(Bloomberg) -- Wizz Air Holdings Plc fell the most since the early days of the pandemic after the budget airline cut its profit outlook for the year, hurt by aircraft groundings during the busy summer travel season.
The stock dropped as much as 18%, the biggest intraday decline since March 2020, when Covid-19 began rippling through the global economy. The stock has declined about 26% in value so far this year.
“We have been struggling with a number of supply-chain issues, most notably our engines that are impacted significantly,” Chief Executive Officer Jozsef Varadi said on Bloomberg TV. “This is not an overnight fix, this is going to take years.”
Wizz is among the carriers that’s been hardest hit by a more-recent engine issue that’s required its Airbus A321 aircraft to be pulled in early for maintenance. Varadi said he expects it will take two to three years for the situation to be fully under control.
The Hungary-based airline now expects net income in a range of €350 million ($378 million) to €450 million for fiscal 2025, down from a previous estimate of €500-€600 million, the company said Thursday in a statement.
With aircraft availability uncertain, the airline has leased flight-ready planes to preserve its schedule, cutting into profit, Varadi said. Still, he cited progress with engine supplier Pratt & Whitney.
“We wanted to make sure that we strategically protect capacity and we don’t hand over markets to competitors,” Varadi said on a call. The engine situation has improved and Wizz “took a position to phase out all the wet lease operations by the end of this summer.”
Operating profit for the first quarter fell to €44.6 million from €79.9 million in the same period last year, as wet-leasing costs ballooned to €39 million.
At the end of June, Wizz had 46 aircraft grounded due to the engine problems, the company said. The expected peak, in September next year, will be 47 groundings, slightly lower than the 50 it previously forecast.
Aircraft delivery delays from Airbus could also have an impact on Wizz’s fleet plans over the coming years, with as many as 35 jets delayed from fiscal 2026, the airline said. Varadi added that the delays are “not fundamentally disrupting” operations.
Wizz is the last of the major European airlines to report earnings for the quarter. Through Wednesday, the stock had fallen about 13% this year, compared with a 23% decline at Ryanair Holdings Plc and a 12% drop at EasyJet Plc.
--With assistance from Anna Edwards and Tom Mackenzie.
(Updates with shares, CEO comments)
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