Wizz Air, the Hungary-based carrier, has cut its guidance for fiscal year 2026, anticipating that the ongoing conflict in Iran will reduce its net income by €50 million. This disruption is expected to push its net income below its previous forecast range of a €25 million gain to a €25 million loss, potentially leading to a full-year loss. Approximately one-third of this impact is attributed to the cessation of scheduled services to the Middle East, with the remaining two-thirds stemming from adverse macroeconomic factors like rising oil prices.
The airline's shares dropped as much as 7.8% in London following the announcement. This news has spurred a significant increase in short-selling activity against Wizz Air. Hedge funds including Citadel Advisors, DE Shaw, and WorldQuant have either established new short positions or expanded existing ones. Short interest in Wizz Air surged from 8.5% at the beginning of the month to 13.5% of its issued shares, making it the most shorted stock on the London market.
Analysts have highlighted Wizz Air's vulnerability, noting its lower fuel hedging compared to rivals, slim underlying margins, and high exposure to Israel. Gerald Khoo, an analyst at Panmure Liberum, commented that Wizz Air entered this crisis with low profit margins and a weak balance sheet, making its earnings more susceptible than those of financially stronger competitors. The company has suspended flights to and from Israel until March 29 and all routes to Dubai, Abu Dhabi, Amman, and Jeddah until September.
Despite the immediate financial hit, Wizz Air's CEO, József Váradi, indicated that the situation is more manageable than previous crises like the Ukraine war, affecting only 5% of the airline's capacity. He expects the impact to ease from April, with growth returning in the new fiscal year. Wizz Air had hedged 83% of its jet-fuel needs for the year to March 2026 at $681 to $749 per metric ton, with further coverage for subsequent years.
Shares in Wizz Air have declined over 20% since the US and Israel began bombing Iran on February 28, extending a 14% fall from the previous month after a major shareholder offloaded a nearly 10% stake. The rapid increase in short-selling underscores market concerns about the airline's ability to compete with larger rivals like Ryanair amidst rising costs and geopolitical instability.
