Budget carrier Wizz Air foresees “opportunities” as the industry emerges from the coronavirus crisis with some airlines sure to be “eliminated”.
Wizz Air chief executive Josef Varadi said: “There will be less players for sure. Wizz Air came into this with stronger liquidity than most other airlines. We think post-virus we will see more opportunities.
“If the airline was grounded another 18 months we would still be able to operate. That is the strength of our liquidity. We are looking at opportunities – at who will return and who will remain on the ground and be eliminated.
“Every crisis reshuffles the players in the market. We are focused on what we will be able to deliver post-coronavirus. We are looking at whether there will be market gaps to be filled.”
Wizz Air confirmed this week that it qualifies for a loan under the UK government’s Covid Corporate Financing Facility.
Speaking on an Aviation Week webcast, Varadi said: “We remain focused on the future. In the next 20 months we plan to take delivery of 25 Airbus aircraft. We will look at growing the business again probably about a year from now.
“For some time the industry will be cash flat. This will give as a real point of advantage. We are going to take delivery of new aircraft.”
Varadi suggested the crisis would lead to a new focus on liquidity by airlines and aviation investors.
He argued: “In general, airlines have been managed poorly for liquidity and based on paper profits. It’s not enough to be strong in terms of paper profits. Airlines go bust because they have no liquidity.
“Cash is king. The problem in the airline industry is that it is such a capital intensive sector. You are dependent on the capital markets. Everybody looks at EBTIDA [operating profit] or net profit. But profitability needs to be measured against liquidity.
“It’s a similar issue to the banks a few years ago [in 2008]. The lesson is to manage your business for cash, for liquidity.”
He forecast state bail-outs in Europe would favour some carriers at the expense of others but weaken even those which survive, saying: “It feels like airlines will be hand-picked by governments – to support this one and let that one go.
“There will be a market distortion. But having said that, whoever is bailed out by government is going to be curbed of expansion options because they have to repay taxpayers’ money.
“In Norway, the government will insist the bailout [of Norwegian Air] supports Norway, not the UK or elsewhere.”
Varadi insisted: “Airlines able to emerge from this independently will be in a better position. Coronavirus will make us a better business relative to the industry.”
