The fast-growing low-cost carrier is blaming higher fuel prices for an estimated €80 million hit on net profit.
The fast-growing low-cost carrier Wizz Air has slashed its full-year profit forecast by 21%, blaming higher fuel prices for an estimated €80 million hit, the news agency Reuters reports.
Full-year net profit for the 12 months to March 31, 2019 is now expected at between €270 million and €300 million, down from the earlier estimate of €310 million to €340 million.
But the largely central and eastern European airline insists it is better positioned to cope with rising costs than many of its rivals, pointing to the ongoing arrival of new fuel-efficient aircraft.
“I don’t think that the high fuel price environment is necessarily a structurally bad thing for Wizz Air,” CEO Jozsef Varadi tells Reuters.
“It helps the market consolidate and makes the stronger airlines even stronger.”
Tough for airlines
Aircraft fuel prices are around 23% higher than they were a year ago, already contributing to the bankruptcy of European carriers like Primera Air and Cyprus-based Cobalt Air.
Bigger airlines are cutting their forecasts and outlook, such as Ryanair and easyJet.
Wizz says that in the short term it will compensate by reducing other costs – as well as lowering capacity growth in the second half from a planned 18% to 14%.
Industry analysts seem to agree the airline’s outlook remains solid.
“While the pull-back in the full-year guidance is disappointing, second-half guidance is in line and the strong pricing momentum is impressive,” a Goodbody analyst tells Reuters.
The carrier will take delivery of its first A321neo in early 2019 – bigger planes that burn 16% less fuel. By the end of its next financial year it will operate 12 of them.