(Adds detail, analyst comment)
By Pamela Barbaglia and Marton Dunai
LONDON/BUDAPEST, June 16 Wizz Air, central
eastern Europe's largest airline, has postponed plans to list
its shares on the London Stock Exchange because it was
unlikely to get the valuation it wanted, sources close to the
deal told Reuters on Monday.
In a statement posted on its web site, Wizz cited market
volatility in the airline business for the decision, without
giving further detail. The sources said recent turbulence in the
airline market meant it would not have been valued at around 500
million pounds ($839.6 million) as it had hoped, one source
The budget carrier said last month it aimed to raise 200
million euros ($272 million) via the listing to strengthen its
balance sheet as it seeks to fund more growth.
"The outlook for Wizz Air's business remains extremely
positive and unaffected by the decision not to proceed with an
IPO (initial public share offering)," the company said.
The sale was not scrapped, only postponed, the sources said,
with none of them able to pinpoint when Wizz might attempt to go
"It typically takes some time before launching another
roadshow," or series of presentations to investors, one of the
sources said, adding there were no sale talks they were aware
Wizz Air is not the only business to scrap plans for a stock
market debut in the past few weeks. Clothes retailer Fat Face
for instance pulled its listing in May.
Airline stocks were hammered last week after German carrier
Lufthansa cut profit targets for the next two years,
citing competition from Middle East-based and low-cost rivals.
That weakness in the sector was a factor in the Wizz Air
decision, the sources said, along with escalating problems in
Iraq and a subsequent rise in oil prices. The Russian-Ukrainian
conflict has also undermined confidence in emerging markets.
Wizz competes with no-frills rivals including Ryanair
and easyJet. Shares in easyJet have fallen 9
percent over the past week, while Ryanair's are about 7 percent
Wizz Air, which started to fly 10 years ago, is the largest
budget airline in central and eastern Europe with a market share
of 38 percent, and has been making money while traditional local
airlines have struggled or have gone bust in recent years.
Wizz has planned to expand its operations to carry an annual
30 million passengers by the end of the decade, by which time
its current fleet of 50 Airbus A320 planes would have
doubled in size.
The company recently began to serve destinations outside its
core European markets, such as the Middle East or Russia, and
has indicated it would replace all of its A320s with the larger
A321 model within the next decade.
Although Wizz has a long way to go to reach the size of
Ryanair, growth opportunities do exist in expanding to markets
that are under-served and flying further afield, said Ascend
Aviation analyst Peter Morris.
"There is room for growth," Morris said. "They have to keep
the cost base down and go for markets where they can gain
traction. I would look at Austria, Switzerland and some of the
secondary destinations in France, like Marseilles or Lyon."
Wizz Air had revenue of 1 billion euros in the year through
March 2014 and net profit of 89 million, nearly triple its level
the previous year.
At a press conference in May, Wizz Air Chief Executive
Jozsef Varadi said he wanted the company to benefit from
takeovers and mergers in the sector. "It is hard to say when and
where, but we expect consolidation and we want to be able to
act," he said.
($1 = 0.7345 Euros)
($1 = 0.5956 British Pounds)
(Additional reporting by Steve Slater and Sarah Young; Editing
by Tom Pfeiffer and David Holmes)