Wizz Air is facing some turbulence.
Despite enjoying its busiest ever year of passenger traffic in 2024, the Hungarian budget carrier can’t seem to turnaround an ailing share price.
The stock is down more than 40 per cent over the last 12 months and fell a further three per cent on Monday after analysts at Panmure Liberum gave it a downgrade.
Panmure’s concerns stem from a particularly disappointing set of quarterly results last Thursday in which Wizz issued its second profit warning in six months.
The headline issues are obvious to those involved with the company. While rivals Ryanair and Easyjet have also grappled with long-running delivery delays at Boeing and Airbus, the two largest planemakers, Wizz has had other supply chain problems to worry about.
Issues with its Pratt and Whitney-manufactured GTF engines have constrained capacity for the best part of two years. Some 40 of its aircraft will be grounded through 2026 as a result, according to Thursday’s report.
Wizz Air also has massive exposure to the conflicts in Middle East and Ukraine and has been forced to axe many of its routes to the region.
The London-listed firm has sought to reassure investors that the GTF issues will be resolved, enabling it to better tap into soaring travel demand across Europe.
But Panmure’s Gerald Khoo on Monday said he had “limited” confidence in Wizz’s ability to reap the cost benefits of such a return to capacity growth.
Khoo added: “While the scale of the GTF-related groundings, and the delays in getting engines inspected, is arguably unprecedented, we sense that Wizz Air has not delivered in the areas it has a degree of control, such as ensuring that volume targets to trigger incentives were hit.”
Adding to the carrier’s woes was a significant negative foreign exchange charge in the last quarter.
Chief executive Joszef Varadi said last week that “given the current volatility in FX,” the board had approved a hedging programme to mitigate future risks.
He’ll be more worried than most – the Wizz Air founder is currently eyeing up a colossal £100m bonus, unprecedented in the London Stock Exchange’s history, if certain share price targets are met. That award looks a long way off as of today.