Discount airline Wizz Air announced a decision to fire 1,000 of its employees, a workforce reduction of 19%, and cut salaries in the wake of the financial impact of the coronavirus pandemic, according to a press release sent to the Budapest Business Journal.
"First and foremost, I would like to thank our people for their tremendous support to passengers and communities across all countries during these unprecedented times, Wizz Air CEO József Váradi says. "They have risen to the challenges facing Wizz Air and the industry with grace and determination, especially when it comes to performing repatriation flights for citizens stranded by COVID-19 across the world and delivering key medical supplies to help our countries, communities of caregivers and their patients."
Váradi says that the Wizz Air has taken various initiatives to protect the company during the COVID-19 pandemic and are reviewing the competitiveness and allocation of assets.
"We are also working to further improve our strategic, cost and cash position in the aftermath of this crisis to ensure we can deliver our long-term growth target. Wizz Air undoubtedly remains best placed for long-term value creation in the European aviation industry due to its low fare - lowcost business model and unique positioning as the market leader in the growing CEE market. The company is expecting to deliver significant shareholder value, environmental benefits and employment opportunities in the years to come," Váradi adds.
According to the press release, additional employee furlough measures have also been and will be taken in the short term as necessitated by the travel restrictions.
Additionally, Wizz Air has been working with suppliers to reduce contracted rates and improve payment terms. The airline will gradually return 32 older leased aircraft by the end of the 2023 financial year (F23) as existing lease contracts expire.
The company also announced that for the whole financial year (F21, which ends on March 31 2021) the remuneration of the CEO, the Board of Directors and all senior officers will be reduced by 22%, while salaries of pilots, cabin crew and office staff will be reduced by 14% on average.
For the last financial year (F20), which has ended on March 31, Wizz AIR expects to report an underlying net profit in line with the company’s latest guidance range of EUR 350-355 million.
In March 2020, the airlineʼs traffic was down 34% year-on-year. Wizz Air is currently operating only 3% of its pre-coronavirus capacity.
As a consequence of COVID-19 and in line with IFRS standards, Wizz Air says will recognize exceptional losses in Q4 of F20 of EUR 70–80 mln, specifically related to hedging losses for the months of March to May 2020.
As a result, Wizz Air expects to report a statutory net profit of EUR 270-280 mln for F20. At the end of March, the company had a liquidity of EUR 1.5 billion in cash.
The airline says that it is not in a position to provide guidance for the year ending 31st March 2021.
The airline expects to maintain its plans to grow capacity by an average of 15% annually as markets normalize. The launch of operations of Wizz Air Abu Dhabi is also progressing in line with the initial timeline.
Since the coronavirus outbreak, Wizz Air has worked with multiple governments to offer repatriation flights for their citizens in Europe, Central Asia, North Africa, and North America.
The company also operates flights between China and Hungary, transporting medical supplies, with most orders coming from the Hungarian government.