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Wizz Air, a London-listed low-cost carrier, faced a significant setback last year as its profits plummeted by over 40 percent. This decline was attributed to the grounding of more than 40 of its planes due to engine issues, leading to a 26 percent drop in shares on Thursday.
The airline reported a 41.5 percent decrease in net profit for the year ending in March, amounting to €213.9 million. Higher costs and capacity constraints were major factors contributing to this decline, with maintenance, materials, and repair costs rising by almost 16 percent. Wizz Air had to hire spare planes to compensate for the grounded aircraft and extend the lifespan of older planes, which impacted its earnings despite recording a record number of passengers at 63.4 million.
The ongoing problems with Pratt & Whitney engines have hindered Wizz Air’s growth plans since the engine maker initiated recalls in 2023 due to concerns about contaminants in the powdered metal used in its turbofan engines. As a result, Wizz Air issued two profit warnings in the past financial year, making it the airline worst-hit in Europe.
Despite these challenges, József Váradi, Wizz Air’s CEO, emphasized that the airline managed to achieve profitability for the second consecutive year, attributing it to operating under unique circumstances. However, the engine issues had a significant impact on the carrier’s cost performance.
To mitigate the losses, Wizz Air negotiated a new compensation package with Pratt & Whitney, receiving undisclosed compensation for the grounded aircraft. As of March, 42 planes were grounded, with an expectation of 34 planes remaining grounded by the end of the first half of the 2026 financial year.
Váradi expressed caution regarding future guidance, citing the unpredictability of the engine recovery issue and geopolitical uncertainties. He anticipated another two to three years of disruption before most aircraft are back in operation by 2027, which he referred to as the turning point for the airline.
Despite the challenges faced, Váradi remained optimistic, stating, “2027 will be the turning year,” and highlighting the resilience of the airline amidst the turbulence.
