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Coronavirus: Wizz Air promises 'ultra low fares' as price war looms

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Wizzair has pledged to offer 'ultra-low' fares. (Artur Widak/NurPhoto via Getty Images)

The chief executive of discount airline Wizz Air (WIZZ.L) has struck an optimistic tone about a post-COVID-19 recovery, promising customers “ultra-low fares” to help fill planes.

József Váradi said he believed his company would “emerge from this crisis as an even more formidable business”.

“We are confident that we can ramp up operations quickly, re-stimulate demand with our ultra-low fares and contribute to the vital recovery of travel and tourism in our markets,” Váradi said in a statement.

The pledge comes days after Ryanair (RYA.L) chief executive Michael O’Leary said he would slash prices to stimulate demand.

Read more: EasyJet to fly 75% of routes by August

“We will dump prices to get people moving again,” O’Leary told the Mail on Sunday. “Once we start flying in July, we will sell at whatever price we can to fill as many of those seats as we can.”

The comments from two of the budget airline industry’s leading chief executives suggests consumers could benefit from a price war in the second half of 2020 as lockdown restrictions ease.

Airlines have seen a total collapse in business since the pandemic struck and are desperate to get business moving again. New figures released by Ryanair on Wednesday show the carrier flew just 70,000 passengers in May — 99.5% down on a year earlier.

Ryanair CEO Michael O'Leary: 'We will dump prices to get people moving again'. (Kenzo Tribouillard/AFP via Getty Images)

However, there is still huge uncertainty about whether international travel from the UK will be possible. A 14-day quarantine for passengers arriving in the UK is set to come into force from next week. The travel industry has warned this will devastate the sector and is pushing for “air bridges” with specific countries that would negate the need for quarantines.

Home Secretary Priti Patel wrote in the Telegraph on Wednesday that quarantines are “crucial to preventing a second coronavirus peak”, suggesting the air bridge proposal may fail.

Read more: TUI to axe 8,000 jobs as tourism industry faces ‘greatest crisis’

Váradi’s comments came as Wizz Air reported strong annual results from the period before the pandemic.

Wizz Air’s revenue rose by 19.1% to €2.7bn (£2.4bn, $3bn) in the 12 months to 31 March 2020. Underlying profit rose by 30% to €344.8m and passenger numbers rose by 40 million.

Like rivals, Hungary-headquartered Wizz Air’s fleet has been largely grounded in recent months due to worldwide lockdowns.

Despite Váradi’s optimism around a recovery, he said it was too early to provide a forecast for profit and revenue in 2021 as much depends on government action.

Váradi said Wizz Air’s balance sheet was “one of the strongest in the airline industry”, with €1.5bn of cash on hand. Wizz Air has tapped UK government support to raise €300m through the COVID Corporate Finance Facility.

Shares in Wizz Air rose 1.4% in London on Wednesday morning.