Wizz Air slams airline aid plans

Low cost carrier Wizz Air, which boasts bases in Skopje, Tuzla and Belgrade in the former Yugoslavia and employs hundreds of locals, has criticised plans by various governments to provide state aid for their national carriers. The airline’s CEO, Jozsef Varadi, told “Bloomberg”, “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”. Interventions could put Europe’s liberalised, market-driven aviation regime back by five to ten years, the CEO said, with many private operators failing as governments favour flag carriers that have struggled to compete with Wizz and other budget airlines.

Serbia has already announced plans to provide an aid package for Air Serbia through recapitalisation or corporate bonds. The governments in Croatia and Montenegro are set to follow suit. Even prior to the coronavirus crisis, all remaining national carriers from the former Yugoslavia were to receive state subsidies. This includes an undisclosed amount for Air Serbia, which would have likely amounted to some twenty million euros as in previous years, twenty million euros for Croatia Airlines as a second instalment of the government’s 2019 cash injection, and 155 million euros for Montenegro Airlines over the coming six years.

According to Mr Varadi, Wizz Air has sufficient liquidity to span one and a half years. He called on states to resist handing out aid that could distort the market by propping up inefficient carriers. Wizz had 1.5 billion euros of cash prior to the Covid-19 crisis and has the same now following cost cuts including a 50% employee pay reduction and zero salary for top executives. Monthly cash burn has been reduced to about ninety million euros and should drop to seventy million euros once a target of cutting variable costs by 80% has been achieved, Mr Varadi said.

EX-YU Aviation News

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