Join our community of smart investors

Wizz Air cuts profit forecasts

The Eastern European airline cut profit forecasts on the back of rising fuel prices
November 8, 2018

Eastern European airline Wizz Air (WIZZ) has spent recent years ramping up capacity, so far relatively uninterrupted. Rising oil prices have begun to change that. The airline has cut its capacity expansion plans from an 18 per cent increase to 14 per cent during the second half, and so far this has helped to boost yield and load factor. However, it also prompted a cut in full-year net profit guidance to between €270m (£235m) and €300m, from €310m and €340m. Cost per available seat kilometre (ASK) increased 6.4 per cent to 3.33¢ after a higher fuel bill added around €80m to costs in the first-half.

IC TIP: Buy at 2783p

Chief executive József Váradi expects higher costs arising from more expensive fuel to put pressure on competitors who haven’t been so prudent in managing expenses, and will likely result in further “capacity rationalisation” in the market. Mr Váradi said “unprecedented disruptions” caused by air traffic controller strikes, take-off slot constraints, and heavily congested airports amplified such issues over the period. Still, it didn’t stop Wizz Air from reporting record profits for the first-half, up 1.2 per cent to €292m.

Analysts at Goodbody expect EPS of 238¢ during the year to March 2019, compared with 217¢ the prior year.

WIZZ AIR (WIZZ)   
ORD PRICE:3,054pMARKET VALUE:£2.22bn
TOUCH:3,028-3,129p12-MONTH HIGH:3,825pLOW: 2,300p
DIVIDEND YIELD:nilPE RATIO:9
NET ASSET VALUE:2170¢NET CASH:€1.16bn
Half-year to 30 SepTurnover (€bn)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
20171.15301445nil
20181.38296402nil
% change+20-2-10-
Ex-div:na   
Payment:na   
£1=€1.15