Wizz Air steps up U.K. expansion as omicron curbs ease

Wizz Air Holdings Plc is scouring its European operations for planes and staff to boost U.K. capacity amid mounting optimism that test-free travel will spur a comeback in demand by the summer.

Bookings are up as Britain prepares to scrap testing for vaccinated arrivals after the omicron variant of Covid-19 pushed Wizz to a loss last quarter. Chief Executive Officer Jozsef Varadi bought slots at London Gatwick airport last month and said Wednesday he may seek more, while bringing in more flights from elsewhere.

Governments hit first by omicron are starting to reverse border clampdowns instituted late last year. The U.K. will end testing from Feb. 11 and the European Union has said it also plans to drop requirements for those who are fully vaccinated. The changes have infused airlines with confidence that after a two-year slump, demand will finally return for good.

“Continental Europe is probably a few weeks behind the U.K. but I would be expecting very similar trends” Varadi said in a Bloomberg TV interview. The company is weighing whether “we should be executing plans earlier and more as a result of a largely improving market in the U.K.”

Shares of Wizz rose as much as 5% and were trading 3.4% higher as of 10:19 a.m. in London. European travel and leisure was the best-performing sector on the Stoxx 600 on rising optimism about Covid’s retreat.

Omicron’s Toll

Wizz reported an operating loss of 213.6 million euros ($241 million) in the fiscal third quarter through December, as omicron curbed demand and the Hungarian discounter spent money ramping up flights, according to a statement.

Lingering uncertainty over travel is likely to impact bookings over the coming weeks, the airline said, leading to a higher loss in the fiscal fourth quarter through March. It had previously forecast a 200 million-euro loss for the December quarter that could carry over into early 2022.

Varadi said he’s optimistic that demand will recover through spring, allowing near-full utilization of the Wizz fleet from summer onwards.

‘Squeezing More Juice’

With Wizz seeing a “profound” increase in U.K. demand, Varadi is steering more inbound flights to Gatwick to augment planes based there. He’ll also boost utilization of the carrier’s London Luton base, ramp up flights from Doncaster in northern England and resume operations from Cardiff, Wales.

“We are squeezing more juice out of the lemon,” Varadi said. Tighter slot-usage rules for summer could also provide the opportunity to add capacity at Gatwick after Wizz bought 15 daily takeoff and landing positions from Norwegian Air Shuttle ASA in December.

What Bloomberg Intelligence says: 

“Fading restrictions should lead to a strong leisure demand recovery by its spring, we believe, justifying strategic fleet investment to win market share using Wizz’s low-cost model.”

—Conroy Gaynor, BI travel and aviation analyst

Wizz is staging an aggressive expansion as it seeks to narrow the gap to low-cost leader Ryanair Holdings Plc. Both companies, which focus on leisure travel, see opportunities to take market share from so-called full-service carriers that are more dependent on business customers and long-distance trips.

Corporate travel will never be the same after Covid, American Express Co. Chief Executive Officer Stephen Squeri said this week. 

While Wizz became the first major European carrier to return to pre-Covid capacity in August, it had warned that the winter months would require price cuts to spur sales.

Varadi has also placed a major plane order to fuel growth, while Wizz was the unidentified bidder that made a takeover offer for British discount rival EasyJet Plc, Bloomberg reported in September.