Wizz Air swings to loss as Iran conflict drives up jet fuel costs

Wizz Air Holdings Plc experienced a drastic reduction in its net income for the fiscal year ending in March, reporting €2.2 million, a sharp decline from €225.8 million in the previous year. The airline attributed this near-eradication of its profit primarily to the ongoing conflict in Iran, which resulted in a €50 million impact on its earnings. This impact stemmed from suspended flight routes in the Middle East, including those to Israel, Saudi Arabia, Dubai, Abu Dhabi, and Amman, as well as adverse macroeconomic conditions like increased jet fuel prices and unfavorable US dollar exchange rates.

The conflict's repercussions led Wizz Air to revise its fiscal year 2026 profit forecast downwards, anticipating it would fall below its previously issued range of a loss of €25 million to a profit of €25 million. Approximately one-third of the €50 million hit was due to the suspension of routes, with the remaining two-thirds attributed to broader macroeconomic pressures. The company's shares dropped as much as 7.8% following the announcement, reflecting investor concerns over the revised outlook.

Despite the significant financial hit, Wizz Air's CEO, Jozsef Varadi, expressed optimism that the impact from the Iran conflict would ease starting in April, coinciding with the new fiscal year. He anticipated a recovery in growth and demand, even suggesting a potential boost in European bookings. The airline had hedged 83% of its jet-fuel needs for the fiscal year ending March 2026 at $681 to $749 per metric ton, and has further coverage for subsequent years, though the recent surge in oil prices likely still presented a challenge.

However, due to the high degree of uncertainty stemming from the conflict and the closure of the Strait of Hormuz, Wizz Air has refrained from providing an outlook for the current fiscal year. This lack of visibility across its trading seasons contributed to the decision, despite the airline's stated intention to leverage market dislocations for growth opportunities. Flights to Saudi Arabia were planned to resume from March 8, while other routes in the region remained suspended until at least mid-March.