Shares of Wizz Air Holdings PLC (LSE:WIZZ) dropped more than 8% on Thursday after the low-cost airline released an unexpected profit warning, saying the escalating Middle East crisis is expected to reduce fiscal 2026 net profit by about €50 million and push earnings below its previously guided range of €25 million to -€25 million.
The Budapest-based carrier said the projection assumes current spot jet fuel prices and prevailing foreign exchange rates remain broadly unchanged for the rest of the financial year.
Analysts at RBC Capital Markets, who had already been forecasting a €27 million net loss — below the €15 million loss consensus estimate tracked by Visible Alpha — said the warning is likely to trigger further downward revisions to market expectations.
Wizz Air’s fuel hedging strategy leaves it more exposed than many of its European competitors. Rather than locking in prices through fixed hedges, the airline uses a cap-and-collar structure that still exposes it to price volatility within certain bands, even for fuel volumes that are technically hedged. In addition, the airline’s route network is more heavily oriented toward eastern markets, increasing its direct exposure to the regional conflict.
RBC also highlighted that both Wizz Air and Air France-KLM carry relatively high debt levels, making their shares more sensitive to geopolitical developments compared with airlines that operate with lower leverage.
By contrast, Ryanair and Jet2 plc have minimal direct exposure to the Middle East, less near-term exposure to spot fuel prices and net cash balance sheets. RBC rates both stocks Outperform, with price targets of €32.00 and GBp2,150 respectively.
The bank also warned of additional pressure on Wizz Air’s earnings beyond FY26, pointing to potential pricing challenges as the airline targets roughly 30% seat capacity growth in the first half of FY27. RBC also expects income from sale-and-leaseback gains, compensation payments and foreign exchange translation to decline compared with FY26 levels.
RBC maintained its Sector Perform rating on Wizz Air with a price target of GBp1,200, stating it sees more attractive risk-reward opportunities elsewhere in the airline sector.
The bank added that although European airline stocks in general face pressure from the ongoing conflict, any de-escalation could deliver the biggest upside to airlines with the greatest exposure to the Middle East, with Wizz Air among the most affected.
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