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Highlights:
- Earnings Forecast Downgrade: Citi revised its FY25 net income forecast for Wizz Air to €258 million, down from its previous estimate of €345 million.
- Lower Growth Expectations: Capacity growth for FY26 has been adjusted down to 19%, based on Wizz Air's latest guidance.
- Target Price Cut: Citi lowered its price target for Wizz Air from 13.0p to 10.0p, reflecting potential downside risks.
Wizz Air, the Hungarian low-cost airline, has been placed on a 'negative catalyst watch' by analysts at Citi, citing growing concerns over the airline's financial performance for fiscal year 2025 (FY25). Citi’s revision follows its updated assessment of the airline’s traffic, fuel costs, and pricing pressures, which could significantly impact its earnings outlook.
Citi now expects Wizz Air to report an adjusted net income of €258 million for FY25, a notable downgrade from its previous forecast of €345 million. The revised figure is also well below Wizz Air's own guidance range of €350 million to €450 million. According to Citi, the primary drivers behind this reduction are softer pricing and rising unit costs, which are applying downward pressure on the airline’s financial performance.
The revised estimates reflect a more challenging operating environment for the budget airline. Softer demand for flights and higher fuel prices are expected to weigh heavily on Wizz Air’s margins in the coming quarters. Citi’s analysis points to these factors as being detrimental to the company’s ability to achieve the earnings figures it had initially projected.
Moreover, Citi has also tempered its expectations for Wizz Air’s growth in FY26. The bank now forecasts the airline’s capacity growth at around 19%, a reduction from previous projections. This adjustment follows the airline’s recent capital markets day, where Wizz Air updated its guidance on future growth prospects, leading Citi to take a more cautious view of its capacity expansion.
In light of these revisions, Citi has lowered its target price for Wizz Air shares from 13.0p to 10.0p, reflecting the perceived risks associated with the airline’s earnings outlook. The lowered target price is indicative of the challenges Wizz Air faces as it navigates a volatile market environment marked by pricing pressures and rising operational costs.
Despite the revised outlook, Wizz Air remains one of Europe’s largest low-cost carriers, known for its aggressive growth strategy and expansion into new markets. However, the latest downgrade from Citi signals caution among analysts, who are increasingly concerned that rising costs and softer demand could impede the airline’s profitability in the near term.
As the aviation industry continues to grapple with macroeconomic challenges, Wizz Air’s performance in the coming quarters will be closely watched, particularly as it aims to manage costs and navigate a competitive pricing environment.
