Seizing the right moment: the rise of Low Cost Carrier Wizz

Wizz CEO Jozsef Varadi with  John Strickland

Wizz CEO Jozsef Varadi with John Strickland

When airline ‘Wizz” kid Jozsef Varadi woke his wife to tell her he’d been sounded out to take the hot seat as CEO for the struggling Hungarian national carrier Malev , she told him “You’d be really stupid to take it”.

With good reason: He’d left the world of highly profitable multinational Procter and Gamble where he’d worked since graduation – to become Malev’s CCO . Accepting the position of CEO in a highly political company like Malev must have seemed like an almighty risk.

And as Varadi disclosed to me in a keynote interview for the 2014 World Travel Market, he was not in the best frame of mind to consider it. He was out socialising when the Chairman called him to a midnight meeting “somewhere” in Budapest. “I told him I’m half drunk.” But the chairman insisted and the meeting went ahead.

Despite his wife’s initial doubts Varadi accepted the job at 8.am the next day. The rest is history. He went on to engineer a big turnaround for Malev before leaving for yet another challenge. That was the creation of Wizz and there’s no doubt that, at that time, Varadi and his colleagues saw opportunities in the east of Europe where others didn’t.

The key moment was in 2004 when 10 countries joined the EU, providing the essential catalyst to the birth of Wizz. This created a vast newly accessible market. It couldn’t have happened earlier given the fallout from 9/11 and if he’d left it till later, competitors would have exploited the opportunity. The airline took its first steps in the Polish market beginning services from Katowice Airport which he says was in the middle of nowhere and felt like a “a hut”. Then it had only around 200,000 passengers per year. Today the figure is more than two million, largely thanks to Wizz’s development.

The airline has expanded carefully. From the outset Varadi’s team saw it as a pan country model and today it serves 35 countries. But the company sticks to its strengths, linking the eastern European markets which it knows best, to Western Europe – and now as far east as Dubai. Economic growth rates in much of Eastern Europe are double those in the west.

Varadi looked to Boeing and Airbus as potential suppliers of aircraft but drew different responses. At Boeing he was met with a lack of interest. Or in his more colourful language: “They sent us to hell”! However Airbus did take the risk with the fledgling airline and today Wizz has more than 50 A320’s in its fleet with big orders outstanding including some larger A321’s which will have 230 seats.

Varadi and his team have the same zealous focus on costs that Ryanair is respected for. It has succeeded in a perilous climate where others have failed. Malev, Varadi’s old employer went bankrupt in 2012. A rival eastern European LCC, Sky Europe, lost its way and also went out of business.

The customer base which was routed in ethnic worker traffic is now much more diverse – with many small businesses and leisure travellers. Even the beleaguered UK supermarket Tesco puts its executives on Wizz. According to Varadi many other companies are waking up to the fact that flying business class on short haul flights amounts to paying for “the most expensive coffee in your life”.

Varadi has shown skill in riding the turbulence of rough economic and political times; not least the conflict in Ukraine, yet the business remains profitable. A planned IPO earlier this year was pulled when financial markets took a dive. A wise decision. It’s all about timing. Given the track record of the management team and its ability to make crucial judgements, I’d expect Wizz’s moment for a successful float to come at a carefully chosen time in the not too distant future. For above all, Varadi has clearly demonstrated his instinct for seizing the right moment.

See my full interview at the World Travel Market here.

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