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4.

3 years from now. Having removed the bulk of the challenges and moving into a cash generative period. Varadi will start to push for his bonus. I imagine that we'll see the mother of all share buy backs.

Let's go 7 years from now (Nirvana)

Wizz fleet: 434 A321-NEO's

Each Aircraft: 16% more fuel efficient.

15% higher Average capacity.

Mature routes for 434 Aircraft.

Results from Densification.

Yields will have risen 5% per year for 7 years (excluding densification benefits). That's over 40%.

Each Aircraft will make a very conservative net income of €4m (*)per year.

434 Aircraft Each making a net income of €4m, that's a net profit of €1.7B.

Average Airline PE of 8.5, means a Market Capitalisation of €14.45B

Factor in the share buy back and Varadi comfortably hits his bonus.

Varadi would need his bonus period extended.

There's also going to be benefit from going back to investment grade Debt.

(*) Wizz were making a net profit of €3m per Aircraft prior to Covid. Adjust that for additional capacity and reduced fuel burn; the assumption of €4m per aircraft at today's prices seems reasonable.

3.

Confirmed Operational Profit Growth is really the key turning point. It doesn't, however, mean the removal of the challenges. The challenges Wizz faces are the following:

- Closure of the Abu Dhabi Base (1 year resolution, cost €70m).

- Termination of CEO powered Aircraft (3 year resolution, cost €200m).

- GTF Engine issue, Groundings (3 year resolution in total, cost €800m).

- Pay off financial debt (2 year resolution, cost ?).

- Mature new routes added as fleet size increases ( 6 years, cost €2m per Aircraft).

2.

The way I see Wizz through my mid/long term holder view:

Currently Wizz is extremely out of favour with the big institutional investors. This is keeping the share price irrationally low.

In order to attract institutional investors back, Wizz needs operational profit growth. This would be best indicated by a November earnings report because it's Q2 that really counts. This could come as early as November this year. I suspect that due to costs associated with closing Abu Dhabi, retiring A320/1-CEO Aircraft and 36-40 GTF's still grounded that this milestone will not occur before November 2026.

1.

The dream of 500 Aircraft in the near future is gone. I think with an all A321-NEO fleet Based on current orders, we'll have 434 Aircraft by 2032. The dream of Varadi achieving his bonus share price over a somewhat extended period is definitely still alive though.

Https://www.mckinsey.com/industries/travel/our-insights/how-severe-is-the-aircraft-shortage-and-what-happens-next

I think this is an interesting article. It's conservative. Doesn't really seem to consider how much of a long term project it is to step up production. Also there's no mention of how important new Aircraft are, particularly to LCC's. It also doesn't seem to consider the high level of Aircraft retirements that we're going to experience (around 11,000 in the next 10 years). That's my understanding.

Johnbri

I understand your point but look at differently. Forget Share price compared to the past. Think PE compared to the past.

LSE Airlines: IAG, JET2, EZJ all on a PE of between 7 and 9. The share price is very low but earnings are very high. Therefore the industry as accumulating cash which will return to shareholders one way or another (dividend, share buyback, higher share price).

Wizz will not go out of business and as I said previously, it's prospective PE is 2 (Without considering that in the future they'll have 500 of the best new Aircraft).

I get your point. A Global recession can come a long and reduce demand for a short period. I also understand that another Covid would be a negative game changer. I am hoping that I've seen my Covid for this lifetime and that nothing like it will come again.

The system didn't like my previous post. Maybe I used too many characters. I'll cut my reply by 90%:

1. Yes the Airline industry is susceptible to external factors. This causes significant volatility over time.

2. Wizz Air's Pre-Covid PE was around 14 and now a challenge free Wizz (and it will be challenge free) would be on around 2 at it's current price and with 250 Aircraft.

3. 10 years ago you didn't have an industry where the the constraint on supply of new Aircraft was extreme. Ask Emirates if you don't believe me.

Alright Johnbri. Very Fair question.

This is my view.

- Since Covid all LSE Airlines have been cheap. IAG PE

Alright Johnbri. Very Fair question.

This is my view.

- Since Covid all LSE Airlines have been cheap. IAG PE

Alright Johnbri. Very Fair question.

This is my view.

- Since Covid all LSE Airlines have been cheap. IAG PE

Alright Johnbri. Very Fair question.

This is my view.

- Since Covid all LSE Airlines have been cheap. IAG PE

Johnbri

Some things that you say make sense to me. I am in Gold and Silver and Wizz. I have physical Gold and Silver coins as well.

You're wrong about the Airline industry. The driver for yields will be the shortage of available Aircraft. Wizz will have the best most efficient Aircraft.

And Airbus are now cooperating well with Wizz to allow them to grow at a sustainable pace. They will only take the number of new Aircraft this winter that they can afford to fit into the system based on how much profit they've made this summer. If the economy slows, they'll take fewer Aircraft.

But whatever, Wizz will still be around in 10 years, it will be a much bigger company, with a much higher share price.

I joined Jet2 in 1992 (it was the Dart group). It's share price was 40p. Now it's £16ish.

Yeslam

Perfect explanation. My hat's off to you.

Taut

You're right. I would love more information from the company. Varadi did say that grounded aircraft would be down to mid single digits in 2 years. He said that in June during the F25 conference call.

I agree though. Too many things are vague. But I guess that it's very hard to be precise.

From my perspective. I'll go with what Varadi said. Along with financial debt clear by the end of 2026. And all A320CEO's gone by 2028. Paving the way for a very cash generative future beyond that.

Wizz is very cheap. There's a lot of upside potential and little downside. Hold Wizz for another 5 years and I think that you'll find that you've down several times better than if you'd held Oracle.

Taut

That's good research. I don't have a reply because I'm not sure.

Still probably "dynamic situation " though, rather than lying. But you're totally right. They could be much more clear with the statistics.

Sorry Taut

Did the same again. These moving ads with my old fingers. I click post by mistake.

In my opinion Varadi as CEO needs to be able to take executive decisions without referral to Investors. He did that in order to enhance the long term potential of the company. He decided to retire all A320 CEO's during 2025-2027. This comes at significant cost as he explained. But that cost will result in much greater long term profitability.

Taut

That's a great post. Thank you very much.

My take is the following:

Regarding the 300 days or more. I think that Varadi gives you the best estimate based on the information he has. As Lucas said, the situation is very dynamic and presumably delays on receiving the spare parts are quite unpredictable due to supply chain issues. But look, we really don't know the average ground time, we're all speculating.

What I thought that you meant was that Varadi had mislead investors by underestimating the costs for F25:

In my opinion a CEO has to take executive decisions. Varadi did that in order to make th

Taut

Which lies?

The Geopolitical risk might kick in somewhat today.

Sorry... 2008