Wizz Air CEO: Considering Buying Either Airbus or Boeing Jets -- 2nd Update

(Recasts first paragraph and adds CEO comments about new plane orders in the second to fourth paragraphs.)

By Robert Wall and Simon Zekaria

LONDON--Wizz Air Holdings PLC (WIZZ.LN), the Central and Eastern Europe focused budget airline that swung to profit in the fourth quarter, said it is considering additional plane purchases to deliver future growth.

The airline is in talks with Boeing Co. and Airbus Group NV to acquire their newest single-aisle jetliners for growth from 2018, Chief Executive Josef Varadi said in an interview. Mr. Varadi said it would be "a large aircraft order" whose size hasn't yet been defined.

Mr. Varadi said the timing of an announcement is still uncertain, although the airline recognizes that strong demand means Airbus and Boeing order books are filling up, making it harder to get planes.

Wizz Air currently operates Airbus jets and has decided to shift its focus to the A321 plane, the Toulouse-based aircraft maker's largest narrowbody. It will introduce the plane type from November and take all new planes of that version through December 2017.

The A321 can seat more passengers and cuts Wizz Air's unit cost by around 10%, Mr. Varadi said. The airline has options to convert more of its Airbus orders to the A321 type, though it will wait to make that decision until it has experience using the plane, he said.

The recently-listed, Budapest-headquartered company, which carries over 16 million passengers annually, swung to a profit of 5.00 million euros ($5.46 million) for its fourth quarter ended March 31, from a loss of EUR22 million in the year-earlier period. Net profit jumped 109% year-over-year to EUR183 million, while revenue rose 21% to EUR1.23 billion.

The number of passengers carried in the year increased 18% to 16.5 million. In the fourth quarter, seat capacity growth was 20%, with the load factor--a measure of the proportion of planes filled--up 2.2 percentage points to 83.6%, it said in a statement.

With the continued expansion of its network, the company expects to grow capacity by around 17% in fiscal 2016. Mr. Varadi said the focus would be largely on boosting flights from existing bases rather than further expanding the network.

Trading so far in fiscal 2016 has been "robust," the airline said without elaborating. It also sees profit for the year of between EUR165 million and EUR175 million, excluding exceptional items, higher than EUR146.2 million reported for fiscal 2015.

Citi analysts said Wizz Air's performance is both solid and better than expected, noting that lower operating expenses boosted the company's profit margin.

"These results and outlook support our positive view of Wizz Air as a leading airline in high-growth Central and Eastern Europe making best-in-class returns," the broker said.

Wizz Air said its net profit margin for fiscal 2015 was 14.9%, up 6.2 percentage points. Its unit costs fell 3% year-over-year to 3.61 euro cents by available seat per flown kilometer. Excluding fuel, costs increased by 0.5% to 2.26 cents.

Low-cost airlines like Wizz Air, Europe's largest low-fare carrier Ryanair PLC and easyJet PLC are scrapping for business in the discount-travel market, with competition intensified by tumbling oil prices as airlines pass on the benefit to passengers through lower fares.

Still, Goodbody analyst Mark Simpson says Wizz Air is well-placed to keep in step with its larger rivals. "Wizz can more than match pricing from Ryanair over this year and the next."

Wizz Air said it recorded a year-end cash position of EUR449 million, up from EUR186 million at the end of March 2014.

At 1015 GMT, shares up 1.3% to 1,469 pence, valuing the company at GBP758 million ($1.17 billion).

Write to Robert Wall at [e-mail] and Simon Zekaria at [e-mail]

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