CLASSIC EPISODE: Wizz Air

0:00This is Britain's growth moment. Do you want to be part of it? On 26th of March, 750 of the UK's most ambitious founders, CEOs and investors will gather in London to shape the future of mid-sized business. The company's driving our nation's success. The Business Leader Summit 2026 isn't just another conference. It's a day built around the three forces that define growth, ambition, policy and capital. And as one of our valued podcast listeners, you can be there in person. To secure a discounted ticket, visit the events section of our Business Leader website and use this code. BL podcast, all one word, all uppercase.

0:41We look forward to seeing you there. We are welcoming 10 new member states into the European Union. And today marks a new beginning for Europeans. I'd like to take this opportunity to acknowledge the many millions of people across Europe for whom this day, the 1st of May 2004, is a day of hope and opportunity. To the people of Europe who are joining us today in the European Union, I extend the hand of friendship. It was your democratic choice and your own efforts that made this day happen. That's Bertie Ahern speaking in 2004 when he was the Irish Taoiseach. He's formally welcoming 10 new countries into the European Union.

1:30This would prove to be the moment that powered the launch of a new airline that now carries more than 60 million passengers every year across Europe and beyond.

1:51I'm Graham Ruddick and this is Business Leader, a podcast that takes a second look at big business stories. In this episode, I speak to Joseph Varady about how he built Wizz Air into one of the largest airlines in Europe, and one that has emerged as a new low-cost rival to Ryanair and EasyJet. Wizz Air was founded by Varady in Hungary, and its first flight was in 2004. Today, it is listed on the stock market in London and is valued at well over£2 billion. Wizz Air has grown rapidly, but it's also faced challenges as it has got bigger and scaled up. These challenges include criticism about delays to flights and a proposed£100 million bonus for Varadi, which would be one of the biggest ever bonus packages for a boss of a company listed in London.

2:59First of all, I would recall the very first flight we made. So this is back in May 19, 2004. That was from Katowice to London Luton. And that evening I was invited to one of the TV studios in London. And I clearly realized that despite having been totally hyped up emotionally for the launch of Vizere, not everyone thought it was a good idea. So the reporter said that, look, I mean, you are one of the 60-some airlines that have just been created, so why the hell do you think you would be surviving? But if you do, come back in a year from now. So that was a very unique moment when we started, and putting that into context, that was the time, 2004 was the year of EU expansion.

3:46So 10 new countries joined the European Union, a bunch of centuries European countries, which changed the industry and created the opportunity. So looking back 20 years later, I think we still kind of have the same spirit. We still look at ourselves as a family, a lot extended and enlarged family. At that time, we had a few hundred people working for the company. Today, we have almost 9 ,000 employees. We remain very entrepreneurial. We are prepared to take risks. We look after each other in the company and created not only a unique business, but also a very unique organizational culture. I think we are very proud of that.

4:23We continue to ride from there. So, you know, it's a living memory with regard to our start and a lot has changed. I think everyone who has been with the company for some time probably feels very good, but no matter how rich our history has been i think our future is going to be very exciting probably even more exciting than our history those other airlines that you mentioned that were around at the time like sky europe central wings why did you do better than them why did you outlast them yeah it's interesting we just looked it up um not too long ago and and we realized that of those 60 some airlines actually we are the only one still standing as an independent uh business so either the others got gobbled up by someone or they went bust.

5:12If you really kind of look at the ways of how we were doing business relative to the others, well, first of all, we always wanted to create a quality business, not an airline, but a quality business. And that is important because I didn't come from the industry really. I mean, I was into aviation in airline only for two years. So prior to that I work for Procter & Gamble, a big American blue chip consumer food company. And my standards were really global brand franchise. And most of the other guys were just creating an airline. Old management teams, you know, some entrepreneurs, they kind of sensed the opportunity and they felt that that was time to jump through that window.

5:58But we wanted to create a quality business. It happened to be an airline, but I think the airline side came kind of secondary. Then the next drive was we tried to understand what really is going to drive this industry going forward. And it became very clear that the industry was commoditizing. And in commodities, lowest cost wins, lowest cost prevails. So we have to have a business model that delivers the lowest possible cost. And that makes you pretty much determined for what kind of aircraft, what kind of a route network, what kind of systems you would be applying in your business model. And then we probably created a better support line for the business, better investors, better business partners.

