Wizz Air Holdings PLC (AIM:WIZZ) shares wit hit by turbulence on Thursday, falling more than 16% to a nine-month low as the growing headwinds facing the industry appeared to be too much for investors.
The budget airline lowered its annual profit guidance after a drop in operating profit, driven largely by the effects of its flights being grounded.
Around a fifth of its planes have been unable to fly because of potential problems with engines developed by Pratt & Whitney.
In a bid to deal with these issues, Wizz Air has been forced to enter into several wet lease contracts to cover its shortfall, resulting in a €39 million one-off hit.
Russ Mould at AJ Bell said: “Fresh from being nominated ‘worst’ airline for customer service by Which?, Wizz Air has now served up a set of results that have angered investors.
“Rather than being a backlash to the unwelcome Which? trophy with travellers turning their back on the business, the problems lie with certain engines causing some of its fleet to be grounded.
“This is the latest in a string of problems for the industry, including consumers waiting until the last minute to book flights which has triggered a price war among airlines hoping to fill their planes.”
Operational issues not only caused problems for Wizz Air’s forward-looking guidance but also its results.
Revenues came in at €1.25 billion, below analyst consensus of €1.33 billion, while underlying earnings reached €44.6 million, considerably lower than the €154 million estimated by the market.
Wizz Air’s headwinds add to the industry woes highlighted by Ryanair last month, with the Irish airline having warned that demand would slump for the rest of summer.