The CEO of Hungarian-based airline Wizz Air has come out today to criticize the way various governments are providing aid during the coronavirus pandemic. Jozsef Varadi highlighted the inequality in governments choosing to provide aid to flag carriers over other airlines which may result in governments supporting inefficient airlines. He called for a fairer distribution of aid packages to allow the market forces to recover naturally.
The CEO of Wizz Air is not happy. In a phone interview conducted on Wednesday, he made it clear that he is not impressed by how several governments have promised to provide to airlines which he says, are already struggling. He believes too much aid could disrupt the aviation market by allowing carriers which would have collapsed, to continue.
Government aid issues
Mr. Varadi told Bloomberg that he believes that:
“Most European airlines have been badly mismanaged when it comes to liquidity. Now they’re all begging for state support. Governments should only be stepping up in areas of employment and reducing charges such as air navigation costs.”
The International Air Transport Association (IATA) says that most European airlines have enough cash to last for just two months. Wizz Air has said it has enough available funds to last just over a year.
The CEO continued to say that government aid could be propping up carriers that would have collapsed even if the virus had not caused widespread disruption. For example, all airlines in the former Yugoslavia area were due to receive government funds before the coronavirus outbreak.
He also stated that he believes Germany would be making a mistake by bailout out the Deutsche Lufthansa Group. He said this would “completely destroy the market” which may take up to ten years to fully recover. In fact, he only had praise for the UK government which has said aid is the last resort and will be based on commercial viability.
Wizz Air plans
Wizz Air is one of many airlines that has taken some drastic steps to ensure cash does not run out. Despite saying the airline has enough cash for over a year, top executives at Wizz Air are no longer receiving a base salary. Other employees have had their paychecks slashed in order to preserve jobs. This is fairly in line with other airlines’ changes.
However, Wizz Air does stick out from the rest. While most airlines are trying to defer delivery of any new planes, Wizz Air has said it is committed to receiving the 15 Airbus planes it was due to receive this year. It already operates 121 Airbus narrowbodies and has over 270 planes on order. Mr. Varadi says the deliveries will allow the budget carrier to position itself to take advantage of the post-virus travel rebound.
Varadi said he is expecting to return to 80% of the airline’s previous services before the end of the year. No doubt, if he is hoping governments won’t support already struggling carriers, Wizz Air may be able to snap up some new routes when the industry takes off again. Wizz Air will certainly be one to watch over the coming months.