Ruskin Felix Consulting (RFC) collaborated with Wizz Air Holdings, a prominent low-cost airline operating across Central and Eastern Europe, to provide strategic leadership consulting. The comprehensive report prepared by RFC included a thorough analysis of the company’s financial health and risk assessment, aimed at identifying opportunities for growth and risk mitigation.
RFC conducted a detailed computation of the gearing ratio for Wizz Air over the years, highlighting a notable increase in debt levels in 2021, mainly attributed to increased leverage and leasing costs, fleet expansion, working capital requirements, and the impact of COVID-19 on revenue generation. The report delved into the debt analysis, revealing an alarming negative Interest Coverage Ratio and an exceptionally high Debt-to-Equity ratio, raising concerns about the company’s financial stability and going concern aspect.
To address these risks, RFC presented risk mitigation strategies for Wizz Air. The company can optimize its gearing ratio by paying off debts through various means, including increasing shareholder equity, converting loans into stock, minimizing operating costs, and maximizing revenue through profit-maximizing plans. The report recommended attaining full normalcy of operations once COVID restrictions are lifted and seeking strategic partners for funding and investment partnerships.
Additionally, RFC formulated a fleet plan strategy for Wizz Air aimed at reducing unit costs to compete with main rival Ryanair in the Central/Eastern Europe market. The fleet plan involved rapid capacity growth over several years, which may also exert downward pressure on unit revenue. However, the strategy’s underlying premise was that the fleet plan would result in lower unit costs, surpassing any potential decline in unit revenue in the long run.
Furthermore, the report emphasized the importance of deleveraging, which would be dependent on market recovery and fleet growth. RFC’s assessment indicated that Wizz Air’s funds from operations adjusted net leverage would remain weak in the near future but could improve beyond the negative sensitivity threshold by FYE24. To safeguard the company’s position as a market leader, Wizz Air implemented cost-reduction measures and focused on growth, postponing dividends in FY22-FY24. RFC’s leadership consulting services empowered Wizz Air to address financial challenges, optimize growth opportunities, and enhance its competitive position in the dynamic aviation industry. With a clear roadmap for risk mitigation and growth, Wizz Air remains poised for success and continued market leadership under the guidance of RFC.
