Wizz Air's near-term revenue dips and Iran war clouds outlook
Wizz Air Faces Revenue Challenges Amid Middle East Conflict
By Raechel Thankam Job and Joanna Plucinska
June 11 (Reuters) - Budget airline Wizz Air forecast lower revenue per available seat kilometre for the fiscal first quarter on Thursday as the Iran war disrupts the airline industry and complicates forecasting.
Operating Profit and Market Performance
Its operating profit, however, beat analyst expectations, driving up the share 4.3% by 0758 GMT, making it briefly the best performer on the FTSE midcap index.
Impact of Middle East Tensions on Operations
The company, based in Hungary, did not provide fiscal 2027 guidance, citing the situation in the Middle East and the protracted closure of the Strait of Hormuz that has forced Wizz Air to suspend routes, accounting for about 5% of its overall seat capacity.
"No one is guiding, so we are not guiding either," Varadi told Reuters in an interview.
Revenue Per Available Seat Kilometre (RASK) Outlook
The airline expects first-quarter RASK, an industry gauge of sales, to fall by a mid-to-high single-digit percentage in the three months to the end of June, before stabilising to roughly flat in the second quarter to September.
Financial Results for Fiscal Year Ended March 2026
For the year ended March 31, 2026, Wizz Air reported an operating profit of €139.7 million ($161.3 million), beating analysts' expectations of €88.51 million, according to data compiled by LSEG.
Strategic Responses to Market Conditions
Capacity Adjustments and Promotional Efforts
Since warning of a net loss from the war impact in March, Wizz Air has added capacity to existing and new routes and increased promotions to support leisure demand in the crucial summer holiday season.
Price Cuts and Target Destinations
It has cut prices for budget travellers on routes with lower demand, particularly to destinations such as Cyprus and Egypt.
Analyst Perspectives and Future Capacity Plans
Bernstein analyst Alex Irving said the airline's capacity prospects might be too optimistic.
"What really took us by surprise is the plan to persist with high levels of capacity growth into H2," he said.
Varadi justified his decision, saying he expects airlines to pull out of some markets after the busy northern hemisphere summer. Wizz Air would then be able to enter them with its added capacity.
"You're going to have a lot of airlines taking capacity out, maybe some airlines fail, and as a result, significant market opportunities will get created," he said.
Additional Information
($1 = 0.8662 euros)
(Reporting by Raechel Thankam Job in Bengaluru and Joanna Plucinska in London; Editing by Mrigank Dhaniwala and Barbara Lewis)
