- First quarter squeezed by rising costs and airports chaos
- Budget airline plans to cut plane use by another 5% this summer
- Anticipates ‘material’ operating profit in the second quarter
Shares in Wizz Air (WIZZ:AIM) fell sharply after the European budget carrier said it expects to report a loss in its first-quarter earnings and revealed plans to cut aircraft usage during the key summer travel season as chaos at airports continues.
In a trading update, Wizz Air announced that it will post a quarterly operating loss of €285 million, citing flight disruptions, rising fuel costs, and negative effects from an uptick in the strength of the US dollar against the euro.
On a net basis, the first-quarter loss is expected to hit €450 million.
The strengthening dollar, a consequence of investors seeking safe currencies as recession fears grow, saw Wizz Air run up a €136 million foreign exchange loss.
AIRCRAFT FLEET USE TO BE CUT
The company also flagged that it may lower its aircraft usage this summer by an extra 5% in a bid to reduce the impact of a recent increase in labour actions and staff shortages at airports across Europe.
‘To be able to avoid cancellations and secure a more punctual operation to our customers, we have further improved the agility and resilience of our network including adjusting schedules where we have seen a higher occurrence of issues,’ Wizz Air said in a statement.
The company warned that it faces a ‘challenging macro and operational backdrop’, but said it still plans to make a ‘material’ operating profit in the second quarter thanks to higher fares and solid summer passenger demand.
Wizz Air shares fell nearly 4% on 11 July to £17.89, meaning that the stock has lost more than 40% since the end of May. Rival airlines EasyJet (EZJ) and BA-owner International Consolidated Airlines (IAG) have also seen their shares prices hammered in recent weeks, down 31% and 20% respectively, since the end of May.
Wizz Air will release its full first-quarter results on 27 July.