6:44It was, again, you know, we wanted to create a quality business. So we were trying to line up quality stakeholders to support our business in any way we were doing business. And I also think we simply accessed a better pool of intellectual capital, getting really, really good people into the airline. Some coming from the airline industry, but actually most coming from outside the airline industry. So we were able to deploy this very diverse view of life to make sure that we benefit from that level of diversity and differences in viewpoints to make better decisions for the business. So I guess these were probably the differentiating factors why we are still around.

7:26How were you able also to take on people like Ryanair, EasyJet and the existing airlines? Because it wasn't just that there was these other airlines launching at the same time. They were very competitive companies already in the market. And obviously, although EasyJet and Ryanair starting off in Western Europe, they'd very much expanded into Eastern Europe as well. So how was Wizz Air able to, one, spot the opportunity and to really make into the market? I think the visitor opportunity was really a window of opportunity that came along, and that window was only open for probably two to three years.

8:02So prior to 2004, we couldn't have launched a business like this because simply the regulatory framework was inadequate to do that. We wouldn't have had access to markets and droughts, and we wouldn't have been designated as a carrier. A few years later, let's say 2007 and onwards, we would have missed the opportunity because by that time, all these Western airlines were really not only sniffing around, but they were deploying capacity, they were making investments, and they started expanding in San Francisco. in Europe. So we had this window of two to three years and we were lucky in a way that we were around.

8:39We sensed the opportunity and we jumped through that window. And by the time others like Ryan and others came to market, we were already a very established player. We built a brand. We had some meaningful customer franchise. And then we were at some scale by that time. So we were able to compete. Yeah, I mean, it was really a very short space of time. We needed to take action because otherwise you couldn't have been able to survive. The growth of Wizz Air has been driven by a strategy that embraces risk-taking. Joseph Ferrati thinks that gives Wizz Air an advantage over other companies. Another advantage that Wizz Air has is that it's built a fleet of new planes that are more fuel-efficient than the older models used by its rivals.

9:28I think if you are a private airline, you are inherently a risk taker. National carriers are different because essentially they act on a mandate of political will. But as a private business, if you want to avoid heart attack, you don't set up a private airline. So just don't do that. But once you are doing it, we felt that one of the ways we can differentiate ourselves is taking more risks than the others. Of course, all these risks are calculated. So you have to be mindful of consequences. But at the same time, I also think that if you want to be an entrepreneur business, you must take risks and you must fail.

10:09If you are not prepared to fail, then you never test your own boundaries. So you never stretch yourself beyond your comfort zone. So that is, I mean, personally, it's philosophical to me, but also it's practical to me. I'm encouraging people for taking risks. I'm encouraging people to fail, not like failing 10 times on the same thing, of course, but without failure, there is no progress. And we made that culture inherent in the company that risk-taking is awarded, it's encouraged, failure is tolerated on that basis. I don't think we have ever fired anyone just because the person made a bad business decision.

10:49We, of course, try to learn from those decisions, but it's important that you remain an entrepreneur and you keep pushing your boundaries. What would a risk look like? Would it be, say, trying a route that no one else has tried? Yeah, I mean, still today we are churning roughly around 15-20 % of our capacity, which basically means that yes, we are tapping into untapped areas, untapped territories. Sometimes the circumstances change and that would have been difficult to predict. I mean, who could have predicted the war in Ukraine or Israel, etc. And we need to take actions on that. We had to turn capacity as a result of that.

11:25But many times we think that we feel there is an opportunity to start a new route, but maybe we were wrong because we didn't have all the data points. No matter how analytical you try to be, it is my turn to be different than what you thought. And that is culturally encouraging the company that we call it like the 8020, applying the 8020 rules as opposed to trying to be perfect to make sure that whatever decision make is 100 % right, maybe kind of 80 % sense this is probably okay, then we go. But that of course contains the possibility of failure, but that's okay. That's okay. How much of a competitive advantage is it for Wizz Air today, your relatively new fleet compared to other airlines?

