‘Crisis management became a constant’

When Covid threw the airline industry into chaos in 2020, the Wizz Air boss took a bold move.

Sensing an opportunity for the European low-cost airline, József Váradi decided to expand (buying new planes, gaining takeoff and landing slots, and opening new bases) just as his rivals were downsizing.

“In fact, I quite liked it,” Váradi recalls. “Yes, of course, we were not immune to the impact and our employees were affected, our consumers were affected, our operation was affected. But I think the strategic opportunity enlightened all of us that, you know, this is our moment. The industry is going backwards, we have to move forward.”

Váradi began his career in the “extraordinary and unprecedented opportunities” of the fall of communism in his native Hungary and spent 10 years working for the American consumer goods company Procter & Gamble before briefly running his country’s state airline.

The entrepreneurial spirit that ultimately led him to launch Wizz in 2004, with the backing of American investors, was evident from an early age. Váradi excelled in mathematics at school and remembers that, when he was nine years old, he would sell the answers to the day’s exams to his classmates. “As a result, I bought my first soccer ball and I was very proud of it, because I don’t think the family could afford it. But I was able to buy it.”

As London-listed Wizz expanded during the pandemic, one investment bank called it “the last great growth story in European aviation.” In 2021, with its share price rising, the company offered Váradi a £100 million bonus if he could more than double the share price and challenge Ryanair’s supremacy in Europe.

Then the problems began. Just when the rest of the industry was taking off again, Wizz was hit by multiple obstacles that combined to thwart its growth plans. “Too many black swans”, as Váradi says.

I still define myself as P&G and still use most of the skills I acquired there today.

The airline has been disproportionately affected by the wars in Ukraine and Israel, with these countries accounting for a larger proportion of its flight schedules than those of its rivals. Váradi had four planes stuck on the ground in Ukraine when the Russian assault began (one has been returned, two cannibalized and one is still in kyiv).

Unlike other airlines, Wizz decided not to hedge against oil price swings before Russia’s full-scale invasion sent prices soaring, meaning the airline was exposed to skyrocketing fuel bills.

But the latest and biggest of the “black swans” came last year when engine supplier Airbus, Pratt & Whitney, began recalling planes for inspections, amid concerns about contaminants in the powdered metal used to make its aircraft. turbofan engines. Once again, Wizz Air was the most affected airline in Europe.

“Everything seemed almost unprecedented, relative to what we had been going through before. And the real problem was that most of these issues were actually unique to us, unlike Covid which affected the entire industry,” the CEO reflects.

Váradi, who is now a long way from landing that £100m bonus, with Wizz’s share price languishing at around £20, compared to a target of £120, says the company’s management team has passed through a “very complicated learning process,” but has become more agile in responding to crises.

“Crisis management became a constant in the company. . . We used to be a very focused company, a very focused management team. . . but we focused even more, almost precisely, on some of the issues. . . We really became micromanagers,” says Váradi.

Wizz leadership held daily calls seven days a week at the beginning of the Ukraine crisis.

With the aircraft shortage expected to last two years, almost as long as the pandemic disruption, Wizz has been forced to significantly slow its growth plans and shred flight schedules, carefully choosing how to deploy the remaining planes to meet with the routes that are most profitable. and provide the greatest strategic advantages.

Some City analysts now doubt whether growth plans are realistic and their rivals have taken advantage of Wizz’s problems. Ryanair boss Michael O’Leary has dismissed Wizz as a rival and has begun issuing press releases announcing “bailout fees” every time the airline withdraws from a route.

Váradi continues to work towards the long-term goal of increasing Wizz’s passenger capacity by 20 percent annually and having 500 aircraft by 2030, and does not rule out reaching his bonus target. (Thankfully, the board gave it another two years, until 2028, last year.)

The CEO, who says he recently calculated that he was “in the air almost the same number of hours a year as the average pilot,” admits he regrets the decision to lay off 20 percent of his staff during the pandemic and has not laid off more staff during the recent crises.

He emphasizes that he has learned the value of “people, loyalty and experience,” a difficult balance in an industry known for trying to keep its personnel costs low and avoid unionization.

“Believe [the redundancies] It kind of affected the company’s morale. We consider it an economic or financial issue. And I don’t think we’ve given enough credit to the moral impact it had. So that is clear early learning, we have not fallen into the trap again,” he states.

Wizz employs about 8,000 pilots, cabin crew and other staff, up from 4,000 in 2020-21. They are still hiring, although it has slowed down since the engine problems.

Váradi has almost 25 years of experience in the airline industry, but still presents himself as an outsider who benefits from a mix of entrepreneurial enthusiasm and commercial knowledge, forged throughout his time at P&G.

“It was a school of exceptional learning. To be honest, I still define myself as P&G and I still use most of my learning, most of the skills that I acquired today in the business.”

Váradi believes this experience has given him an advantage over executives who have spent their lives in the aviation industry. He doesn’t mention anyone by name, but reading between the lines, under the Váradi school of management, most of his rivals are not perfectly prepared for the job.

CEOs who trained as pilots cannot make “objective decisions,” while engineers have been raised in a “narrow, focused and deep discipline” and have no strategic experience. “Finance guys. . . “They don’t have an entrepreneurial spirit, they tend to be conservative.”

Willie Walsh, former head of the International Airlines group, owner of British Airways; Lufthansa boss Carsten Spohr; Current IAG boss Luis Gallego and O’Leary fall into one of these categories. Váradi admits that “many people” will not share his views, but insists that “it is really necessary to hire a salesperson.”

Váradi rarely talks about how his background in communist Hungary influenced him.

He was born into relative poverty after his father was excluded from steady work after playing a role in the 1956 Hungarian uprising, which was crushed by Soviet troops in less than two weeks.

“Those 10 days probably cost him 30 years,” says Váradi. “They imprisoned him, beat him and prohibited him from doing proper work.”

His mother worked in a factory and Váradi won a scholarship to one of the best universities in Hungary, which he claimed was worth more than his parents’ salaries at the time.

He is clear that he had a happy childhood with a supportive family, but he believes he was motivated by the opportunities his father lost due to government repression.

“I had a lot more potential than I could realize given those circumstances, and maybe that became a driving factor in me. I felt like I had to do something for the blood, to show that we are worth more than what he ended up being.”