Wizz Air shares slip as analysts flag foreign exchange impact

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Wizz Air shares slip as analysts flag foreign exchange impact
Credit: © Reuters.

By Scott Kanowsky 

Investing.com -- London-listed shares in Wizz Air Holdings PLC (LON: WIZZ ) slumped on Thursday, as analysts noted that the budget carrier's third-quarter core earnings failed to beat estimates when removing a multi-million euro foreign exchange gain.

The Hungary-based airline swung to a net income of €33.5 million during the three months to December 31, rebounding from a loss of €267.5M in the prior year and above forecasts of a loss of €29.4M (€1 = $1.0901), thanks in part to higher prices and passenger demand that remained "robust" in the face of recent cost-of-living pressures.

A strengthening euro also led to a major revaluation of its U.S. dollar leasing liabilities, which provided an unrealized boost of €220.9M. Analysts at Citi said the contribution was larger than its consensus predictions of €115M, adding that it was the main driver behind Wizz Air's quarterly net profit.

Wizz Air's earnings before interest, tax, depreciation and amortization - which do not account for foreign exchange effects - came in at a loss of €2.8M, missing Bloomberg consensus forecasts for a profit of €23M.

Looking ahead, chief executive officer József Váradi said average fares are higher than pre-pandemic levels, while booking volumes are also coming in ahead of 2022, in line with the group's expectations.

But Citi argued that the firm's decision not to upgrade its guidance for a mid- to high-single digit percentage uptick in pricing in the second half of the year should be taken negatively.

Wizz Air reiterated that it still expects to post an overall net loss in its 2023 financial year before it returns to profitability in 2024.

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