Wizz Air Falls on Muted Outlook as Fare War Heats Up

(Bloomberg) -- Wizz Air Holdings Plc dropped after saying its outlook is clouded by stiff competition for passengers and a potential threat from air-traffic control strikes.

Profit will still rise this year, to as much as 350 million euros ($390 million), as the Hungarian discount carrier seeks to grab market share from rivals battling higher fuel costs. Investors had hoped for more, according to Morgan Stanley, and Wizz Air stock fell as much as 6.9%.

European discount airlines including market leader Ryanair Holdings Plc are warning of a tough trading environment this summer, with fuel prices combining with weak economic growth to hurt profit margins. Wizz joined its larger Irish rival in cautioning that there is little visibility for the second half of the 2020 fiscal year, which encompasses the winter period.

Achieving the profit goal will depend on the peak summer period, and whether there’s disruption from strikes at airports, Wizz said in a statement on Friday.

“We are starting to have good visibility and so far so good -- we will outperform last year’s performance,” Chief Executive Officer Jozsef Varadi said in an interview with Bloomberg TV. “We are seeing some pressure on fares, but we are generating revenue on additional services and products.”

Wizz isn’t interested in taking over the airline business of beleaguered U.K. holiday company Thomas Cook Group Plc, but may be interested in some assets if they become available, Varadi said.

Wizz shares were down 2.9% to 3,115 pence at 9:15 a.m. in London. The stock has gained 11% this year, valuing the carrier at 3.2 billion pounds. Ryanair has fallen 2.7%.

To contact the reporter on this story: John Bowker in Johannesburg at jbowker2@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Andrew Noël, Tom Lavell

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