‘Socialistic’ London lost its mojo, says Wizz boss
Airline chief insists he is happy with City listing but that red tape has taken ‘edge’ off UK markets, finds
London’s “socialistic” corporate governance rules have taken the “edge” off capitalism in Britain, the chief executive of Wizz Air says. József Váradi says that London “has lost a bit of its mojo when it comes to capitalism” as a result of bureaucratic and burdensome red tape.
“There is work to be done to make sure it remains effective for companies. It has become somewhat socialistic. American corporate governance is more pro-capitalist, whereas UK corporate governance has lost some of its edge. A gap has opened up,” he told The Telegraph. Váradi will celebrate the discount airline’s 20th anniversary this week by ringing the opening bell at the London Stock Exchange (LSE). He stressed that Wizz Air remained committed to London, even as rivals such as Tui quit the market.
However, the Hungarian executive says changes are needed to stop businesses worth hundreds of millions of pounds quitting the stock market. “We are happy with our London listing. When looking at European capital markets I think, still, that London is the right market for a business like ours. This is where the capital is concentrated and where there is most interest in investing in airlines,” he says.
“But being more critical, London has lost a bit of its mojo when it comes to capitalism and that needs to be regained. Otherwise more companies will divert to other places.”
Váradi, who founded Wizz and helped build it into Europe’s third largest low-cost airline after Ryanair and easyJet, says that corporate governance codes in the UK are burdensome, overly bureaucratic and insufficiently focused on the creation of shareholder value.
The Wizz Air chief says: “You need to find the right balance and make sure your capital market works according to global standards and global competition.”
Sister carrier Frontier Airlines – in which Wizz’s biggest shareholder, Indigo Partners, is also the leading investor – is listed on the Nasdaq in New York. Wizz’s London listing has done nothing to insulate its share price from the roller-coaster fluctuations that are the fate of most traded airlines in an industry notoriously sensitive to external factors ranging from the price of oil to volcanic eruptions.
The company has been on more of a white-knuckle ride than most. As well as Covid and other pan-industry pressures, Wizz has suffered from its unfortunate exposure to conflict zones – it runs more flights to Ukraine and Israel than rivals – and a huge order book of jets with Pratt & Whitney engines, which have been recalled because of the risk they might crack.
Váradi says: “Over the past few years the entire airline industry has been derated globally, given the economic issues resulting from geopolitical tensions, supply chain issues, pandemics, you name it. Investors have become more shortterm focused.
“On top of that we have Wizz Air-specific issues. The war in
Ukraine relates more to us because we had so much capacity there. The war in
Israel relates more because we happen to be the largest inbound carrier there. The Pratt & Whitney issue relates more because we are one of their largest customers. So you see why the turbulence is happening.”
Wizz’s shares have lost almost two thirds of their value from an all-time high of more than £55 in March 2021 to trade at around £20. It makes the prospect of Váradi receiving his £100m bonus, first promised in 2021, faint. Under the terms of the deal, the Wizz chief must raise the company’s share price to £120 by 2028 to unlock the award. Váradi, 58, will put those concerns behind him on Tuesday when the airline celebrates two decades in business at a party in Budapest to be attended by 3,000 employees flown in from its 35 bases across Europe and the Middle East. The message he plans to convey is that a nadir has already been reached in terms of fleet disruption, with the number of planes grounded by the engine crisis at a maximum.
“This will be one of the biggest events of our corporate lives,” he said of the gathering. “We should feel very proud of what we have achieved and that should give us energy and pride for the future. We have another exciting 20 years in front of us,” he says.
Then it’s back to London for the presentation of full-year results on Thursday, followed by Friday’s appointment at the London Stock Exchange. It will be his first time ringing the market’s opening bell. When
Wizz listed in 2015 the privilege fell to Bill Franke, the airline’s chairman and the founder of its biggest investor, US private equity firm Indigo.
After that, Váradi will retreat to the Mayfair apartment he has called home since late 2020, driven by Wizz’s corporate set-up, a desire to be closer to financial markets, the growth of its UK business (Luton is now its biggest single base) and the ease of global travel from Heathrow. There will be little time for relaxation. Váradi is months away from completing his dissertation at King’s College London as part of the Masters course in war studies he began two years ago.
The subject: Palestinian statehood. He says he chose it long before the Oct 7 attacks by Hamas and Israel’s subsequent military operation in the Gaza strip. He declined to reveal what his thesis will conclude about prospects or a lasting peace.
The degree will be his fifth, after a BA in business and an MA in economics gained as a young man in Hungary, an MA in law from University College London and another in international directorship and governance awarded by French business school Insead.
“It’s purely intellectual,” he says. “You know, there was a game called Brick Breaker, which I started playing, and at one point it flashed up that I was in the top 100 in the world. I thought, my God, if you’ve got time to do this you’ve got time to do something else.”
The war studies course, in particular, resonates for reasons beyond the pursuit of knowledge, however, harking back as it does to his days of national service before the fall of communism in Eastern Europe. “I’ve always been interested in global affairs. I served in the military. I was a sniper. I picked up shooting again 10 years ago and now I do it for competition, with pistols, not sophisticated guns, I don’t have the eyes for that. But I have an interest in the military,” he says.
Váradi is full of praise for King’s – “it’s the world leader in war studies” – and of Britain’s education system in general, revealing that his son will follow in his footsteps and begin an MA course in London this autumn.
“It’s outstanding, the best in the world, and I can make some comparisons. Your leading schools are really top notch. The European academic attitude is very restrictive. In the UK they say, here’s a problem, explore the options to resolve it.”
That’s an approach ministers and the City of London might do well to consider as the LSE fights to retain its biggest companies, and with them its global standing. Váradi says: “The conditions for money need to be worked out properly. The pendulum has swung too far and now it needs to swing back to restrike a balance.”
‘I’ve always been interested in global affairs. I served in the military. I was a sniper’