Wizz Air resurrects London share listing plan

By Sarah Young

LONDON (Reuters) - Eastern European-focused budget airline Wizz Air has resurrected plans to list on the London Stock Exchange, seeking to raise 150 million euros (113 million pounds) to help compete with larger rival Ryanair (RYA.I).

Hungary-based Wizz, whose rivals also include EasyJet (EZJ.L), pulled a plan for an initial public offering (IPO) last June, citing market volatility in the airline sector.

Wizz said the sale proceeds would help strengthen the company's balance sheet, giving it access to cheaper capital and boosting its ability to be more competitive on fares.

That would mean it could continue to compete with its biggest rival Ryanair, which has been on a stellar run after traffic surged, leading it to lift profit forecasts for its financial year by more than 30 percent.

"We've been a formidable competitive force and we will remain a formidable competitive force," Chief Executive Jozsef Varadi said.

Wizz said it was confident of further growth as more people in Central and Eastern Europe use planes, noting that budget airline penetration was lower than in Western Europe.

Redburn analyst Donal O'Neill said Wizz's target market capitalisation on the IPO was 1 billion euros, which looked cheap compared to the company's metrics, but he was cautious on the sector.

"Sentiment towards airlines, given cheap oil, will likely support the IPO but must raise questions about the potential over-optimism in the industry," he wrote in a note.

Wizz said it aimed to complete the listing in the first quarter. Varadi said the IPO would consist of new shares and shares sold by existing investors, but did not give precise details.

"We are expecting to float around 20 percent of the business," he said in a telephone interview on Wednesday.

The 150 million euros sought by Wizz is below the 200 million it was aiming for last year before the IPO was pulled.

Wizz Chief Financial Officer Mike Powell said that was because the company was in stronger financial position.

"We don't need as much money as we did back then. We've had a very successful period and generated significant cash since last summer," he said.

The airline, which plans to expand its Airbus fleet to 85 in 2017 from 54 now, said it grew strongly in the six months to the end of September. Sales rose 24 percent to 727 million euros and core earnings climbed 37 percent to 255 million euros.

(Editing by David Clarke)