Wizz Air Reports Mixed Results Amid Operational Challenges
Why we think this is bad
The airline's performance presents a mixed bag, but leans towards negative territory. While revenue grew by 3.8% to €5,267.6 million, the operating profit took a significant hit, plummeting by 61.7% to €167.5 million. This stark decline in profitability is a major red flag. The ongoing GTF engine issues continue to plague operations, with 42 aircraft grounded at year-end. Despite these headwinds, the company managed to improve its cash position and maintain passenger growth. However, the outlook remains challenging with geopolitical uncertainties and operational disruptions expected to persist. The decrease in EBITDA margin from 23.5% to 21.5% further underscores the pressure on profitability. While the airline shows resilience in some areas, the substantial profit decline and operational challenges overshadow the positive aspects, painting a concerning picture for investors.
Key Points
- Revenue increased 3.8% to €5,267.6 million
- Operating profit decreased 61.7% to €167.5 million
- Passenger numbers grew 2.2% to 63.4 million
- EBITDA declined to €1,134.3 million, with margin dropping to 21.5%
- Total cash improved 9.3% to €1,736.0 million
- 42 aircraft grounded at year-end due to GTF engine issues
- Expects capacity growth in low to mid-teens for H1 F26, circa 20% for full year F26
- Ongoing challenges from geopolitical uncertainties and operational disruptions
Summary
Wizz Air's full-year results for F25 reveal a complex picture of resilience and challenges. Revenue increased by 3.8% to €5,267.6 million, driven by a 2.2% rise in passenger numbers to 63.4 million. However, operating profit plummeted by 61.7% to €167.5 million, primarily due to ongoing GTF engine issues that led to 42 aircraft being grounded at year-end. The company's EBITDA decreased to €1,134.3 million, with the EBITDA margin declining from 23.5% to 21.5%. On a positive note, total cash improved to €1,736.0 million, up 9.3% year-on-year. The airline faces continued headwinds from geopolitical uncertainties and operational disruptions, but expects improvement in F26 with reduced groundings and a return to growth. Management anticipates capacity growth in the low to mid-teens for H1 F26 and circa 20% for the full year F26.