European budget carrier Wizz Air on Thursday narrowed its annual profit forecast below analyst expectations, citing continuing macroeconomic uncertainty and difficult operating conditions, sending its share price down 6.3%.
European airlines have reported strong results this quarter but have warned of a murky outlook as jet fuel prices, supply chain issues and a lack of economic clarity weigh.
Wizz Air was also one of the main airlines hit by issues with RTX engines this year and had said it would face a capacity reduction as a result.
That knocked its net income guidance for the financial year to between 350 million euros and 400 million euros ($374.7 million to $428.2 million), down from 350 million to 450 million euros.
The guidance reflects expectations for the second half of its financial year to March 31 in the face of macroeconomic uncertainty and difficult operating conditions from an infrastructure and security perspective, Chief Executive Jozsef Varadi said in a statement.
"While the proportion of the European short-haul fleet that is grounded is small, this should have a noticeable impact on competition and therefore pricing in summer of 2024," said Jamie Lindsay, an investor at Artemis Investment Management.
"It looks likely that the impact will continue well into next summer."
BOUNCING BACK
The budget carrier posted operating profit of 522.9 million euros ($559.8 million) for the six months to Sept. 30, compared with a loss of 63.8 million euros a year earlier.
"Our revenue and profit results reflect the higher volumes we now operate and the enormous amount of work and investment over the past three years," Varadi added, saying that forward bookings were strong.
The airline said it was on track to receive a delivery of 21 Airbus 321 neo planes by the end of the 2024 financial year and that it had secured compensation from RTX over the need to inspect engines on its planes.
"The bigger issue is really how to complete the engine inspection program with the least degree of disruptions to the operation," Varadi told Reuters, adding that they expected 45 aircraft to be grounded at the start of 2024 and that growth would be limited.
Aerospace supplier RTX said in September that 600 to 700 geared turbofan engines (GTF) will have to be removed for quality checks that are likely to result in some of its aircraft being grounded.
($1 = 0.9341 euros)
(Reporting by Joanna Plucinska in London and Yadarisa Shabong in Bengaluru; Editing by Savio D'Souza, David Goodman and Sharon Singleton)
