Wizz Air Tweaks Fleet Growth Plans on A321neo Delivery Delays

 - November 14, 2019, 11:20 AM
The Central Eastern European low-cost carrier has lowered its delivery expectations for the Airbus A321, scaling down from 12 to eight in the financial year ending March 31 and from 19 to nine in the financial year through March 2021.

Continuing production issues of Airbus’s re-engined single-aisle aircraft have forced Wizz Air to revise fleet growth plans, and the Central Eastern European low-cost carrier now anticipates receiving 14 fewer A321neo jets in the current and next financial year than scheduled a couple of months ago. The LCC is expecting to expand its fleet to 121 aircraft—all Airbus narrowbodies—by the end of March 2020 and to 134 units by the end of March 2021, according to Wizz Air’s updated fleet plan released on Wednesday. In July, Wizz Air still had anticipated growing the fleet to 123 and 145 aircraft, respectively. Estimated A321neo deliveries were scaled down from 12 to eight in the financial year ending March 31 and from 19 to nine in the financial year through March 2021.

Wizz Air received its maiden A321neo powered by Pratt & Whitney GTF engines in March and now has seven in its fleet. The aircraft are fitted with 239 seats. The company has orders for almost 300 Airbus aircraft to be delivered in the next seven years, including 20 A321XLRs, 185 A321neos, and 70 A320neos.

Speaking during a first-half earnings presentation with analysts, Wizz Air CFO Iain Wetherall insisted the airline “definitely” will be able to continue to grow at 15 to 20 percent per year in terms of passengers and revenue in spite of the A321neo delivery delays, which he described as a “short-term” issue. “In terms of the cost base, clearly we would prefer to have the A321neo. It is a superior aircraft,” he said, adding that the LCC is overcoming capacity supply shortfalls by extending leases and pushing up aircraft utilization.

Responding to a remark of an analyst that company executives previously have been “evangelical” about the “really harsh penalties” they negotiated with Airbus in case the airframer changed delivery timings, Wizz Air CEO József Váradi confirmed the airline “is benefitting from those financial penalties.” While he did not disclose the amount of the financial compensation, he stressed these were “technical and not our strategic interest. Our strategic interest is to get the supply of capacity to be able to grow the business. Yes, we are getting some money out of it, but I would rather get the aircraft.” Váradi also highlighted the A321neo “is still being delivered. The aircraft is not grounded” like the Boeing 737 Max.

Wizz Air reported what Váradi called “all-time high financial results” for the six months to September 30, delivering an 18 percent year-on-year increase in passenger numbers to 22.1 million and a 26 percent rise in net profit to €371.5 million ($408.8 million). Revenue rose 22 percent to €1.67 billion.