Tuesday, September 23, 2014

Wizz Air Wants Bigger Jets in Budget Airline Battle: Eastern Europe-Based Airline May Swap Airbus A320s for Larger A321s

The Wall Street Journal
By Robert Wall

Sept. 23, 2014 7:03 a.m. ET

ISTANBUL—Wizz Air Holdings PLC is thinking of buying a slightly larger version of the current single-aisle Airbus jetliners it has on order to try to compress its costs to the same level as those of rival Ryanair Holdings PLC.

The move by the eastern Europe-focused budget airline comes amid continuing fierce competition in Europe's airline sector.

The likes of Ireland-based Ryanair and easyJet PLC of the U.K. continue to expand their geographic reach while targeting business travelers rather than just holidaymakers and people visiting friends and relatives. National airline operators like British Airways-parent International Consolidated Airlines Group and Deutsche Lufthansa AG are expanding budget carriers of their own.

Wizzair plans to introduce more Airbus A321 jets by converting an order for smaller A320 jets, the airline's chief financial officer Michael Powell said. The airline has more than 30 A320s on order at Airbus.

"Right now we have 10% higher unit cost than Ryanair. We'd like to eliminate that disadvantage" Mr. Powell told The Wall Street Journal on the sidelines of the ISTAT Europe conference. Wizz Air has already ordered 26 A321s with deliveries to start next year.

The carrier, which operates head-to-head with Ryanair in eastern and central Europe, may add more seats to the A321, Mr. Powell said.

The plane currently seats 220 passengers, though Airbus is offering higher seat density arrangements. Wizz Air may fly 230 passengers on its planes.

Ryanair this month said it would buy as many as 200 Boeing 737 Max jets, an upgraded version now in development, with 197 seats as the Chicago-based plane maker offers a higher-seat count configuration.

The Dublin-based airline is big operator of Boeing's 737-800. Ryanair chief executive Michael O'Leary long pushed Boeing for a 737 configuration accommodating more passengers to cut per-seat costs.

Wizz Air would likely take future single-aisle jets also in larger configurations though the planes it now has an order should satisfy its growth plans for another six years, Mr. Powell said.

Wizz Air in June pulled its planned €200 million initial public offering of stock after rising oil prices and profit warnings at some carriers unsettled investors.

Chief executive József Váradi said last week the IPO may be revived, though it isn't needed to finance growth plans. He called a share sale "a strategic option, but not the only strategic option."

Mr. Powell said the carrier was seeking growth in part by supplanting failed carriers.

"There is certainly a need for consolidation," he said. Mr. Powell bemoaned a European Union decision this year to approve state aid for Poland's struggling national carrier LOT, calling the decision "pretty galling."

- Source:  http://online.wsj.com

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