Wizz Air’s share price falls sharply in trading turbulence

Wizz Air Holdings Plc share price LON:WIZZ falls sharply as its Q3 earnings highlight rising costs and falling profitability

Wizz Air reported its Q3FY 2025 results this morning

The figures showed that revenues in the period had increased by +10.50% to €1.176 billion, whilst Revenue per Available Seat Kilometer, or RASK as it’s known, grew by +12.0% to 3.86 Euro cents.

At the same time, the airline’s load factor also improved rising by +2.7% to stand at 90.3%. Overall passenger numbers, perhaps a more tangible measure of performance, climbed to 15.50 million a gain of +2.60%.

Costs are important to budget airlines of course and Wizz Air measures these using a metric known as CASK or Cost per Available Seat Kilometer. Fuel CASKs fell by -16.30%.

However, total costs rose by +3.60%. Though. if we strip out the decrease in fuel costs, then the jump in costs becomes +16.80%.

A significant gain, which is a concern, given the tight margins that Wizz Air and its competitors operate on.

Those increased costs contributed to a loss of -€241.10 million an increase of +128.0%.

I also note that net debt increased by +7.30% to €5.14 billion. Neither of these metrics was helped by a -€160.0 million FX charge in the quarter.

From an operational standpoint, 20.0% of Wizz Air’s fleet was grounded in the quarter due to problems with their Pratt and Whitney GTF engines.

Wizz Air will receive compensation from the engine manufacturer, and the airline will also try to improve access to essential spares and maintenance for the engines, which it continues to negotiate with Pratt and Whitney.

Wizz Air increased its fleet by two aircraft in the quarter and it now has 226 planes, which coincidentally is also the average number of seats per plane in the fleet.

Eight additional aircraft are expected to be delivered by Airbus in 2025, and four planes will be retired.

Q4 bookings are running at 62.0% of capacity, and management intends to focus on revenue maximisation and reducing costs going forward.

Overall capacity at the airline is targeted to grow by between +15.0% and 20.0% over the next 5-years.

However, the airline has guided lower for 2025 dropping its forecast by almost one third and that’s before any realised FX loss in the second half of the year.

For now, it seems the airline may be growing in terms of capacity, but not in terms of profitability, and that should be a major concern for investors because both margins and net income are falling, as costs rise sharply.

Traders seem to flying away from Wizz Air shares today with the stock down by -8.00%, some 45 minutes after the start of the analyst’s call.