12:06I think it's huge. If you look at our fleet composition, it is a source of strategic competitive advantage for the business. And I would define the fleet VisAir has from a number of different angles. So first of all, we operate the youngest fleet of aircraft of any European airline, actually one of the youngest in the world off-scale. We have a fleet of over 200 airplanes now with an average age of four years. Our competitors typically track eight years, 10 years, 10 plus years of average age of death fleet. Two, we are flying the most up-gauge single-aisle narrow-body aircraft in the world. Our average seat count per aircraft is around 220 as we speak, and this is a lot bigger than any other airlines we compete with.

12:54The relevance of that is that by engineering design, seat count drives economic efficiency of the operation of the airplane. So The more seats you have on the airplane, the lower the unit cost will become. And three, we are very committed to innovation as a result. We tend to be the first airline to renew the fleet when new technology is coming into play. So if you look at today, we've already converted 60 % of our fleet into new technology. And by far we are number one with that regard. So we are innovative, we are economically efficient. Also as a by-product of all of that is that we are environmentally incredibly efficient.

13:31So our carbon footprint is by far the lowest in the industry. We actually have been recognised a number of times for that globally, being the sustainability leader in the industry. It is now 20 years since Wizz Air's first flight. It's grown into a business that carries more than 60 million passengers every year and operates from 200 airports across 60 countries. But it has ambitions to grow much more.

14:02It took us 20 years to get to 200 aircraft. We think it's going to take us seven years to get to 500 aircraft, so another 300 aircraft. So if you really look at that, I mean, we are picking up the pace hugely in terms of our growth. This is the result of market diversification, enlarging the footprint of the business. We started as a Central Eastern European airline. Essentially, a Central Eastern European airline focused on Poland and Hungary back in the early days. Then we became truly pan-Central Eastern European. But in the meantime, I think increasingly we are pan-European. We have an airline in the United Kingdom.

14:41We have significant operations in Italy, base operations. We have significant operations in Austria. And basically, as destination markets, we fly the whole of Western Europe. We have been expanding in Central Eastern Europe further, and Central Eastern Europe remains our bread and butter going forward. And in the meantime, we also pushed to the east and opening up Abu Dhabi, visit Abu Dhabi and also opening a lot of new destinations in the east. So we have become a lot more diversified, a lot more extended net footprint than ever before. So that kind of creates a foundation for growth from a consumer demand standpoint.

15:21Now, from a supply standpoint, we are one of the privileged airlines in the world, having access to another 330 aircraft on order. And to be honest, looking at the supply chain in the industry, as we speak, this is going to be the game changer. So those airlines who have aircraft order will win. Those airlines who don't have an aircraft order will fail. Because the market is not going to support any longer cheap assets. everything is repriced, offered, given the scarcity of supply. And if you don't have an aircraft order today, next time you're going to get a new aircraft delivered, either by Boeing or Airbus, it's going to be 2030.

16:01And we think we have that very privileged position that is going to make us able to align the supply side of the business to the demand side of the business. So I think very exciting next seven years in front of us. How much are you going to be able to do in terms of routes and destinations? other airlines can't you've touched on the moldy you've spoken in the past about the middle east i mean is whiz air going to be start to take the low-cost industry to destinations in europe there's just an outside of europe they've just never been able to reach before to some extent yes because shortly we will start taking deliveries of the so-called a321 xlr aircraft that's an extended range that aircraft is capable of flying up to eight hours today we can only fly up to six hours So that will create a soft segment of network opportunities, untapped by low cost carriers at the moment.

16:52Again, this is going to be a very exciting part of the network and we quite look forward to exploiting that opportunity. We will be having 47 of those aircraft, so quite significant. And we're seeing that this is just going to further build on our competitive advantages vis-a-vis other carriers, because it's not only that we are a more efficient, lower cost, environmentally friendly operation than our main drivers, but also we're going to be able to offer unique network opportunities, not only through geographical diversification, but also through the range of aircraft, which others don't have.

17:23Could you one day fly across the Atlantic to the US? No, we don't have that ambition. I mean, it is a very particular market, strongly supplied by a blind legacy capacity. If you look at New York from London, believe it or not, 34 daily flights. So just imagine competing against that capacity. Now, we don't think this is the way we can add value to the system. We think the way we can add value is to exploit connectivity within our existing footprint. And if anything, we should be pushing east as opposed to west with regard to deploying the XLR aircraft. Joseph Varadi worked for Procter & Gamble for 10 years.

