Life after the coronavirus crisis. Wizz Air has a bold business growth strategy
While many other airlines cancel flights, postpone delivery of new aircrafts and clearly state that they will reduce the fleet after the crisis, Wizz Air plans to go in the opposite direction. The airline will not reduce its fleet and even intends to increase it significantly.
The coronavirus pandemic is forcing carriers to suspend connections and ground thousands of planes. At the same time airlines’ CEO are making plans for the future and they are not very optimistic: a few days ago both easyJet and Lufthansa clearly stated that after returning to “normality” the demand for flights will not be the same, and as a result both carriers will reduce their fleet. In case of easyJet this can be a significant change because the fleet might be reduced by up to 1/4 or almost 100 aircrafts. Besides easyJet is also considering cancelation or significant delay of the large Airbus order for 107 new aircraft. However Jozsef Varadi, the CEO of Wizz Air, has completely different approach.
In an interview with Bloomberg, Varadi declared that by the end of the year the airline would accept all 15 Airbus A321 neo in full conformity with the delivery schedule agreed with the European aircraft manufacturer. Furthermore, the Hungarian carrier is also not planning to suspend its orders for more aircrafts.
According to Varadi , Wizz Air wants to be totally prepared for the post-pandemic situation and the rebound on the market in order to be able to respond quickly to expansion opportunities when many carriers fail due to the crisis. At the same time Varadi confirmed that although it has shut down 90% of the routes the carrier’s financial condition is quite good.
Most European airlines have been badly mismanaged when it comes to liquidity. Now they are all begging for government support. Governments should only take care of employment and reduce taxes such as air-navigation costs”
The state intervention in the struggle between airlines is the biggest concern for the Wizz Air CEO at the moment, particularly in Germany:
It will completely destroy the aviation market in Europe and take it back in time by 5-10 years. This will be a precedent followed by other countries
He adds that for now only the British government is taking a “measured approach”, promising to help airlines only as last resort.
Wizz Air has currently €1.5 billion in cash and can afford at least one and a half year of very reduced activity. At the same time the company is reducing its costs significantly: after current cuts the costs will amount to around €90 million/month. Varadi plans even more cuts to keep a level of €70 milion after new cost-cutting measures are completed.
Wizz Air currently operates a fleet of 121 Airbus aircrafts with 270 more to be delivered (including A321XLR for long-haul intercontinental routes). Varadi expects that this year the airline will relaunch up to 80 percent of its scheduled routes and will use new planes to take advantage of the routes previously operated by airlines that has gone bankrupt or are not able to operate them due to financial difficulties.
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