Wizz Air has announced a reduction in its winter flight capacity amid rising jet fuel prices, although the budget airline remains optimistic about its long-term growth prospects. The FTSE 250 carrier informed shareholders that it would cut its planned capacity for the second half of the year by 5 percent, citing volatility stemming from geopolitical tensions and increased fuel costs. This revision comes despite a stronger-than-expected summer season.
The airline now anticipates that revenue per available seat kilometre (RASK), a critical industry metric, will remain flat in the second quarter compared to the same period last year. This represents an adjustment from a previous forecast that had expected a mild single-digit decline. Wizz Air did not offer updated financial guidance for the remainder of the year. RBC analyst Ruairi Cullinane commented that while the revenue update was encouraging, it remains uncertain whether this will lead to a full-year earnings upgrade.
Looking ahead, Wizz Air aims to nearly double its annual passenger numbers to 127 million by the end of the decade, up from 70 million currently. The airline also plans to grow its fleet from 269 aircraft to 335 and targets revenues of €10 billion by 2030. Founder and Chief Executive Jozsef Varadi emphasized the company’s focus on leveraging its low-cost operating model to improve returns by concentrating growth in core and emerging markets, enhancing fleet productivity, maturing its route network, and maintaining operational discipline.
The airline industry as a whole continues to face significant challenges linked to increased fuel expenses, exacerbated by the ongoing US-Iran conflict. Several carriers have responded by scaling back capacity to protect margins. For example, Latvia’s national airline AirBaltic entered bankruptcy protection this week to restructure amid a worsening liquidity crisis. Similarly, Ryanair, Europe’s largest short-haul airline, recently reduced its winter schedule, warning that soaring fuel costs pose a threat to the viability of less financially robust competitors. While full-service airlines have generally demonstrated greater resilience, even major U.S. carriers have curtailed flights due to cost pressures.
Wizz Air stands out as relatively well-positioned, with over €2.2 billion in liquidity and hedging arrangements covering 80 percent of its fuel requirements for the next year at prices approximately half of current market rates. However, the airline has faced other setbacks in recent years, including exposure to the war in Ukraine—its primary market as a Hungarian-based carrier—and technical issues that led to grounding about 20 percent of its fleet due to Pratt & Whitney engine problems. In addition, Wizz Air exited the Gulf market by discontinuing flights to Abu Dhabi last July, ending its ambitions for expansion into the Middle East.
As Europe’s third-largest low-cost carrier after Ryanair and easyJet, Wizz Air remains under pressure in the financial markets. More than 10 percent of its shares are held by short sellers betting on a continued decline in value. Despite this, the airline’s stock rebounded in recent trading, rising by 3.4 percent after a prolonged five-year slump that saw share prices tumble nearly 80 percent.