Wizz Air cancels IPO amid market turbulence

Hungarian low cost airline Wizz Air has scrapped plans to list on the London market citing "volatility in the airline sector".

The 10-year-old company had been planning to raise £160 million to expand its network, which currently consists of around 315 routes between 96 destinations in 35 countries, to challenge budget carriers Ryanair and EasyJet.

Lufthansa shares plunged nearly 15% last week after a profit warning blamed on tough market conditions.The cheap airlines have also seen a drop in share prices over the past two weeks. Easyjet lost another 0.7% on Monday morning to 1,447p.

Wizz Air put a brave face on the u-turn, saying: "The outlook for Wizz Air's business remains extremely positive and unaffected by the decision not to proceed with an IPO; the board will continue to focus on executing its strategy of driving growth and value."

The Hungary-based carrier operates a fleet of 50 leased Airbus A320s and had been planning to increase its fleet to 82 jets by the end of 2017.

It has 17 bases across Central and Eastern Europe, and a 38% market share, based on seat capacity. A key contributor to the airline's performance has been high fleet utilisation, averaging 12.4 flight hours per day per aircraft.

Wizz had been looking at new markets in the Central and Eastern European region and further East, many of which have better growth opportunities than Western Europe and whose people's propensity to travel by air could be stimulated by low cost flights.

US private equity group Indigo Partners, Wizz Air's leading shareholder, had been expected to reduce its equity holding through the share offering.

Meanwhile, Lufthansa is planning a new low-cost platform within its Eurowings regional carrier to compete against the budget airlines, German magazine Der Spiegel has reported.

It is reported to be planning to build out the Eurowings fleet by adding Airbus A320 jets to serve destinations throughout Europe from Germany and is also said to be looking for a foreign partner to offer low-cost alternatives to and from Asia.