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- Wizz Air Hungary Airlines Ltd.
BUD International Airport Building 221
- Main hub
- Budapest Ferenc Liszt International Airport
- Business model
- Low Cost Carrier
- Domestic | International
- Airline Group
- Part of Wizz Air Group
- Frequent Flyer Programme
- WIZZ Discount Club
- Association Membership
Established in May-2004, Wizz Air is a low-cost carrier headquartered in Budapest Airport, with secondary hubs at Gdańsk, Katowice and Belgrade as well as bases in 18 other airports across Europe. Wizz Air operates on over 380 routes across Europe, using predominantly secondary airports, and is continuously looking at opportunities to expand its network of destinations and provide low-cost air transport to and from Central and Eastern Europe.
Location of Wizz Air main hub (Budapest Ferenc Liszt International Airport)
Wizz Air Holdings Plc share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Wizz Air fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Following easyJet's fall back into loss in 1H2016 (six months to Mar-2016), it still expected that the summer months would more than offset this, allowing another year of profit growth. A profit warning after the UK's Brexit vote dashed this hope in late Jun-2016. EasyJet's 3Q2016 (April to June) trading statement casts a bigger shadow over its outlook, as weak unit revenue is not being offset by unit cost reduction. According to CAPA calculations, easyJet's 3Q2016 pre-tax profit fell by 59% year on year.
European LCCs Norwegian and Wizz Air have reported improved profits for the same quarter and are on track to achieve stronger full year results, but easyJet is not alone among European airlines in lowering earnings expectations in recent weeks. IAG and Lufthansa have also issued profit warnings. Growing macroeconomic and geopolitical uncertainties are weighing on unit revenue. For some, there is no longer a sufficient release coming from lower fuel prices, which also contribute to unit revenue weakness by encouraging additional capacity.
The majority of European airlines have yet to report April-June results, most notably Ryanair, Air France-KLM and IAG. Nevertheless, the reporting season seems likely to herald a more cautious phase of the airline cycle.
Wizz Air: city pair overlap with Ryanair on one third of seats. Opportunities for both; CASK crucial
Wizz Air and Ryanair are Europe's two lowest cost airlines, and most profitable airlines by operating margin. Together with Pegasus they form a small group of European ultra-LCCs. Unlike Pegasus, whose business concentrates on Turkey-Europe and domestic Turkey, both Wizz Air and Ryanair have bases in several countries.
However, while Ryanair is Europe's largest airline by seats, with a pan-European network and 84 bases, Wizz Air focuses on the niche between Central/Eastern Europe and Western Europe. All of Wizz Air's 25 bases are in Central/Eastern Europe, where it is the largest airline and Ryanair is number two. This superiority in CEE is based on Wizz Air's greater share of capacity in most of the larger country markets in the region (but not Poland), while in fact Ryanair is bigger in more (mainly smaller) countries.
In Jul-2016 Wizz Air faces Ryanair competition on 14% of its city pairs, covering 30% of its seats. Moreover, Ryanair is expanding rapidly in CEE, with five new bases this winter, increasing this overlap to around one third of Wizz Air's capacity. For Ryanair, the overlap represents a higher proportion of its CEE capacity, but only a very small share of its total seat numbers.
Over 20 years the responses of Europe's big three legacy groups to the short/medium haul LCC revolution have all been through phases of denial, submission, retreat, and counter-attack.
Now all three now have a more clearly defined LCC strategy than in the past. IAG, with Vueling and Iberia Express, has the largest, most pan-European and most profitable LCC, helping the group to grow its short/medium haul traffic. The Lufthansa and Air France-KLM LCCs are more defensive, to preserve market share. Both have only recently started LCC bases outside their original home markets. Lufthansa (after a false start with high cost Germanwings, now transferring to Eurowings) has replaced mainline capacity with LCC capacity, route-for-route. Air France-KLM has grown Transavia while cutting mainline capacity, but without substitutions route-for-route.
Only Lufthansa has taken its LCC onto long haul routes, albeit on a limited scale. Facing the more complex challenges on long haul, all three are developing a growing range of partnerships with other airlines. They have also sought to improve labour productivity in their legacy network airlines, with varying degrees of success, but again led by IAG. A next step may even be to connect with their arch rivals.
Wizz Air: more strong FY results for ultra-LCC. A321 to solve problem of further unit cost reduction
Wizz Air's second annual results since its Feb-2015 IPO show it going from strength to strength. Almost all the key indicators moved positively in FY2016. Capacity and revenue grew rapidly once more and load factor went up. Wizz Air's market share in Central/Eastern Europe increased. Net profit was higher and operating margin expanded. Moreover, unit cost fell.
However, behind the headlines, Wizz Air cannot sit back and relax. Firstly, after years in which unit revenue was driven by strong ancillaries compensating for weak ticket pricing, total RASK fell in FY2016. Ancillaries remained strong, but not strong enough to offset falling fares. The RASK outlook remains weak. Secondly, unit cost only fell because of lower fuel prices. Ex fuel CASK has barely moved for six years and is already the second lowest in Europe. It is difficult to cut non-fuel costs further (although containing them, as Wizz Air has done, is a creditable achievement).
Of course, well-managed companies do not sit back and relax. Wizz Air's is building its future on the A321, whose greater seat count will give lower unit costs versus the A320s. Wizz Air judges that this unit cost benefit will compensate for the larger aircraft's dilutive impact on yield.
Air Serbia's transformation from the loss-making carrier Jat Airways in 2013 to one with the possibility of sustainable levels of profitability took another step forward in 2015, with another positive result. After receiving investment from Etihad and the Serbian government in 2H2013, it had recovered from heavy losses to a small profit in 2014. This was based on an impressive reduction in unit cost, with a realignment of the network and its commercial positioning.
In 2015 Air Serbia again increased its net profit, although this remained slim at only 1% of revenue. Buoyed by its success in establishing a track record of positive results, Air Serbia is growing its European network. Perhaps more significantly, it is also launching its first long haul route, Belgrade-New York, this summer.
Its unit cost is efficient versus legacy airlines and not very much higher than LCCs such as easyJet. It has the good fortune to face only a relatively small amount of competition from LCCs (it only has competition from any other airline on a minority of its routes). However, the ultra-LCC Wizz Air, which has a much lower unit cost than Air Serbia, is its leading LCC competitor and could provide a greater threat over time.
Among airports in Germany's Top 10 by passenger numbers, Berlin Schoenefeld was the fastest-growing in 2015. After declining between 2010 and 2013, its traffic then grew by 27% over two years. In the first three months of 2016 passenger numbers have grown by a further 43% year- on-year.
Berlin Schoenefeld is the smaller of the two airports in the Berlin system, yet its growth vastly outpaces the low single-digit rate of Berlin Tegel. Already an important base for easyJet in Germany, Schoenefeld has experienced recent rapid growth that has been mainly the result of expansion by Ryanair. Wizz Air has also entered Schoenefeld in 2016. Although easyJet's growth is much slower, it has announced that it will increase the number of aircraft based at the airport from nine to 10.
At the same time airberlin, based at neighbouring Tegel, is losing market share in the Berlin airport system. Although Germanwings is gaining share, this is merely substituting for its parent Lufthansa. By the situation at Schoenefeld, Berlin is a good illustration of how LCCs continue to take share from legacy airlines on intra-Europe routes.