Wizz Air is cutting capacities due to high kerosene prices and raising its earnings forecast
The low-cost airline is reacting to skyrocketing fuel prices, while investors remain optimistic thanks to strong summer numbers.
Quick Look
- Due to skyrocketing kerosene prices as a result of the Iran war, the Hungarian low-cost airline Wizz Air is cutting its capacity by five percent.
- At the same time, the short-term earnings forecast was raised after a strong summer, sending the stock higher.
AI-generated summary
Why It Matters
The Iran war is leading to rising jet fuel prices, putting airlines worldwide under pressure.
Budapest. The skyrocketing fuel prices due to the Iran war are forcing the low-cost airline Wizz Air to step on the brakes. The Hungarian airline announced on Thursday that it would cut its planned capacity for the second half of the financial year by five percent.
Investors were unimpressed, however, as the company simultaneously raised its short-term earnings forecast after a strong summer: the share price rose by more than three percent. Wizz Air now expects sales in the July to September period to be at the previous year's level instead of a decline in the low single-digit percentage range.
The Iran war plunged the global aviation industry into its worst crisis since the corona pandemic due to increased kerosene prices. The Latvian airline airBaltic was the first European airline to file for bankruptcy this week. Major US airlines have also already reduced their flight schedules to secure income.
Meanwhile, Wizz Air is trying to convince investors of its ultra-low-cost business model with new long-term goals. The airline wants to achieve sales of ten billion euros and an operating margin of ten percent by the 2030 financial year, the company announced. The fleet should grow to 335 aircraft and the number of passengers should increase to 127 million. The fleet currently consists of 269 aircraft and transported 69.7 million passengers in the last financial year.
What to Watch
AI outlook — possibilities, not facts
Wizz Air is cutting planned capacity for the second half of the financial year by five percent.
Very likely · Within months
Open Questions
- How long will kerosene prices remain high?
- Will more airlines have to cut capacity?
