Wizz Air: Margin Challenges

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Understood. Going back to my previous question, if we look at Wizz Air's history up until the Covid pandemic, they had very attractive margins. Then the pandemic happened, followed by various challenges, including recent engine issues. Currently, margins are significantly lower, but there are extenuating circumstances. The question we're trying to answer is whether, in a few years, when hopefully the engine issues are resolved, they can return to margins similar to those in the past. I'll leave it to you to answer from a big picture perspective, and then I have a few specific aspects I'd like to explore.

I don't really expect much. That's my short answer. On a high level, the market has changed significantly. There are two things that won't happen again. Wizz was in a very comfortable situation in Eastern Europe, with just some local direct competitors and not much exposure to competition. This situation won't return. The top management thought there would be drastic consolidation, especially due to Covid-19, expecting many airlines to go bankrupt. However, this didn't happen, and we don't see it in the European market now. There are still many small players. The issue isn't really Ryanair; it's the local players who can impact Wizz's profitability. They still operate and can grow single digits annually, limiting the achievement of a nice profit margin.

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