18:04in Central and Eastern Europe before getting in to the airline industry by joining the Hungarian state-owned airline Milev in 2001. He left to set up Wizz Air and secured a key partner to fund his plans by attracting investment from a US private equity firm called Indigo. Indigo is still a shareholder in Wizz Air today, 20 years later. But Wizz Air nearly didn't survive past its early months.

18:41So I felt that after 10 years with Procter & Gamble, I was too contained as an individual inside the company. I did very well career-wise, and I think I had all the opportunities available to me. But I just felt that, you know, this is such a huge corporate structure that no matter who you are, what you do, you are just part of a machine. You can be a small part, a bigger part, but you are still just a part of a machine. And I felt that I wanted to test my own boundaries. I wanted to test myself. And I knew that when I put down a Procter & Gamble business card, 95 % of the business was done. So I was not really adding that much value.

19:16So that was kind of something pushing me out, or at least pushing me to think about alternatives. chips. And then came Malave Hungarian Airlines, which for the first sight, I felt, well, I mean, this is stupid. I mean, I'm working for a proper, very high quality blue chip American company. I mean, going to a state-owned Hungarian airline, I mean, you can't do that. But actually, I ended up doing it. And the reason for that was a lot more like, well, I wanted to eliminate this protective shield, the P &G business card. And indeed, when I went to Malay, there was no business card. There was no credit given.

19:53So I was on my own and it really tested me how much I'm worse and I had to take risks and I had to push my own boundaries, which I liked a lot. I think that was a lot better kind of a fit to my personality and to what I wanted to get out of life at that stage. So with that regard, I felt that was a good decision. Now, with regard to the business, I didn't like the way the airline operated. And when it came to this, I sort of felt that, you know, if I just do everything the exact opposite versus how money was operating, I would be okay. And this is what I kind of did. So the learning exercise was really, you know, learning the industry on the one hand, but also learning how not to do business.

20:37and kind of contrasting that with your experience at P &G, I think made me pretty well prepped up for Vizsair when it came two years later. What would have been sort of a key learning of what not to do? Yeah, I mean, decision making was not based on performance, on merit of the idea, but on some conventions, loyalty, because that's how we have been doing business. We were very un-innovative. Every new idea was resisted in a big way. And I also felt the organization was corrupted. And I just didn't want to have any of those, I have to say. And P &G was indeed my real business school. I got my university degree before P &G, but what did I know?

21:24I didn't know anything. Maybe the only value of the diploma was that you got educated academically and you were able to ask the right questions, but you were not able to give the answers to the questions. So my real business school, I still consider is P &G. And not only through the Molle period, but also I would even say that still to date, I have been benefiting greatly from that training experience, from that learning experience. So I think I'm still framed and defined by P &G. When you came to have the idea of Wizz Air, how did you then go about setting it up because obviously it's one thing to have the idea and then one thing to launch it i think you went to the us and went to see southwest so who did you go and look to learn from and then how did you come to have the relationship with indigo that was obviously been so fundamental to wiz so we are back in 2003 so end of 2003 it was very clear that the the molly story would end sometime and probably sooner than later it became political there was a change in government it was a state-owned company.

22:28A new political force came into play, and they had different views of life, which I was totally on the line to. And at the same time, I also knew that now the EU expansion is coming, and this is going to be a limited window of opportunity. So if anything is to be done, it's got to be done now. So I started searching around, pulling a few people into the project, and also started traveling around the world to understand alternative business models to legacy carriers. I ended up spending quite a bit of time in the US and Canada, meeting a few airlines who understand what they are doing and why they are successful and how they were able to kind of challenge the legacy status quo when they came to market.

23:10Also, of course, looked at the European market. And then we ended up with a really good team, committed professionals. We were six in total, and we said, okay, we're going to make this an an airline, uh, started drafting business plans. Uh, one then, you know, we had to recognize that, well, I mean, we need some money, uh, for that. I mean, no matter how ambitious we are, I mean, this is not going to fly without, uh, without money. Actually I approached a fellow Hungarian aviation professional, uh, and wanted him to invest, but he was conflicted and he said, but you know what? I know a guy in London who works for Goldman Sachs as an investment banker.

