Sunday, September 19, 2021

Wizz Air CEO: The Kid who Became An Entrepreneur To Have A Ball

The now classic low-cost flight duo of Ryanair and EasyJet has been joined by a third player from Hungary. It is Wizz Air, founded 15 years ago, which has even been able to launch a takeover bid, rejected, for EasyJet. Its architect is József Váradi (Debrecen, Hungary, 1965), CEO since 2003.

EasyJet said on the 9th that it had rejected a full takeover bid as insufficient, although it did not say from whom; according to Reuters, it was Wizz Air, listed in London and the largest low-cost airline in Central and Eastern Europe. Both it and Ryanair are trading above pre-pandemic levels, while EasyJet has fallen by half. Wizz Air is worth £5 billion (€6 billion) on the stock market, and handled 3.5 million passengers in August, compared with 11.1 million for Ryanair, which is worth €19 billion.

Váradi has an apartment in Geneva: he enjoys skiing and golf, as well as running. He is the father of three children, aged between 20 and 30. The eldest has been involved in the family investment vehicle, owning, among others, the Juliet Victor winery. He is now married to Kinga Bóta (1977), eleven-time world champion and Olympic silver medalist in kayaking, as well as secretary general of the Budapest Olympic Movement of the Hungarian Sports Foundation. They met at the Rio 2016 Games.

Wizz Air's CEO is considered a tough boss, and he doesn't mind that he is: his job, he says, is not to be liked, but to be respected. He grew up in difficult circumstances, with his family struggling to survive every day. His father participated in the 1956 Hungarian Revolution, for which he was thrown in jail, and then supported his family with odd jobs.

József's interest in entrepreneurship comes from his childhood, he told the Hungarian weekly HVG a few years ago. He liked to play soccer, but didn't have the money to buy a ball, so he started selling his math homework. At the age of 18 he moved to Budapest, where he graduated in economics.

He started his professional career at the petrochemical company Tiszai Vegyi Kombinát and the Dutch paint company Akzo-Nobel, and in 1991 he joined the American consumer goods multinational Procter & Gamble, where he started as a sales representative and ended up as sales director responsible for Central and Eastern Europe. There he felt he was just a component of a machine, and he was more ambitious.

He gets on the plane

At the end of the decade, a headhunting firm signed him up as deputy commercial director for the struggling Hungarian state-owned airline Malév. Five months later he was offered the position of CEO. When he was called - he said in an interview at London's World Travel Market - he was out partying and drunk, but he kept the appointment that evening. His then-wife advised him against running a company with so much political influence. By 8 a.m. the next morning he had accepted.

The government dismissed him in 2003, and that same year Váradi founded Wizz Air with five businessmen. They had in mind the EU accession of Hungary and nine other countries, scheduled for a year later. It was the right time to bet on this emerging market: before that, the aftermath of 9/11 was still unfolding, and after that there would have been more competition. The beginnings were not easy, because he even had to ask his management team to work for free.

The airline expanded carefully. It focused on its strengths, linking Eastern European markets, which it knows best, with those of Western Europe. Katowice airport in Poland was one of its first forays abroad, and it remains a key enclave of the business. When it came to buying aircraft, Boeing sent Wizz Air "to hell", but Airbus took a chance. Váradi did not get out of the red until 2010.

Málev went bankrupt in 2012, after Wizz Air reported it to the EU for illegal state aid. Its rival Sky Europe, based in Bratislava, Slovakia, had collapsed in 2009. Among the problems Wizz Air has faced over the years, the Ukrainian war stands out. After a failed attempt, the company went public in 2015.

A future of growth

In July, the company announced a £100 million (€120 million) bonus for Váradi, if in five years it manages to almost triple its share price. It is higher than the one offered by Ryanair, which is worth three times as much, to its boss, Michael O'Leary. Ed Cropley, a Reuters analyst, sees this as very difficult to achieve because it would imply compound annual growth of 33%. Ryanair grew at most 21% in 2011, with less competition, and fewer demands on environmental taxes.

Váradi could also sell the company, or have it buy out a rival, as he has tried with EasyJet, but Wizz Air's debt is a major constraint, and the business models of the two are not entirely identical, because the Hungarian carrier's flights are ultra-cheap, and it could lose efficiency with the merger. Another unlikely alternative is for major airlines such as Air France or Lufthansa to reduce their short-haul routes.

Váradi argues that Wizz Air is the most environmentally friendly airline, as opposed to the business class and outdated technologies of the legacy airlines. It aims to expand its fleet from 137 aircraft to 500 by the end of the decade. What it already has plenty of is money for balloons.

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