Wizz Air's chief executive said the airline is operating in a "volatile environment" as Pratt & Whitney engine problems have grounded 21 per cent of its fleet, constraining capacity in markets where it could have expanded its footprint.
These jet engine issues could persist for two to three years before they are fully resolved, Jozsef Varadi told The National on Thursday after the airline announced its first-quarter earnings.
"We are subject to a very volatile environment as we speak, lots of supply chain issues with very significant impact," he said. "When you have the best part of your fleet on the ground, that is frustrating. It creates a lot of complexities in the system.
"But once you're out of that cycle and you dig yourself out of the ditch, then you're going to see a structurally improved platform and performance, subject to business."
The European budget airline, which operates an all-Airbus fleet of 218 planes, is facing challenges related to Pratt & Whitney engines, with 46 of its aircraft grounded at the end of June for inspections during the busy summer travel season. The next peak aircraft groundings are now expected to be 47 planes in September 2025, compared to a previous forecast of 50, the company said in a statement.
Wizz Air's share price fell 17.5 per cent on Thursday after the airline slashed its annual profit forecast and posted a 91 per cent drop in net profit.
The airline projected net income in a range of €350 million ($378 million) to €450 million for fiscal 2025, down from a previous estimate of €500-€600 million, it said.
Net profit attributable to owners of the company fell to €5.8 million in the three months ending June, from €62.8 million in the same quarter last year. The airline's fiscal year ends on March 31.
Operating profit fell 44 per cent year-on-year to €44.6 million, after the airline secured eight wet-leased aircraft for periods of six to 12 months, to maintain its network footprint while its own aircraft are grounded due to engine inspections, it said. Under a wet-lease arrangement, the lessor maintains operational control of flights while providing aircraft and crew to the airline.
Compensation is not enough
The airline is also monitoring the wider supply chain amid delays by plane makers for new aircraft deliveries.
"This is clearly a very volatile environment that goes beyond one or two issues here or there. It seems to be more structural. The [aviation] regulators are taking a bigger stake in the whole issue, more regulatory scrutiny is applied on the industry which have the potential of slowing down innovation and technological developments for the future," Mr Varadi said.
Supply chain delays are also making it difficult for airlines to plan ahead.
"Predictability is challenged with the current set of challenges but this is not only down to us ... I don't know that [OEMs] are really fully in control of their own destiny at the moment because they are also part of a supply chain so they are subject to other stakeholders delivering parts or services and those suppliers might be tumbling as well," he said.
"It is a very difficult ecosystem at this time. Of course, we have daily conversations with all these key suppliers to our business but that does not necessarily make planning easier or more predictable because they are also in a volatile environment."
Jet delivery delays by Airbus could impact Wizz Air's scheduled fleet programme in the coming years, the airline said in the statement. It is expecting 30 to 35 aircraft to be delayed from fiscal 2026.
"It is what it is and we need to manage ... we try to be as proactive and forward looking as possible but this is not a benign environment," Mr Varadi said.
While the airline is receiving compensation from Pratt & Whitney related to its engine issues, the payment does not make up for potential market share that could have been grown.
"We are not in the business of collecting financial compensation, we are in the business of flying aircraft from A to B. Yes, it eases the pain, but also it undermines possibly our positions in certain markets that we should be developing and investing more capacity but we cannot because we have over 20 per cent of our fleet on the ground," Mr Varadi said.
Abu Dhabi market
Among these markets it could have developed further by adding more capacity in Abu Dhabi, where Wizz Air has a base, but was constrained by the shortage of aircraft, Mr Varadi said.
Wizz Air Abu Dhabi, a joint venture between Hungary's Wizz Air Holding and Abu Dhabi state holding company ADQ, has an air operator certificate in the UAE and launched operations in 2021 amid the pandemic.
"We have a few developing markets that we just got into and we needed to invest further ... Abu Dhabi is one of them," he said.
"We need to make sure that we continue to develop our profile and our portfolio of routes in the Abu Dhabi market but we clearly we are constrained. We might have done a lot more under normal circumstances than what we are able to do right now because of the capacity constraints."
However, next year will have a brighter outlook as the airline takes delivery of new aircraft, grows its fleet and has some capacity to add into specific markets, he said.
"2024 is more a year of survival ... next year is going to be more strategic with more opportunities to grow," Mr Varadi said.
Wizz Air grew its capacity in Abu Dhabi 30 per cent year-on-year in 2024 and is exploring opportunities to expand the market further, he said, declining to reveal specific plans.
Citizenship-by-investment programmes
United Kingdom
The UK offers three programmes for residency. The UK Overseas Business Representative Visa lets you open an overseas branch office of your existing company in the country at no extra investment. For the UK Tier 1 Innovator Visa, you are required to invest £50,000 (Dh238,000) into a business. You can also get a UK Tier 1 Investor Visa if you invest £2 million, £5m or £10m (the higher the investment, the sooner you obtain your permanent residency).
All UK residency visas get approved in 90 to 120 days and are valid for 3 years. After 3 years, the applicant can apply for extension of another 2 years. Once they have lived in the UK for a minimum of 6 months every year, they are eligible to apply for permanent residency (called Indefinite Leave to Remain). After one year of ILR, the applicant can apply for UK passport.
The Caribbean
Depending on the country, the investment amount starts from $100,000 (Dh367,250) and can go up to $400,000 in real estate. From the date of purchase, it will take between four to five months to receive a passport.
