Wizz Air: war causes annual profits to plummet
The crisis is costing €50 million, despite 84% coverage against fuel price risks until the end of the year. There will be no increase in ticket prices
The conflict in Iran is weighing on Wizz Air’s accounts; the Hungarian low-cost carrier has been forced to cut its full-year profit by €50 million, almost wiping out its profit for the period, whilst promising to capitalise on market turbulence to drive growth. Net profit fell to €2.2 million in the year ending in March, compared with €225.8 million the previous year. The company stated that it was unable to provide forecasts for this year, given “poor seasonal visibility, uncertainty linked to the ongoing conflict in Iran and the closure of the Strait of Hormuz”. Revenue of €5.69 billion was slightly below forecasts.
Wizz Air shares rose by more than 6% in London.
The impact of the war in Iran is roughly 40% due to soaring fuel prices and the blockage and reallocation of capacity in the Middle East, and 20% due to consumers choosing different destinations and booking closer to the departure date, explained CEO Jozsef Varadi.
“We see this kind of change in booking patterns for about four or five months before the market stabilises in terms of booking behaviour,” added Varadi. “People get used to everything.”
The conflict in the Middle East has driven up the cost of aviation fuel, which in turn has hit the profits of many airlines ahead of the summer peak season. The rise in prices has led to higher fares, discouraging consumers from booking flights.
