Stock Market Flotation to Fuel Wizz Air's Growth Plans
Low-cost carrier Wizz Air is aiming to raise €200 million ($273 million) through an initial public offering on the London Stock Exchange next month. The 10-year-old company is seeking to expand its network, which currently consists of around 315 routes between 96 destinations in 35 countries, in order to challenge the continent’s leading budget carriers Ryanair and EasyJet. U.S. private equity group Indigo Partners, which is currently Wizz Air’s leading shareholder, is expected to reduce its equity holding through the share offering.
The Hungary-based carrier currently operates a fleet of 50 leased Airbus A320s and plans to increase this fleet to 82 jets by the end of 2017. It has 17 bases across Central and Eastern Europe, and claims a 38-percent share of this market based on scheduled departing seat capacity. In the financial year ending on March 31, 2014, Wizz Air achieved a 19-percent increase in revenues, to €1.012 billion ($1.36 billion) and a 193-percent hike in net profits to €89 million ($121 million). A key feature of the airline’s performance has been high fleet utilization, averaging 12.4 flight hours per day for each aircraft.
“We look forward to building on our success to date as we leverage opportunities both in our current markets and new markets in the Central and Eastern European region and farther East, many of which have significantly higher GDP growth forecasts than the rest of Western Europe and whose propensity to travel by air can be stimulated and driven by the low air-fares we offer,” commented CEO Jozsef Varadi. He also expects to see further airline failures in this region and indicated that Wizz Air will be well placed to exploit the opportunities these present. Varadi, an economist who was formerly an executive with now-defunct Hungarian flag carrier Malev, indicated that the IPO will provide greater working capital to fuel expansion.