Hungarian-based carrier WizzAir has negotiated a crucial compensation agreement with US engine manufacturer Pratt & Whitney following widespread engine issues that led to the grounding of approximately 40 aircraft throughout the year.
The FTSE 250 airline has secured a two-year deal ensuring operational support and compensation for costs directly associated with grounding a fifth of its fleet for essential inspections. The agreement comes as the carrier grapples with significant operational disruptions stemming from microscopic cracks discovered in turbine blades of certain geared Pratt & Whitney engines.
The impact on WizzAir’s financial performance has been substantial, with profits declining by more than 20% to €315 million in the first half of the financial year ending September 30. The airline, often regarded as eastern Europe’s equivalent to Ryanair, has maintained an average of 46 grounded aircraft during the past quarter for inspection purposes.
Despite these challenges, WizzAir’s management remains optimistic about future growth prospects. The company has strategically ordered 50 Airbus A321neo aircraft, which is expected to boost passenger capacity by approximately 20% in the 2025-26 financial year.
The compensation agreement mirrors a similar arrangement struck between Pratt & Whitney and Indian carrier IndiGo in June, though the financial terms remain undisclosed. The engine manufacturer has acknowledged that roughly 1,200 engines require inspection following the discovery of contaminated powdered metal in their components.
Market response to the announcement has been cautiously positive, with WizzAir’s shares rising 17p, or 1.2%, to £14.39 in recent trading. However, the airline’s stock value has depreciated by approximately one-third over the past 12 months, reflecting ongoing investor concerns about the operational challenges facing the carrier.
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