Wizz Air makes bond debut with €500mn issuance

By bne IntelliNews January 14, 2021

Wizz Air sold €500mn worth of three-year bonds at an interest rate of just 1.35% on January 13 after receiving more than €2bn of orders from investors, business news site Portfolio reported. The Budapest-based low-cost airline announced plans to launch a €3bn bond program in August, but the issue was delayed by the pandemic.

The deal underscores robust demand in credit markets even in deeply-troubled sectors such as the airline industry.

Fitch Ratings affirmed Wizz Air’s rating at a junk rating of 'BBB-' with a negative outlook in November.  The slower-than-expected recovery of the airline industry is offset by Wizz Air’s fleet growth plans, flexibility and strong liquidity, it said.

Wizz Air’s cash reserve of €1.6bn would allow it to survive for the next two years even if its planes were grounded, CEO Jozsef Varadi said earlier.  Varadi has spoken out against governments providing lifeline to companies in the industry.

Wizz Air has pursued an aggressive expansion strategy during the pandemic, capitalizing on its strong liquidity. It opened a number of new bases in Europe.

Analysts expect Wizz Air's recovery to be faster than that of the sector, due to the company's low-cost position, short-haul flights, flexibility in route management and favourable customer base. Wizz Air operates with one of the best cost ratios in the industry and has followed Ryanair’s model of keeping both costs and ticket prices low.

Wizz Air  passenger numbers slumped by 80% y/y in December to 665,722, against more than 3.3 million in the base period. The load factor fell by 33.3pp to 56.1% as capacity was cut by 68% to 1.18mn seats, according to recent data from the company.

CEE's leading airline did not give guidance for its fiscal year 2021 due to the uncertainty of the current situation. The airline closed 2019-2020 with a profit of €281mn on €2.76bn revenue.


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