 24. It has been forced to slash capacity forecasts by 10 per cent this year as a result of the problems.
József Váradi, Wizz Air’s Chief Executive Officer, said: “Wizz Air continued to deliver industry-leading capacity growth during the third quarter, ahead of the anticipated grounding of aircraft in Q4 as GTF engines are removed for mandatory inspections.
“We have worked hard to adjust the schedule in line with updated capacity projections, focusing on seasonality and markets with the greatest potential to deliver stronger yields and optimal operational performance.”
On the violence in the Middle East, Váradi said a portion of the fleet would remain grounded this year as the carrier looked to relaunch operations in regions including Moldova and Georgia, to stimulate demand.
“Despite the associated flight cancellations and redeployment of capacity at short notice, we managed operations well, delivering improved on-time performance and significantly better utilization, year-on-year,” he added.