Wizz Air Holdings PLC (AIM:WIZZ) impressed investors with solid quarterly results but continues to be viewed in a bearish light by Citi, which cut its forecasts as intensifying competition from Ryanair this summer could put pressure on fares and weigh on profits.
Analysts said that while the FTSE 250 airline's revenue per seat held steady this year despite 10% capacity growth, next year’s planned 20% expansion comes at a more challenging time.
Schedule data suggests Ryanair is stepping up growth on Wizz’s key routes, raising the risk of price cuts.
Ryanair’s larger network, lower unit costs and stronger balance sheet all give it an advantage, Dwyer said. Ryanair operates on 16% of Wizz’s network, compared with Wizz’s presence on just 6% of Ryanair’s.
The bank is now forecasting a 1.2% fall in unit revenue for Wizz in the 2027 financial year and has cut its earnings forecast by nearly half compared with consensus, expecting EBIT of €175 million for the year, with flat margins.
While some improvement in Wizz’s costs is expected, lower gains from sale-and-leaseback transactions and reduced engine compensation are likely to offset the benefit.
The bank reiterating a 'sell' rating and 810p price target.
Deutsche Bank, meanwhile, kept a 'hold' rating, and UBS reiterated a 'buy'.
Wizz shares were down 0.8% to 1,424p on Friday, after climbing over 7% on the previous day's results, and continuing the recovery from November's multi-year lows below 1,000p.