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Discount carrier Wizz Air Holdings Plc is considering using a new fleet of long-range narrow-body Airbus SE jets to launch flights from London to Dubai and even central Europe to India in a further challenge to network rivals.
The 20 A321 XLR planes ordered last week will allow Wizz to broaden its footprint and beef up capacity on existing destinations, Chief Executive Officer Jozsef Varadi said in an interview. The Budapest-based airline has no plans to deploy them on trans-Atlantic routes.
Wizz, eastern Europe’s biggest discount carrier, announced the XLR order at the Paris Air Show shortly after Airbus unveiled the model — the newest member of its A320-family — as a challenge to Boeing Co. in medium-haul markets. Varadi said the jet, which has a range of 4,700 nautical miles and 239 seats in a high-density layout, will allow Wizz to add another couple of hours of flying time to operations currently limited to five or six hours.
“We’ll connect the dots of our existing network but we’ll be looking at new opportunities, too,” he said in London. “The XLR will be delivered in four years so we have plenty of time to work it out.”
Wizz flights span from Iceland on the Arctic Circle to Dubai in the Persian Gulf and from the Canary Islands in the Atlantic to Astana in Kazakhstan. The A321 planes, both the standard and long range versions, will comprise 80% of the fleet in four years. Varadi said he’d switch to the model entirely if all the airports Wizz serves had runways long enough to accommodate the plane.
The XLR deal is part of a 50-plane purchase by Wizz investor Indigo Partners. Some of the jets will go to Frontier Airlines in the U.S. and Chile’s JetSmart. Indigo’s role was to secure the best prices through a bulk deal, but sales contracts are with individual airlines, Varadi said.
The CEO, who founded Wizz in 2004 and took it public in 2015, said he’s “upbeat” about market conditions in Europe despite a June 16 warning from the region’s biggest airline, Deutsche Lufthansa AG, that earnings are being squeezed by a fare war on short-haul routes.
Varadi said Wizz is well placed to ride out the pressure on pricing because it’s focused on eastern Europe, where GDP is growing fast and costs are 50% lower than at Lufthansa’s Eurowings arm. Competition in Vienna — where Wizz has been vying with Lufthansa, Ryanair Holdings Plc, EasyJet Plc and British Airways owner IAG SA — shows signs of easing, he said.
Wizz’s other western European base is at London Luton, where the CEO said demand is holding up well despite concerns that the U.K. may be headed for a hard Brexit under a new prime minister. Inbound passenger flows on flights from east-European countries remain strong despite a reliance on migrant workers, he added.
Wizz has no interest in bidding for Thomas Cook Group Plc airlines, which the tour operator has put up for sale, though it could look at individual airport slots that might become available, Varadi said.
Speculation that network carriers like Lufthansa may seek to buy discount rivals as they struggle to make money from their own short-haul operations ignores the valuations of low-cost specialists, according to the CEO. Wizz has a market capitalization of 3.39 billion euros ($3.9 billion), 48% that of Lufthansa, while Ryanair is worth almost 60% more than the German company.
–With assistance from Richard Weiss.
©2019 Bloomberg L.P.