Socialists won’t stop my bumper bonus, says Wizz Air boss
Wizz Air’s chief executive is never one to beat around the bush. As we shake hands ahead of an interview near Rome’s Fiumicino Airport, József Váradi asks tersely: “Why are you here?”
It’s met with laughter but I still can’t quite tell whether it was media strategy, a joke, or whether he genuinely wanted to know why a transport journalist fancied chatting with the boss of one of the biggest airlines in Europe.
Váradi is blunt and tough to decipher, but his backstory is undeniably remarkable. The 59-year-old had a rags-to-riches rise from relative poverty in communist Hungary, where his father was cut off from steady work following involvement in the failed Hungarian revolution of 1956.
He has previously cited his father’s missed opportunities as a key driver of his own relentless desire to succeed.
What influences his no-nonsense approach to business is impossible to tell, but regardless, he never shies away from saying what he thinks.
Opponents of a possible bonus payout worth more than 300 per cent of his £700,000 a year salary are decried as socialistic and unappreciative of the value he creates for shareholders.
“Look at the United States… I don’t know what bonus Elon Musk took, but he took billions,” he says.
Clearly, some shareholders are unappreciative, though.
At last week’s annual general meeting (AGM), nearly a fifth voted against the Budapest airline’s plans to reward Váradi, while 34 per cent voted against the board’s wider remuneration policy.
No matter.
In Rome, Váradi declares “absolute victory” over the rebels. “I would say that it was an absolute victory because despite the socialist view imposed by the proxy agencies, actually we gained shareholder confidence, and shareholders with a comfortable margin voted in favour of the resolution,” he says.
As well as the 300 per cent bonus, Varadi is also in line for a colossal £100m payout, one of the biggest in the history of the London stock market, if he steers Wizz’s share price to 12,000p by 2028.
That package has drawn considerable controversy, although hitting the threshold is looking increasingly challenging.
Wizz Air shares struggle to gain altitude
Following a turbulent year, shares in Wizz Air have fallen to 1,350p, down over 40 per cent since January.
A toxic cocktail of engine supply chain issues, conflict in the Middle East and Ukraine, and high aircraft leasing costs has hit Wizz harder than rivals Easyjet and Ryanair.
In June, the carrier reported a sharp dip in profit to €45m and cut its annual earnings forecast.
The pushback in September’s AGM was sizeable but Váradi doesn’t back down when questioned.
“I wouldn’t say that was a huge revolt. Show me one Prime Minister in the history of the United Kingdom that has ever gained that kind of support.”
“I wouldn’t say that was a huge revolt. Show me one Prime Minister in the history of the United Kingdom that has ever been gaining that kind of support.”
His confidence may surprise some, given the firm’s issues, yet he simply will not consider any compromise in defending its remuneration policy.
“If you take a view that you are a socialist or a communist and you say that everyone should be equally remunerated or largely equally remunerated, no matter what contribution or performance that they deliver, then you may say this is outrageous,” he said. “I think it depends on the perspective you have.”
Passengers would be forgiven for feeling angry. Wizz Air is regularly hounded by regulators and consumer groups for delays, poor service and issues with refunds.
Wizz Air customer service issues
In June, the carrier was named the worst airline for UK flight delays for the third consecutive year, before Which? crowned it the worst airline for customer service in July.
Váradi, though, thinks Wizz gets an unfair rap and was characteristically unyielding about Which?’s research.
“We think it’s completely unfair. I mean, we looked into the methodology… the sample size and the representation of the sample,” he said.
“We have been making huge investments in the company as well as in the UK in particular. I mean if you just look at the UK, I think the average age of the UK [aircraft] fleet is one year.”
Reputation isn’t the be-all and end-all for Wizz Air, and budget airlines will always be in the firing line to some degree. Ryanair regularly posts outrageous retorts to customers’ complaints on social media, and its PR strategy has worked a treat.
Issues down the supply chain and ever-rising tensions in the Middle East could spell real trouble for Varadi though.
He concedes that faults with Wizz’s geared turbofan engines (GTF), which have caused hundreds of aircraft groundings, are set to continue over the next two years.
On the Middle East he argues most of the airline’s exposure is elsewhere, with around ten per cent of its capacity allocated to the region.
However, he has previously warned of a “ripple effect” on demand in neighbouring countries and said the carrier was always “watching” events for any sign of escalation.
Violence has spiralled dramatically since our interview, with Iran launching hundreds of missiles towards Israel overnight and Benjamin Netanyahu vowing revenge.
Shares in the low-cost airline fell over six per cent at one point on Wednesday in response.
Varadi may back his £100m bonus. But with supply problems persisting and profits on the wane, he knows more than anyone how far away that target share price looks.