Wizz Air, a budget airline based in Hungary, has decided to reduce its planned capacity by 5% for the second half of its fiscal year, even though it had a better-than-expected summer season that led it to raise its revenue expectations for the near future. This decision comes amid ongoing tensions between the U.S. and Iran, which have caused fuel prices to rise sharply. Higher fuel costs are creating major financial difficulties across the global aviation industry. Shares in Wizz Air rose by 3.4% to 985.5 pence by 8:40 a.m. GMT. Wizz Air has a strong financial position, with more than €2.2 billion in liquidity and fuel hedging that covers 80% of its needs for the next 12 months at about half the current market price. This gives it a better advantage than many of its competitors. The airline has set ambitious medium-term goals, including €10 billion in revenue and a 10% margin on earnings before interest and tax by fiscal 2030. It plans to operate a fleet of 335 aircraft and carry 127 million passengers annually by that time. As of now, it operates 269 aircraft and transported 69.7 million passengers in fiscal 2026. The ongoing U.S.-Iran tensions have been described as the most severe airline crisis in terms of cost since the COVID-19 pandemic. Earlier this week, airBaltic, a Latvian airline, became the first European carrier to file for bankruptcy. The airline said the move was necessary to improve its financial standing and support its long-term plan to become a more efficient and stronger company. It assured passengers that their tickets remain valid and no action is required from them. While full-service airlines have generally been more resilient than budget carriers, even major U.S. airlines have cut their planned flight schedules due to rising fuel prices. Ahead of its capital markets day, Wizz Air raised its forecast for revenue per available seat kilometre (RASK), a key industry metric that measures how much money airlines earn per seat per distance travelled. It now expects RASK to remain flat compared to the previous year, up from a forecast of a low single-digit decline. Goodbody Stockbrokers analysts noted that this slight improvement in pricing is a positive development, especially considering Wizz Air's significant increase in capacity. Rival Ryanair also adjusted its outlook for average fares, predicting a slight increase this winter due to a "mild upturn" since July, though the forecast still heavily depends on oil prices.