Fitch Ratings downgrades Wizz Air

Fitch Ratings announced on Wednesday that it has

downgraded Wizz Air Holdings Plc's Long-Term Issuer Default Rating (IDR) and senior unsecured rating to 'BB', from 'BB+'.

The Outlook on the IDR is Stable.

The downgrade reflects weaker-than-expected operating performance in the financial year to end-March 2025 (FY25) and expectations of persistent high maintenance and depreciation costs related to the Pratt & Whitney (P&W) engine groundings, resulting in leverage and coverage metrics inconsistent with a 'BB+' rating,

Fitch said.

"Fitch-defined EBITDAR net leverage, the key ratio we monitor together with EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Restructuring or Rent) fixed-charge coverage, was 4.4x in FY25 and we expect it to gradually fall to 3.3x in FY27, consistent with a 'BB' rating (negative sensitivity at 3.7x)," the rating agency added.

Fitch pointed out that Wizz is implementing strategic actions to optimise operations and improve profitability. "Along with the gradual unwinding of the airline's P&W parked fleet, this should support an improvement in the credit profile," it said.

Fitch reminded that Wizz's FY25 results were weaker than the rating agency's expectations, with revenue of EUR 5.3 billion (+4% year on year), below the EUR 5.5 billion forecast and Fitch's assumptions.

Fleet groundings affected nearly all operating cost categories, with the overall effect exceeding the financial compensation it received from P&W and putting pressure on profitability.

Fitch pointed out that in FY25, Cost per Available Seat Kilometres (CASK) increased by 11% and ex-fuel CASK by 20% year on year, primarily driven by higher maintenance and depreciation costs due to grounded aircraft and end-of-lease expenses.

"We expect cost pressures to ease in FY26, supported by a favourable fuel trend, but maintenance and depreciation will stay relatively high, peaking as older aircraft are retired and new planes and engines enter operations. We expect the CASK trend to improve over the medium term as capacity rises," it said.

Fitch also noted that as an ultra-low-cost carrier, Wizz has had a very strong cost position, comparable with Ryanair and the Turkish Pegasus.

"The company has been penalised by the P&W engine issue, but has the potential to recover its highly efficient structure over the medium term. It has a leading market position in the central and eastern European market, which has solid growth potential. The airline operates on a smaller scale than Ryanair and Southwest Airlines Co. (BBB+/Negative) but is larger than Pegasus," Fitch said.

Factors that could, individually or collectively, lead to negative rating action/downgrade

• EBITDAR net leverage above 3.7x and EBITDAR gross leverage above 4.7x, both on a sustained basis
• EBITDAR fixed-charge coverage below 1.3x on a sustained basis

Factors that could, individually or collectively, lead to Positive rating action/upgrade

• EBITDAR net leverage below 3.0x and EBITDAR gross leverage below 4.0x, both on a sustained basis
• EBITDAR fixed-charge coverage above 1.5x on a sustained basis
• EBITDAR margin above 20% a sustained basis

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