A popular budget airliner used by millions of Brits for their holidays has seen its shares nosedive after admitting that 20 per cent of all their planes were currently grounded due to engine problems.
Wizz Air ran more than 63 million flights through the UK last year, connecting with major holiday hotspots like Spain, Greece, and Italy. But their profits plunged 62 per cent to £141 million due to two major problems, one being the ongoing conflicts in two of their other major destinations – Israel and Ukraine.
The other is that around 40 of their aircraft have been grounded as a result of issues affecting the engines of some Airbus planes worldwide, leaving a fifth of Wizz’s moneymakers in the hangar. Consequently, the low-cost airlines’ stock values tumbled to 1207p, down from a 2021 peak of 5500p.
More than 12 million Brits used the budget airline in the past year for their foreign getaways, with the airline seeing growth in the UK market. However, struggling against significant headwinds, Wizz Air has been forced to issue two profit warnings in the last 12 months.
Chief executive Jozsef Varadi told the Mail: “Wizz Air is a more resilient business today. Despite the unproductivity of a grounded fleet, we successfully delivered a second year of profitability.
“We have the benefit of more than a year of experience operating under unique circumstances – conditions airlines would never experience when demand exceeds supply.”
The budget airline’s plummeting profits and share price will be of concern for airports across the UK. Wizz Air runs routes from major international hubs like Luton and at wider regional airports in Liverpool, Birmingham, Doncaster, Aberdeen, and Edinburgh.
Wizz is unlikely to return to plain sailing soon either, with long delays to have the engines of its Airbus fleet checked and serviced reaching 300 days and likely to continue into 2027.
Problems began in 2023, when the manufacturer recalled some engine models over concerns that powdered metal had contaminated the manufacturing process.
Yet, the airline’s boss said the company had reached a “transformation point” with the issue. Despite having 44 of its 200 aircraft affected, they now expect to have reduced this number to 37 by September, missing the summer rush.
With Wizz Air being one of the worst-affected airlines in Europe, the business has managed to secure a compensation deal from Pratt & Whitney, which made the engines for Airbus. Varadi said this mitigated “some, but not all, of the operational and financial impacts on the business.”
Russ Mould, investment director at AJ Bell, commented: ‘The airline described its past year as “resilience and transformation”, whereas the market reaction suggests “awful” might be a better word.
‘Wizz used to be the aggressive growth player, with talk that it tried to buy Easyjet in 2021. The tables have turned and it is being left behind.
‘With shares at a fraction of their peak, failure to resolve its problems could see Wizz turn from predator to prey.’