Wizz Air, the low-fare airline that has built a business shuttling Polish and Hungarian workers to Western Europe, is planning to float on the London Stock Exchange in a listing that could value it at £400-£500 million ($799-$999 million).
The Budapest-based airline, founded in late 2003 by CEO József Váradi, has been holding a beauty parade of six investment banks to advise on an initial public offering. The IPO will include a significant fundraising, of as much as £200 million, to finance the airline's expansion. The banks vying for the adviser role, according to banking sources, include the trio behind the successful flotation of Spanish low-fare airline Vueling. They were Goldman Sachs, JP Morgan and Morgan Stanley. The other banks in the beauty parade are UBS, Credit Suisse and Citigroup. Morgan Stanley and Citigroup are thought to be favorites to land the bookrunner role. The float is planned before the year end and Wizz Air is expected to have a higher market worth than Vueling, which is currently valued at €640 million ($868 million, £435 million), including the new money raised.
Váradi, a native Hungarian who once ran the state-owned Malév carrier, spotted the opportunity to carry the hundreds of thousands of eastern European workers who have migrated west in search of jobs after the European Union opened its borders to former communist countries. He based Wizz Air on the Ryanair model, flying from secondary airports with one-way fares starting at less than €20 ($27, £14) and chose Katowice, a Polish industrial city, as the airline's first base. Last year, Wizz Air flew 3.1 million passengers, with Poland and Hungary its major markets. It will expand its nine-strong fleet of A320 aircraft to 13 by June, flying 86 routes, and expects to carry 4.5 million passengers this year. Regular trips to and from the West by workers and their relatives have made eastern Europe a fast-growing aviation market, with Ryanair and Easyjet recently entering the fray.
Almost one million Eastern Europeans have moved to Britain, Ireland, Germany and other western European countries since the EU expanded from 15 nations in 2004 to 27 today. Some 600,000 immigrant Poles currently live in Britain. Wizz Air's major investor is Indigo Partners, a US private equity group with affiliations to the David Bonderman-led Texas Pacific Group - a bidder for Qantas and Iberia airlines. New money raised in the flotation will help fund Wizz Air's order for a further 32 A320 aircraft by 2012. Váradi has attributed Wizz Air's success to spotting an opportunity before Ryanair. One aviation analyst said: "I would expect Ryanair and Easyjet to look at them." A spokesman for Wizz Air said: "We will not comment unless we have something to say." (telegraph.co.uk)