Wizz Air warns of higher costs on top of fuel pressures

By Yamini Kalia and Gianluca Lo Nostro

Nov 12 (Reuters) - Wizz Air said on Thursday it expects a mid-single-digit percentage increase in full-year unit costs excluding fuel, as airlines grapple with higher labour and airport expenses on top of the soaring price of jet fuel due to the Iran war.

CEO József Váradi told Reuters the biggest single cost in the second half of its financial year was more than €100 million ($111 million) of incremental costs linked to the phase-out of older Airbus A320ceo jets.

Wizz Air shares fell as much as 4% in early trade, but had recovered to trade only slightly lower by 0935 GMT.

The budget carrier, which had previously held back on giving full-year guidance due to the uncertain trading environment, joins peers in warning of challenges facing the global aviation industry.

British Airways owner IAG this month forecast its first annual capacity decline since 2022, while Ryanair said it could freeze staff pay to help offset a surging fuel bill. Many airlines are also raising ticket prices.

Spot Northwest European jet fuel prices, the regional benchmark, have fallen 18% this month to their lowest since August, offering airlines some relief. However, the decline may come too late to ease pressure for the winter season.

WIZZ CONFIDENT ON FUEL HEDGING

Asked about fuel hedging, Varadi said the airline remained protected whether fuel prices stayed high or fell sharply thanks to its strategy of setting upper and lower hedge price limits. The carrier has hedged 82% of its fuel needs this winter and 51% for April to October 2027.

For its fiscal third quarter, Wizz Air said it expected revenue per available seat kilometre — a measure of pricing power — to rise by a low-single-digit percentage year-on-year, with a 19% increase in seats.

Net profit fell 66.6% to €108.1 million ($119.75 million) in the six months to September 30, as fuel costs jumped 33.7% to €1.24 billion.

($1 = 0.9027 euros)

(Reporting by Yamini Kalia in Bengaluru; Editing by Subhranshu Sahu and Mark Potter)