Wizz Air slows its capacity recovery, cushioned by cash

After years of double digit growth, Wizz Air’s seat count dropped by 43% in the first 10 months of 2020. This compares with a 55% capacity drop for all of Europe.

Wizz Air returned capacity more aggressively than the market when it emerged from its grounding in the Jul-Sep quarter. However, the ultra LCC has applied the brakes following renewed lockdown and travel restrictions, and capacity is now below the European average as a percentage of 2019 levels.

In spite of reduced near term capacity plans, Wizz Air expects there to be opportunities in the crisis. Its fleet will increase by 13% in FY2021 and more than double by FY2027. Its seat share has grown in its Central/Eastern Europe core market and it is opening 13 new bases across Europe, from the UK to Russia. Further new markets will be added by Wizz Air Dubai, which now expects to launch in Dec-2020.

Moreover, Wizz Air can afford to wait out any extension of the period of weak demand. CEO József Váradi has said that its cash balance is enough to last for two years, even with a full lockdown and no flying.

Summary:

• Wizz Air returned capacity faster than the market in the Jul-Sep quarter, but is now below the European market as a percentage of 2019 levels.
• Ryanair was the only leading European airline group with a better Apr-Sep operating margin than Wizz Air. Wizz Air has the strongest liquidity.
• Wizz Air’s capacity plans are reduced, but it foresees opportunities in the crisis. Its fleet will increase by 13% in FY2021 and more than double by FY2027.
• Wizz Air Abu Dhabi is operationally ready, but its launch has been pushed back to mid Dec-2020.