Portugal
The investment amount ranges from €350,000 to €500,000 (Dh1.5m to Dh2.16m) in real estate. From the date of purchase, it will take a maximum of six months to receive a Golden Visa. Applicants can apply for permanent residency after five years and Portuguese citizenship after six years.
“Among European countries with residency programmes, Portugal has been the most popular because it offers the most cost-effective programme to eventually acquire citizenship of the European Union without ever residing in Portugal,” states Veronica Cotdemiey of Citizenship Invest.
Greece
The real estate investment threshold to acquire residency for Greece is €250,000, making it the cheapest real estate residency visa scheme in Europe. You can apply for residency in four months and citizenship after seven years.
Spain
The real estate investment threshold to acquire residency for Spain is €500,000. You can apply for permanent residency after five years and citizenship after 10 years. It is not necessary to live in Spain to retain and renew the residency visa permit.
Cyprus
Cyprus offers the quickest route to citizenship of a European country in only six months. An investment of €2m in real estate is required, making it the highest priced programme in Europe.
Malta
The Malta citizenship by investment programme is lengthy and investors are required to contribute sums as donations to the Maltese government. The applicant must either contribute at least €650,000 to the National Development & Social Fund. Spouses and children are required to contribute €25,000; unmarried children between 18 and 25 and dependent parents must contribute €50,000 each.
The second step is to make an investment in property of at least €350,000 or enter a property rental contract for at least €16,000 per annum for five years. The third step is to invest at least €150,000 in bonds or shares approved by the Maltese government to be kept for at least five years.
Candidates must commit to a minimum physical presence in Malta before citizenship is granted. While you get residency in two months, you can apply for citizenship after a year.
Egypt
A one-year residency permit can be bought if you purchase property in Egypt worth $100,000. A three-year residency is available for those who invest $200,000 in property, and five years for those who purchase property worth $400,000.
Source: Citizenship Invest and Aqua Properties
Tips on buying property during a pandemic
Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.
While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.
While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar.
Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.
Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.
Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities.
Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong.
Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
The Book of Collateral Damage
Sinan Antoon
(Yale University Press)
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
MATCH INFO
Uefa Nations League
League A, Group 4
Spain v England, 10.45pm (UAE)
Hili 2: Unesco World Heritage site
The site is part of the Hili archaeological park in Al Ain. Excavations there have proved the existence of the earliest known agricultural communities in modern-day UAE. Some date to the Bronze Age but Hili 2 is an Iron Age site. The Iron Age witnessed the development of the falaj, a network of channels that funnelled water from natural springs in the area. Wells allowed settlements to be established, but falaj meant they could grow and thrive. Unesco, the UN's cultural body, awarded Al Ain's sites - including Hili 2 - world heritage status in 2011. Now the most recent dig at the site has revealed even more about the skilled people that lived and worked there.
'The Woman in the House Across the Street from the Girl in the Window'
Director:Michael Lehmann
Stars:Kristen Bell
Rating: 1/5
Kalra's feat
- Becomes fifth batsman to score century in U19 final
- Becomes second Indian to score century in U19 final after Unmukt Chand in 2012
- Scored 122 in youth Test on tour of England
- Bought by Delhi Daredevils for base price of two million Indian rupees (Dh115,000) in 2018 IPL auction
KILLING OF QASSEM SULEIMANI
The%20specs%20
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UAE currency: the story behind the money in your pockets
The candidates
Dr Ayham Ammora, scientist and business executive
Ali Azeem, business leader
Tony Booth, professor of education
Lord Browne, former BP chief executive
Dr Mohamed El-Erian, economist
Professor Wyn Evans, astrophysicist
Dr Mark Mann, scientist
Gina MIller, anti-Brexit campaigner
Lord Smith, former Cabinet minister
Sandi Toksvig, broadcaster
CONFIRMED%20LINE-UP
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How tumultuous protests grew
- A fuel tax protest by French drivers appealed to wider anti-government sentiment
- Unlike previous French demonstrations there was no trade union or organised movement involved
- Demonstrators responded to online petitions and flooded squares to block traffic
- At its height there were almost 300,000 on the streets in support
- Named after the high visibility jackets that drivers must keep in cars
- Clashes soon turned violent as thousands fought with police at cordons
- An estimated two dozen people lost eyes and many others were admitted to hospital
Thor: Ragnarok
Dir: Taika Waititi
Starring: Chris Hemsworth, Tom Hiddleston, Cate Blanchett, Jeff Goldblum, Mark Ruffalo, Tessa Thompson
Four stars
Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
THREE
%3Cp%3EDirector%3A%20Nayla%20Al%20Khaja%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Jefferson%20Hall%2C%20Faten%20Ahmed%2C%20Noura%20Alabed%2C%20Saud%20Alzarooni%3C%2Fp%3E%0A%3Cp%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
KEY HIGHLIGHTS
Healthcare spending to double to $2.2 trillion rupees
Launched a 641billion-rupee federal health scheme
Allotted 200 billion rupees for the recapitalisation of state-run banks
Around 1.75 trillion rupees allotted for privatisation and stake sales in state-owned assets
The Settlers
Director: Louis Theroux
Starring: Daniella Weiss, Ari Abramowitz
Rating: 5/5
UFC%20FIGHT%20NIGHT%3A%20SAUDI%20ARABIA%20RESULTS
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Company%20Profile
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More from UAE Human Development Report:
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
