Wizz Air's annual profit down over 61%, CEO blames grounded planes

Wizz Air reported an annual operating profit of 167.5 million euros, a 61.7% decrease year-over-year and below analyst expectations of 246 million euros, due to capacity constraints from grounded planes related to RTX-owned Pratt and Whitney engine repair issues. CEO Jozsef Varadi cited these unique circumstances, while the company declined to provide guidance for 2026, citing limited visibility and expecting engine repair challenges to persist for another two to three years. Wizz Air's shares have fallen over 30% in the last year, making it the worst-performing European airline stock.

Analysis

Wizz Air's financial performance for the year ending March 31st has significantly underperformed expectations, with reported annual operating profit of 167.5 million euros, a stark 61.7% decline year-over-year and considerably below the 246 million euros consensus forecast. This underperformance is primarily attributed to persistent capacity constraints stemming from grounded aircraft due to ongoing repair issues with RTX-owned Pratt and Whitney engines, a challenge CEO Jozsef Varadi acknowledged has created unique operating conditions where demand outstrips available supply. The company has refrained from issuing financial guidance for 2026, citing limited visibility, and anticipates these engine-related disruptions will continue to impact operations for another two to three years. This operational uncertainty is reflected in Wizz Air's share price, which has fallen by over 30% in the last year, positioning it as the worst-performing stock among its European airline peers. While the broader European airline sector has benefited from lower fuel prices, it also faces headwinds from delivery delays and concerns over post-COVID demand sustainability, compounding the challenges for Wizz Air.

Key Decisions for Investors

• Investors should exercise caution due to Wizz Air's significant earnings miss and the expectation that RTX engine-related capacity constraints will persist for another two to three years, directly impacting future profitability and operational stability.
• The absence of 2026 financial guidance underscores a high degree of operational uncertainty, making it prudent to closely monitor for any resolution timelines on engine issues and subsequent updates to capacity outlook before making or adjusting investment positions.
• Considering Wizz Air's shares have declined over 30% in the past year, significantly underperforming European airline peers, investors should reassess their exposure, weighing the prolonged operational challenges and lack of near-term catalysts against any perceived valuation discount.