Wizz Air Holdings PLC (AIM:WIZZ) the budget airline, posted over a 50% jump in first-quarter revenues, but shares in the group dropped by around 3% in early trading, reflecting investor’s caution towards the industry despite strong signs of recovery.
Sales of €1.2 billion in the first three months of the 2024 financial year jumped from €808 million in 2023, helping Wizz Air turn an underlying profit of €236 million compared to a loss of €154 million twelve months earlier, a company statement revealed.
Maintaining its full-year net profit forecast and bringing in a record number of passengers during the quarter, it is difficult, as is for rivals Ryanair and EasyJet, to see this summer as anything but a win for airlines.
However, in the last month, the London-listed firm has tumbled more than 18% and Victoria Scholar, head of investment at Interactive Investor, believes “investors remain cautious towards the stock”.
“There was investor anger at this week’s annual meeting over chief executive Jozsef Varadi’s £100 (million) bonus package with more than 25% of shareholders rejecting the proposals. Wizz Air was also voted the worst airline in Britain in a recent Which? survey of UK passengers this year,” she said.
Guidance for capacity growth was lowered from 30% to 25%, at risk in the first half due to engine inspections and industry infrastructure constraints, which Liberum thinks could also dent second-half forecasts.
Liberum maintained its ‘sell’ rating on the airline and targets a 2,200p share price—current shares are trading at a little over 2,3000p on Thursday.
“There may be short-term share price pressure from the lack of an upgrade, given the upgrades seen at other airlines this quarter,” the UK broker added.