Wizz Air cuts UK growth plans by half

Bloomberg

Wizz Air Holdings Plc cut UK capacity-growth plans for the rest of this year by half as Britain’s vote to exit the European Union is set to weigh on fares and demand.
Wizz Air will add just two aircraft to serve new UK routes instead of four and won’t increase the number of flights serving existing routes to the country, the Budapest-based airline said in an online presentation. Total UK capacity will now increase 15 percent, down from an earlier 30 percent target, with some of the planned additional planes and flights re-assigned to routes serving mainland Europe.
The low-cost carrier is the third in the region to shift capacity away from the UK since the referendum last month that approved the country’s EU departure, known as Brexit. Ryanair Holdings Plc, Europe’s biggest discount airline, said in June that it will deploy 50 planes due for delivery this year to non-UK bases, and Chief Executive Officer Michael O’Leary predicted the pound will remain weak for as long as a year. Luton, England-based competitor EasyJet Plc is in talks to gain operating rights in mainland Europe to retain access to the single market after the exit from the 28-nation bloc.
Wizz Air’s net income in the first quarter ended on June 30 rose 54 percent to 50.7 million euros ($55.7 million), and the company is sticking to a full-year target for profit to amount to 245 million euros to 255 million euros, it said in a separate statement. The shares rose as much as 4.8 percent and were trading up 2.9 percent at 1,588 pence as of 9:15 a.m. in London.
The pound’s collapse since the vote has made the U.K. market less profitable for Wizz Air, which generates about 20 percent of revenue in the currency ferrying eastern European workers and their families to and from Britain, Chief Executive Officer Jozsef Varadi said. The carrier is taking steps to protect earnings in response to that, as well as to incidents such as a terrorist attack in Nice, France, and an attempted coup in Turkey that are hurting demand over the short term, he said.
“We are not immune to the recent events, not only Brexit, but also the geopolitical events, but we are less exposed than other airlines,” Varadi said in a phone interview. “We are very proactive and are addressing the issues so they don’t affect our finances.”