Wizz Air Holdings PLC (LON:WIZZ) is “the greenest airline in Europe” and is expected by analysts at JP Morgan to return to net income margins of between 13-15% despite a growing need for European airlines to cut down on carbon emissions, according to analysts at JP Morgan.
In a note on Wednesday, the investment bank said the need to reduce CO2 emissions is “a financial headwind” for the sector amid the need to invest in new aircraft while also contending with compulsory emissions charges and mandatory carbon offsetting by 2027.
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However, analysts said airlines with “young, fuel efficient fleets have a clear advantage”, noting that Wizz, which they rate at ‘overweight’ with a target price of 5,350p, has the youngest fleet of aircraft among the carriers in its coverage.
Despite this, JP Morgan predicted that both Wizz and its rival Ryanair Holdings PLC (LON:RYA) will face “rising carbon credit costs” as the European Emissions Trading Systems “penalise fast-growing airlines”.
“However, we still expect WIZZ to return to net income margins of 13-15% in the coming years”, the bank said.
Shares in Wizz were flat at 4,723p in late morning trading.