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Hungary’s Wizz Air to halve UK growth plans due to Brexit

The impact on Euro priced fares has caused the budget airline to redraw its expansion plans in the UK.

Wizz Air plane being boarded by passengers
Brexit is key among the uncertainties for Wizz Air.

European budget airline Wizz Air Holdings Plc (LON:WIZZ) shares rose on Wednesday after it revealed it is redirecting its jets following the Brexit vote.

Wizz Air said it has, as a direct result of Britain’s decision to leave the European Union, halved growth plans pencilled in for the UK market and it now intends to redeploy capacity to other non-UK routes.

The Budapest headquartered carrier, which is the largest budget airline for Central and Eastern Europe, noted the recent drop in the British pound is causing a weakness in fares priced in Euros.

In an interim management statement, covering the three months to June 30, Wizz Air told investors that group passenger numbers were up almost 18% at 5.8mln versus 4.9mln in the same quarter of last year.

Group revenue rose 9.8% to €364.9mln, and net profit was said to be up 54.2% to €50.7mln for the three months.

It repeated full guidance for net profit in the range of €245mln to €255mln, albeit it noted that the forecast was heavily dependent upon summer trading and the group’s performance in the second half.  And there is currently ‘limited visibility’ for that period, it added.

Brexit is key among the uncertainties for Wizz Air.

In this morning’s statement, it said: “The UK's decision to leave the European Union has led to a notable weakness in fares (in euro terms) on routes to/from the UK mainly due to the much weaker British pound which is currently 19% lower than the same period last year versus the euro.”

It added that it has already started adjusting its operations in response to the weakness.

József Váradi, Wizz Air chief executive, added: “While Wizz Air is not immune to the recent challenges in our industry we believe our ultra-low cost base, diversified point-to-point network and ability to adjust capacity quickly when needed enables us to better respond to these challenges than many other European airlines and also means we are well placed to exploit market opportunities as they arise.”

This morning the group’s FTSE 250 shares gained 60p, 3.9%, to trade at 1,603p each.

Quick facts: Wizz Air Holdings

Price: 3298 GBX

AIM:WIZZ
Market: AIM
Market Cap: £3.39 billion
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