Air Freight News

Wizz Air CEO stands by major jet-delivery plan in boost to airbus

Wizz Air Holdings Plc Chief Executive Officer Jozsef Varadi said Europe’s third-biggest discount carrier will take delivery of hundreds of new jetliners as planned despite idling 90% of capacity in response to the coronavirus outbreak.

Wizz will accept all 15 Airbus SE planes due this year, followed by the rest of its commitment, to position itself for a post-virus rebound in travel demand and seize on expansion opportunities as the pandemic pushes rivals toward collapse, Varadi said Wednesday in a phone interview.

Carriers worldwide have been delaying plane handovers or looking at scrapping deals altogether as fleets are grounded and revenue slows to a trickle. Wizz’s U.K. rival EasyJet Plc is under pressure from its founder and leading investor to terminate a 107-plane Airbus order to help survive the crisis.

While European airlines have enough cash to survive two months on average, according to the International Air Transport Association, Varadi said Wizz has sufficient liquidity to span 1 1/2 years, and called on states to resist handing out aid that could distort the market by propping up inefficient carriers.

“Most European airlines have been badly mismanaged when it comes to liquidity,” he said from Wizz’s headquarters in Budapest. “Now they’re all begging for state support. Governments should only be stepping in in areas of employment and reducing charges such as air-navigation costs.”

Varadi said he’s concerned that Germany in particular might dole out billions of euros in backing for Deutsche Lufthansa AG that would “completely destroy the market” and set a precedent for bailouts with a social agenda. Only the U.K. appears to be taking a measured approach, he said, with a pledge to provide aid only as a last resort and then on purely commercial terms.

Interventions could put Europe’s liberalized, market-driven aviation regime back by five to 10 years, the CEO said, with many private operators failing as governments favor former flag-carriers that have struggled to compete with Wizz and larger discount peers Ryanair Holdings Plc and EasyJet.

Wizz had 1.5 billion euros ($1.6 billion) of cash prior to the Covid-19 crisis and has the same now following cost cuts including a 50% employee pay reduction and zero salary for top executives. Monthly cash burn has been reduced to about 90 million euros and should drop to 70 million euros once a target of cutting variable costs by 80% has been achieved, Varadi said.

Wizz operates a fleet of 121 Airbus narrow-body jets, with about 270 more on order. The CEO said he anticipates as much as 80% of capacity returning to service this year, with the balance available to add flights in markets where weaker carriers exit or shrink.

Bloomberg
Bloomberg

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© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

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