Budget carrier axes 1,000 jobs and slashes wages for 2021
Low-cost carrier Wizz Air announced 1,000 redundancies today – 19% of its workforce – and said its directors and staff will take pay cuts for the whole of financial year 2021, due to the coronavirus pandemic.
Wizz Air Holdings, the largest low-cost airline in Central and Eastern Europe which operates routes from Liverpool John Lennon Airport, made the announcement in its post-close trading update for the year ending March 31, 2020.
It said, despite a range of cost-cutting measures, including furloughing of staff, it is “taking the difficult step to make 1,000 positions redundant”.
It also announced today that for the whole of financial year 2021, the salaries of the chief executive, 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.
The company said it has been working with suppliers to reduce contracted rates and improve payment terms, and it will gradually return 32 older leased aircraft by the end of financial year 2023 as existing lease contracts expire.
March 2020 traffic of Wizz Air was down 34% year-on-year. It is currently operating three per cent of its pre-COVID-19 capacity.
As a consequence of COVID-19 and in line with IFRS standards, Wizz Air will recognise exceptional losses in the fourth quarter of financial year 2020 of €70-80m, 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 €270-280m for 2020, and an underlying 2020 net profit in line with the company’s latest guidance range of €350-355m.
At this point, the airline said it is not in a position to provide guidance for the year ending March 31, 2021.
However, the company says it has a very strong balance sheet and excellent liquidity with €1.5bn of cash at the end of March 2020, one of the strongest in the airline industry.
Since the breakout of the coronavirus Wizz Air has worked with various governments to offer repatriation flights for their citizens in Europe, Central Asia, North Africa and North America.
The company has also operated a number of flights between China and Hungary to deliver medical supplies, with most of the orders coming from the Hungarian government.
In the short term, the company continues to actively adjust capacity to market conditions and is reviewing aircraft allocation on a market-by-market basis as opportunities arise.
As markets normalise, Wizz Air said it fully expects to maintain its plans to grow capacity by an average of 15% annually.
And the company confirms that the launch of operations of Wizz Air Abu Dhabi is progressing in line with the initial timeline.
Chief executive József Váradi said: “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.
“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.
“We have taken various initiatives to protect the position of the company in a controlled manner during the COVID-19 pandemic and are reviewing the competitiveness and allocation of the assets of the company.
“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 – low cost 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.”