Airline shares came under pressure on Thursday after Wizz Air Holdings PLC (AIM:WIZZ) warned that an ongoing pause on Middle East flights due to the war in Iran would push its full-year net profit below previous guidance, triggering a sell-off across the sector.
The budget carrier, which is more exposed to the region than its rivals, said the conflict would result in a €50 million hit to its fiscal year 2026 net profits.
Around a third of this hit stems from the cancellation of scheduled services to the Middle East and the remainder from adverse fuel prices and currency movements linked to the Iran conflict.
As a result, Wizz said its reported net profit would fall below the guidance issued in January, which had pointed to a range of positive to negative €25 million, meaning the airline now expects a loss for the year.
Wizz Air shares fell 7.9% on the news, with the warning also weighing on rivals, sending easyJet down 1.8% and IAG 0.9%.
The warning comes amid broader uncertainty over the impact of Middle East tensions on aviation, with carriers that had resumed services to the region following earlier ceasefires now facing fresh disruption.
Analysts at Morgan Stanley have estimated that around 8% of Wizz's scheduled capacity is tied to the Middle East, compared with minimal exposure at Ryanair and easyJet, which operate almost entirely within Europe and are also more heavily hedged on fuel.
IAG faces some impact through British Airways and Iberia's long-haul Middle East services, but its exposure is spread across a much larger revenue base, limiting the damage.