Wizz Air CEO sees 'volatile environment' as jet engine woes continue

Pratt & Whitney engine problems have grounded 21 per cent of airline's fleet, Jozsef Varadi says

A Wizz Air plane takes off from Ferenc Liszt International Airport in Budapest, Hungary. Reuters

Wizz Air's chief executive said the airline is operating in a "volatile environment" as Pratt & Whitney engine problems have grounded 21 per cent of its fleet, constraining capacity in markets where it could have expanded its footprint.

These jet engine issues could persist for two to three years before they are fully resolved, Jozsef Varadi told The National on Thursday after the airline announced its first-quarter earnings.

"We are subject to a very volatile environment as we speak, lots of supply chain issues with very significant impact," he said. "When you have the best part of your fleet on the ground, that is frustrating. It creates a lot of complexities in the system.

"But once you're out of that cycle and you dig yourself out of the ditch, then you're going to see a structurally improved platform and performance, subject to business."

The European budget airline, which operates an all-Airbus fleet of 218 planes, is facing challenges related to Pratt & Whitney engines, with 46 of its aircraft grounded at the end of June for inspections during the busy summer travel season. The next peak aircraft groundings are now expected to be 47 planes in September 2025, compared to a previous forecast of 50, the company said in a statement.

Wizz Air's share price fell 17.5 per cent on Thursday after the airline slashed its annual profit forecast and posted a 91 per cent drop in net profit.

The airline projected net income in a range of €350 million ($378 million) to €450 million for fiscal 2025, down from a previous estimate of €500-€600 million, it said.

Net profit attributable to owners of the company fell to €5.8 million in the three months ending June, from €62.8 million in the same quarter last year. The airline's fiscal year ends on March 31.

Operating profit fell 44 per cent year-on-year to €44.6 million, after the airline secured eight wet-leased aircraft for periods of six to 12 months, to maintain its network footprint while its own aircraft are grounded due to engine inspections, it said. Under a wet-lease arrangement, the lessor maintains operational control of flights while providing aircraft and crew to the airline.

Compensation is not enough

The airline is also monitoring the wider supply chain amid delays by plane makers for new aircraft deliveries.

"This is clearly a very volatile environment that goes beyond one or two issues here or there. It seems to be more structural. The [aviation] regulators are taking a bigger stake in the whole issue, more regulatory scrutiny is applied on the industry which have the potential of slowing down innovation and technological developments for the future," Mr Varadi said.

Supply chain delays are also making it difficult for airlines to plan ahead.

"Predictability is challenged with the current set of challenges but this is not only down to us ... I don't know that [OEMs] are really fully in control of their own destiny at the moment because they are also part of a supply chain so they are subject to other stakeholders delivering parts or services and those suppliers might be tumbling as well," he said.

"It is a very difficult ecosystem at this time. Of course, we have daily conversations with all these key suppliers to our business but that does not necessarily make planning easier or more predictable because they are also in a volatile environment."

Jet delivery delays by Airbus could impact Wizz Air's scheduled fleet programme in the coming years, the airline said in the statement. It is expecting 30 to 35 aircraft to be delayed from fiscal 2026.

"It is what it is and we need to manage ... we try to be as proactive and forward looking as possible but this is not a benign environment," Mr Varadi said.

While the airline is receiving compensation from Pratt & Whitney related to its engine issues, the payment does not make up for potential market share that could have been grown.

"We are not in the business of collecting financial compensation, we are in the business of flying aircraft from A to B. Yes, it eases the pain, but also it undermines possibly our positions in certain markets that we should be developing and investing more capacity but we cannot because we have over 20 per cent of our fleet on the ground," Mr Varadi said.

Abu Dhabi market

Among these markets it could have developed further by adding more capacity in Abu Dhabi, where Wizz Air has a base, but was constrained by the shortage of aircraft, Mr Varadi said.

Wizz Air Abu Dhabi, a joint venture between Hungary's Wizz Air Holding and Abu Dhabi state holding company ADQ, has an air operator certificate in the UAE and launched operations in 2021 amid the pandemic.

"We have a few developing markets that we just got into and we needed to invest further ... Abu Dhabi is one of them," he said.

"We need to make sure that we continue to develop our profile and our portfolio of routes in the Abu Dhabi market but we clearly we are constrained. We might have done a lot more under normal circumstances than what we are able to do right now because of the capacity constraints."

However, next year will have a brighter outlook as the airline takes delivery of new aircraft, grows its fleet and has some capacity to add into specific markets, he said.

"2024 is more a year of survival ... next year is going to be more strategic with more opportunities to grow," Mr Varadi said.

Wizz Air grew its capacity in Abu Dhabi 30 per cent year-on-year in 2024 and is exploring opportunities to expand the market further, he said, declining to reveal specific plans.