Sunday - Jun 25, 2017

Wizz Air plans a June IPO on the London Stock Exchange next month


Wizz Air plans a June IPO on the London Stock Exchange next month

In a recent statement, Budapest low-cost airline Wizz Air have announced their plans to launch an initial public offering on the stock exchange in London next month, where they hope to raise around €200 million.

If all goes according to plan, Wizz Air will use the proceeds of the IPO to first of all pop-up its balance sheet, and later acquire aircraft parts, with the balance going towards consolidating existing markets and establishing new ones.

The forthcoming stock flotation is expected to close a market value on Wizz Air with a market capitalisation of around £1 billion (€1.1 billion, $1.5 billion) and will mean freeing up some capital for the company’s principal investors, Phoenix, Arizona base Indigo Partners, whose founder William Franke is also chairman of the airline, whilst retaining a controlling interest.

Wizz Air was founded in 2004 by Hungarian entrepreneur Jozsef Varadi, who acts as the airline’s chief executive; Varadi brought with him long experience of the airline industry in Eastern Europe, having spent a number of years with the now-defunct Hungarian state airline Malev before forming Wizz Air.

According to Varadi, Wizz Air is currently in an excellent position for growth with Eastern European low-cost carriers having only achieved 20 per cent market penetration in Central and eastern Europe, slightly less than half than what their counterparts in –Western Europe have achieved, despite the collapse of Malev in 2012.

Close to fourteen million passengers flew with Wizz Air in the 2013-14 financial year, bringing in reported revenue of €1 billion in the year that ended on March 31st, 2014, signifying an increase in profit of 19 per cent from the previous financial year, while net profit rose by an outstanding 193 per cent to €89 million.

Wizz Air, who prefer to lease their aircraft rather than own them, had already made public their plans to increase its fleet of Airbus narrow-body aircraft from 50 to 82 by 2017, irrespective of the results of the IPO.

According to Mike Powell, Wizz Air’s finance director, anticipation is high that the transparency requirements that the company will required to adhere to after the IPO should significantly enhance their credit standing, bringing with it an immediate positive effect on their aircraft rental costs.

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