Wizz Air profit slumps, shares dive on bleak outlook

Investing.com -- Shares of Wizz Air Holdings PLC (LON:WIZZ) plummeted on Thursday after the low-cost airline reported first-quarter FY25 results below market expectations, prompting a reduction in its profit guidance for FY25.

At 6:14 am (1014 GMT), Wizz Air was trading 11.5% lower at £1,692.8.

Wizz Air has revised its FY25 profit guidance downward to a range of €350 million to €450 million. This adjustment marks a decrease from the previously projected range of €500 million to €600 million. 

The midpoint of the new guidance is approximately 20% below the Eikon consensus of €499 million but represents an improvement over FY24's net profit of €366 million. 

The company's first quarter net profit of €1.2 million was a stark disappointment, falling well short of the Eikon consensus of €84 million and RBC Capital Markets' estimate of €59 million. 

Revenues for the first quarter totaled €1,259 million, missing UBS's estimate of €1,312 million and the consensus forecast of €1,331 million, though slightly up from €1,237 million in 1Q23. 

Ticket Revenue per Available Seat Kilometer (RASK) grew by 3.2%, falling short of UBS's projected 6%. EBIT came in at €44.6 million, significantly below UBS's forecast of €121 million and the consensus estimate of €154 million.

Operating profit also faced a severe decline, plummeting by 44% year-on-year to €44.6 million. This was significantly below the Eikon consensus of €147 million and RBC's forecast of €98 million. 

Excluding fuel costs, Cost per Available Seat Kilometer (CASK) increased by 8.2%, further straining profitability. Additionally, the grounding of 46 aircraft due to GTF issues added to operational challenges.

Additionally, net debt rose slightly to €4.83 billion from €4.79 billion at FY24. 

The revised outlook reflects challenges in unit revenue growth, with RASK (Revenue per Available Seat Kilometer) now expected to rise by a mid-single digit percentage year-on-year, down from earlier expectations of high-single digit growth.

“We think Wizz Air has strong medium-term growth credentials backed by its A321neo orderbook and exposure to faster growing Eastern European and Middle Eastern markets,” said analysts at RBC.