Brexit vote forces Wizz Air to ditch UK growth plans

Budget airline Wizz Air said it will cut its capacity growth in the UK by 50% following Britain's decision to vote in favour of leaving the European Union.

Citing a sharp decline in the pound, which has undermined the euro value of fares, the Hungary-based carrier indicated it will redeploy the capacity it had planned to use for routes to Britain to other "non-UK routes".

"The UK's decision to leave the European Union has led to a notable weakness in fares (in euro terms) on routes to/from the UK mainly due to the much weaker British pound which is currently 19% lower than the same period last year versus the euro," the airline said in a statement on Wednesday (20 July).

"Wizz Air has already started readjusting its network due to this weakness and halving its intended second half growth to the UK and redeploying this capacity to other non-UK routes."

The news came as the FTSE 250-listed airline, which floated on the London Stock Exchange in February last year, reported pre-tax profits in the three months to the end of June which surged 52.2% year-on-year to €52.3m (£43.9m, $57.5m).

Revenue climbed 9.8% to €364.9m, while passenger numbers increased 17.9% from the corresponding period in the previous year to 5.8 million. Meanwhile, fuel costs declined 16.5% year-on-year to €93.8m.

Group chief executive József Váradi highlighted the results proved the resilience of the company's business model.

"While Wizz Air is not immune to the recent challenges in our industry we believe our ultra-low cost base [...] enables us to better respond to these challenges than many other European airlines and also means we are well placed to exploit market opportunities as they arise," he said.

Shares in Wizz Air, the largest low-cost airline in Eastern and Central Europe, plummeted 30% in the two days following the EU referendum, losing approximately 50% of the value gained since the flotation, but have since regained 10%.