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Investing.com -- Fitch Ratings has downgraded Wizz Air Holdings Plc’s Long-Term Issuer Default Rating to ’BB’ from ’BB+’, with a Stable outlook, citing weaker-than-expected operating performance.
The credit rating agency pointed to persistent high maintenance and depreciation costs related to Pratt & Whitney engine groundings as key factors affecting the airline’s financial metrics. Wizz Air’s EBITDAR net leverage reached 4.4x for the financial year ending March 2025, exceeding the threshold consistent with its previous rating.
Fitch expects this leverage ratio to gradually decrease to 3.9x in FY26 and 3.3x in FY27, which would align with the ’BB’ rating. The company’s EBITDAR fixed-charge coverage was 1.3x in FY25, matching the negative sensitivity threshold for the rating.
The airline reported revenue of €5.3 billion for FY25, representing a 4% year-on-year increase but falling short of the €5.5 billion forecast. Fleet groundings impacted nearly all operating cost categories, with the financial impact exceeding compensation received from Pratt & Whitney.
Cost per Available Seat Kilometers increased by 11% in FY25, with ex-fuel costs rising by 20% year-on-year, primarily due to higher maintenance and depreciation expenses related to grounded aircraft and end-of-lease costs.
Wizz Air is implementing strategic actions to improve profitability, including increasing its presence in established markets, prioritizing more profitable routes, and phasing out high-cost operations. The company has also revised its delivery plan with Airbus, reducing scheduled deliveries by 75 aircraft through FY28.
Fitch projects that Wizz Air’s available seat kilometers will increase by 19.3% in FY26, followed by 18.6% growth in FY27 and 13.5% in FY28. The agency expects the airline’s EBITDAR margin to average 21.8% between FY26 and FY28.
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