Wizz Air Holdings PLC (AIM:WIZZ)’s decision not to buy aviation fuel in advance poses a risk, Barclays analysts have warned.
Given a marked 20% increase in the price of kerosene – used in jet fuel - over the past month, Wizz may suffer from higher costs.
“Wizz's fuel hedge structure offers almost no protection to the recent rise,” the bank said.
To make matters worse, potential recalls of Pratt & Whitney-powered A320neos could also pose a hit to the FTSE 250-listed airline.
“We see serious risk from the geared turbofan issue,” Barclays added, after Wizz acknowledged in first-quarter results that its targeted 30% rise in second-half capacity could be affected.
Given the risks, Barclays slashed Wizz’s share price estimates from 2,600p to 2,150p – a potential fall of 7% on Thursday’s close.