Indigo Partners To Sell £500m Of Wizz Air Shares

Advertisement:

**Update 04/02/20 @11:34 UTC – According to Reuters, Indigo Partners has this morning sold 12.5 million shares of Wizz Air at a 3.5% discount on Monday’s closing price. The sale price of 4,015 per share has raised around £500 ($649.73) million.**

Wizz Air shareholder Indigo Partners is preparing to sell £500m ($650m) worth of its shares in the low-cost airline. The American private equity firm owns a 20.6% stake in Wizz Air which, according to Monday’s closing price on the London Stock Exchange, is worth £624m ($810.43) million.

wizz-air-a3208b5d7cde511441be9d39aef7079ea3a6_92179127
Indigo Partners to sell some Wizz Air shares. Photo: Wizz Air

The low-cost airline, which is focused on central and eastern European destinations, has a 49% cap on shares that are owned by non-European Union and Switzerland qualifying nationals.

Wizz Air shares will be of interest to institutional investors

The main underwriter or book-runner in charge of the Wizz Air share sale says that the shares will most likely be offered at £40.15 ($52.12) per share. They note that the shares will be of interest to institutional investors.

The sale of the Wizz Air shares could not come at a more opportune time after the Budapest based carrier upgraded its profits forecast following a strong third-quarter performance. Sales were up by 24.2% to 637.3€ ($704.25) million, while passenger numbers increased by 23.2% on the same period in 2018.

Ryanair and easyJet have both upgraded their profit forecast

In recent months, European short-haul airlines have seen an uptick in business with both easyJet and Ryanair upgrading their profits forecast for January 2020. For the third quarter of 2019, Irish low-cost carrier Ryanair reported profits of 88€ million ($98 million) despite the grounding of the Boeing 737 MAX and problems with employee unions.

Advertisement:
wizz-air
JP Morgan is the book-runner in the Wizz Air share sale. Photo: Wizz Air

By selling shares in Wizz Air now, the Phoenix, Arizona headquartered private equity company would help Wizz Air to comply with European Union shareholder rules following the UK’s departure from the EU. According to European Union rules, airlines that wish to operate in the block of 27 nations must have an ownership percentage of more than 50% EU nationals.

Last year with Brexit looming, Wizz Air chief executive Jozsef Varadi told Reuters that the budget airline still had work to do regarding this, as once the UK left the EU they would no longer be in compliance with the rule. JP Morgan is the book-runner handling Indigo’s Wizz Air share sale and says that the sale of the American company’s shares should help the Hungarian airline to comply with the European Union rules.

Wizz Air will add to its Vienna based fleet

Already the biggest airline serving Budapest Ferenc Liszt International Airport (BUD), Europe’s fastest-growing airline has increased its presence at nearby Vienna International Airport (VIE).

Advertisement:
wizz-air
Wizz Air will base another aircraft at VIE. Photo: Wizz Air

From July 1st, 2020 a new Airbus A321 will become the ninth aircraft to join the Wizz Air fleet at Schwechat, helping to consolidate Wizz Air as being central Europe’s number one carrier. Starting next summer Wizz Air will offer five new routes from the Austrian capital to Alghero, Sardinia, Faro, Portugal, Podgorica, Montenegro and Suceava, Romania. As well as the five new routes Wizz Air will increase the frequency of its existing Vienna flights to Malaga, Spain, Porto, Portugal and Milan and Rome in Italy.

Advertisement: