By Joanna Plucinska and Shashwat Awasthi
(Reuters) -Wizz Air missed first-quarter profit estimates on Thursday as the budget airline struggles with plane groundings and warned that grounded jets would return to service a year later than expected.
The company’s shares were down 3.5% by 0734 GMT.
It said existing problems with RTX-owned Pratt & Whitney engines, which caused the grounding of some planes, had been compounded by the “poorer than specified” performance of the GTF engines, leading to significantly less time in service before needing inspections.
No-one at P&W could immediately be reached for comment.
Wizz has struggled in recent years to compete financially with other European carriers as it grapples with the engine challenges. The groundings have limited its ability to increase capacity to meet demand and it has issued two profit warnings in the past year.
Wizz said it had 41 aircraft grounded due to GTF engine-related inspections as of June 30, and now expects the affected planes to return to the air in the financial year ending March 2027, a year later than previously predicted.
“Our management team has demonstrated a high degree of adaptability in recent years when faced by severe challenges, and this year will likely continue to call on that strength as we refocus our business,” CEO Jozsef Varadi said in a statement.
Wizz reported an operating profit of 27 million euros ($31.8 million) for the three months to June 30, compared with 87 million projected by analysts polled by LSEG and down 38.3% from a year ago.
NEXT GENERATION
Varadi told Reuters he was hopeful the next generation of GTF engines would not suffer some of the ongoing issues. “Towards the end of this year, Pratt & Whitney is bringing in the second version of the engine and much improved technology,” he said.
There was no explicit outlook offered for the year, but some analysts pointed to positive signs, given attempts to cut costs and build a better maintenance partnership with P&W. Still, mid-term growth goals are set to be revised down.
“Despite the near-term cuts, we do see some early ‘green shoots’ in the results around strategy and upcoming structural action being taken,” JP Morgan analysts said in a note.
Wizz, founded in Hungary, expanded first into western Europe, before opening a base in Abu Dhabi six years ago, and is pinning its hopes for future growth on a major expansion into the Middle East.
But it announced its exit from Abu Dhabi last week, blaming recent geopolitical instability for frequent airspace closures and disruptions, which have hit travel demand and meant there was no hope for recovery at the loss-making unit.
“No customer likes flying over rockets,” Varadi said, adding that demand was impacted by political events in the region, challenges to engines in the hot environment and a lack of access to lucrative India and Pakistan routes.
(Reporting by Joanna Plucinska in London and Shashwat Awasthi in Bengaluru; Additional reporting by Tim Hepher; Editing by Tomasz Janowski and David Holmes)
