Wizz Air
Chief executive Jozsef Varadi said despite its profit warning, the airline remained excited about 2017 Reuters

Shares in Wizz Air plunged over 7% on Wednesday (1 February), after the Eastern and Central Europe-focused airline cut its full-year profit forecast on the back of adverse weather and lower fuel prices.

The latter issue, the airline said, will continue to translate into lower air fares well into the current year, while extreme cold weather across Europe this winter has hampered its operations across the continent.

As a result, the FTSE 250-listed company said it lowered its profit guidance for the full year from €245m (£209.5m) – €255m to between €225 and €235m.

"Although the current financial year is looking like a very good year for Wizz Air and we remain excited about our prospects for the next financial year, lower fuel prices continue to feed through to lower airfares, and this downward trend looks likely to continue well into 2017," said group chief executive Jozsef Varadi.

The revised profit forecast took the gloss off a very positive set of third quarter figures. In the three months to the end of December, pre-tax profit jumped 104% from the same quarter a year ago to €33.1m as revenue rose 10% to €341.1m, while the number of passengers carried rose 20% year-on-year.

Ticket revenues increased 2.5% to €191.8m, while ancillary revenues were 21% higher than a year ago at €149.4m but Nicholas Hyett, analyst at Hargreaves Lansdown, said Wizz Air had not escaped the pricing squeeze engulfing the airline industry.

"The by now familiar mathematics of falling ticket prices and stubbornly high costs per seat mean that the bottom line has suffered," he said.

"Each passenger is simply less profitable than they were a year ago, leading management to reduce profits guidance for the full year."

However, despite the profit warning, Varadi added 2017 was looking like "a very good year" for the airline, which remained excited about its prospects for the next financial year.

"Wizz Air remains on track to strengthen its position during 2017 financial year through continued growth in our core markets and expansion of our network," he said.

"We expect to grow capacity in terms of available seats per kilometers at 20% for the current financial year which is at the higher end of our previous guidance of 18% - 20%."