Danish fund sells Wizz Air shares in spat over union stance

A Danish pension fund said it will exit its $3 million stake in Wizz Air Holdings Plc after talks failed to resolve concerns surrounding the discount carrier’s labor practices.

AkademikerPension, which manages around $23 billion, said Monday that it will sell the stock after Wizz rebuffed a plea for it to recognize staff rights concerning freedom of association and collective bargaining agreements. 

“Management’s behavior conflicts with human and labor rights,” Jens Munch Holst, the fund’s chief executive officer, said in a statement. “The risk of being linked to a clear and persistent breach of our responsible investment policy is simply too high if we remain invested.”

Fast-growing Wizz is adding capacity to win market share as Covid-19 travel restrictions are eased. That’s propelling the Budapest-based low-cost carrier into West European markets where labor rights are well established and an increasingly hot topic for investors. 

While the amount is just a fraction of Wizz’s 4.26 billion-pound ($5.76 billion) market value, the AkademikerPension campaign has been joined by London’s Ardevora Asset Management.

Swiss aviation-news website AeroTelegraph cited Wizz CEO Jozsef Varadi as saying in 2020 that the company has “been keeping out unions everywhere” and typically moves to another base when labor demands become too costly, something discount operators are able to do since they have no one main hub.

Wizz says it engages openly with the workforce via its People Council, employee surveys, bi-monthly base visits and a ‘Floor Talks’ program offering a two-way dialog with Varadi, and has also recently formed a Sustainability and Culture committee focused on environmental and staff issues.

The carrier says the success of its business model has already allowed half the 1,000 people let go at the height of the pandemic to be rehired, with over 1,000 more to be recruited in coming months. 

Scandinavia has among the highest rates of union participation in the world. AkademikerPension said unionization is “a fundamental human right enshrined in global and regional conventions and national laws.”

Varadi stands to receive a bonus of 100 million pounds if he can lift Wizz’s market value to almost 12 billion pounds over five years, after shareholders approved the plan in July.