This FTSE stock's just crashed 28%! Is it time to take advantage?
On Thursday (5 June), the Wizz Air Holdings (LSE:WIZZ) share price plunged nearly 28% following the release of the FTSE 250 airline's results for the year ended 31 March 2025 (FY25).
Given that it reported a 61% fall in operating profit — over 30% lower than analysts were expecting — the reaction of investors isn't surprising to me.
The problem is that the group's been badly affected by the grounding of some of its aircraft.
Of a fleet of 231 planes, 37 are unable to fly due to problems with their engines. Worryingly, 34 are still expected to be out of action by the end of September. Each repair takes around 300 days.
During FY25, the airline received credits and compensation from suppliers of €354m. However, it's not specified how much of this came from Pratt & Whitney, the manufacturer of the engines. Whatever the figure, I think it's unlikely to be enough to cover all of the lost earnings.
Of most concern, the press release accompanying the results said: 'We are not giving guidance for FY26 at this time of the year given the lack of visibility across our trading seasons.' In other words, the directors don't want to make any public predictions for fear of getting it badly wrong.
The results were so disappointing that RBC Capital Markets revealed it was 'throwing in the towel'. It downgraded its price target from 2,400p to 1,500p. And it cut its FY26 net profit forecast by 31%. The broker said: 'We think the risk-reward is more attractive in other low-cost carriers, where we have greater confidence that fuel and foreign exchange tailwinds will translate into earnings upgrades.'
Since June 2024, the Wizz Air share price has fallen 50%. But there could be worse to come. The engine problems are expected to affect operations for another two to three years.
However, despite its problems, the results announcement contained some good news. Passenger numbers were at record levels and it was the airline's second consecutive year of being profitable.
Compared to FY24, its load factor increased by 1.1 percentage points to 91.2%. RASK (revenue per available seat kilometre) was up 3.9%.
Looking ahead, it should continue to benefit from lower oil prices. Fuel costs accounted for 35% of operating expenses in FY25, compared to 40% in FY24. Also, the airline's load factor is expected to increase further.
But the group's net debt has risen to €4.96bn at 31 March 2025. This is equivalent to 4.4 times EBITDA (earnings before interest, tax, depreciation, and amortisation). For comparison, at the same date, easyJet reported a small net cash position.
Even though I'm prepared to take a long-term view, I fear things are going to get worse before they (hopefully) improve.
There's too much uncertainty for my liking. The company's chief executive recently told Reuters: 'You look at the performance of the supply chain, of the industry, and there are cracks all over the place.'
When considered alongside the airline's FY25 results, this doesn't fill me with much confidence. Therefore, I don't want to invest.
The post This FTSE stock's just crashed 28%! Is it time to take advantage? appeared first on The Motley Fool UK.
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James Beard has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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