23:48He has his unique special interest in airlines. Talk to the other guy. So I talked to that guy and we agreed on him becoming an advisor to us, advising on capital structure and fundraising on the one hand, but also how to best kind of business plan around the whole idea. And we agreed on a two-phase fundraising to raise seed capital roughly around 3 million euros. Actually, that was very easy. We went to see all the rich men in Europe, people who got some wealth. Maybe they were associated with airlines in one stage of their career. And we approached, I don't know, 50, 60 of those guys across the whole of Europe.

24:30And a third of them, 40 % of them said, yeah, okay, fine. Here is 50 ,000, here is 100 ,000, whatever. And we raised around 3 million euros on that basis. And that was good enough to kind of put the airline up and running, to start selling, to get aircraft contracted. to build initial organizational capacity, operating capabilities, etc. And then we started chasing the big money and we said we need to raise 40 million euros to make this really a viable financial proposition. And that's how we ended up with Indigo. Basically, he brought us to Indigo. Indigo engaged, actually fairly early on in the process.

25:07But the problem was that any non-European investment remains subject to at least equivalent amount of European investment because of ownership and control rules in the regulatory framework. So Indigo said, okay, guys, we are happy to invest 20 million subject to you raising 20 million from European investors. And then we failed. So by end of 2004, essentially business was bankrupt because we ran out of money. We couldn't really intake the Indigo investment. And of course, we were far out of the 3 million what we had initially. So we indebted the business significantly and then we had this magnificent idea of convincing debt holders to become equity holders.

25:56So we issued equity against their debts and that enabled Indigo to put in cash. And as a result, towards the end of 2004, early 2005, the company got recapitalized and up and running. And ever since, the rest is just history. To have a relationship with a shareholder that's gone the full 20 years, nearly the full 20 years, you say, that's quite unique. How fundamental has that partnership been to this airline? I mean, as you can imagine, it is a very fundamental line. Indigo invested 20 years ago, and they are still 38 % of the fully diluted economics of the company. So they remain very committed and very supportive.

26:37and a few years back we listed a company here in London and despite that they didn't run away. They continue to benefit from the prospect of the business and they continue to support the management team. I think personally I've developed a special relationship with Bill Franke who is the managing partner of Indigo and has been over the last 20 years and some of it is professional, of course. Some of it is personal. He's almost like my dad and I'm almost like his son. And that's a good thing. So I don't think that has corrupted our relationship at all. I think it has just reinforced and strengthened our relationship.

27:19We have big debates on issues here or there, but we are pretty much in daily contact with each other. So sometimes unrelated to business, just purely intellectual or something topical, we exchange views and yeah it is a very strong relationship what's been the key to the to the relationship working i think it is of course bid is a good capitalist so he needs to see value coming out of his investments and he has made tremendous value out of this uh this investment but i also think that bid is intellectual he's a very smart guy so he wants to see the uh the counterparty being kind of equally intellectual and equally uh equally smart and i think that created a kind of a good click.

28:02So on the one hand, our relationship was fueled by the performance of the business with regard to creating shareholder value, but also the kind of the intellectual fit between the individuals also helped a lot. How tough were those early months with Wizz Air? Because I think you also had to ask staff to not take or delay taking their pay for a while. How much did you learn from that period? Probably the most insightful event was towards the end of October 2004 when it became fairly clear that we were hitting the wall and we saw the wall. So not just thinking about it, but actually the wall was there.

28:41And I called a stop meeting and I told the guys, look, I mean, we have worked very hard to try to capitalize the business. We have failed so far. This is not totally chance-less, but I think the chance is getting slimmer and slimmer every day. So the likelihood is very high that we are not going to make it. So at that time, we were probably 300, 400 people. And I told them, look, I mean, with head up, you still can decide to go. You know, you gave it a go and you supported this idea. But such a slife, it didn't work and life moves on. So if you want to go, go now. And basically the response was that not a single person left.

29:27And they said that, look, I mean, if you have to die, we're going to die together. So we have been into this together. If it's good, great. If it's bad, great too. We are with you. We are behind you. So we'll do this together. And I think that was a tremendous feeling, which I don't see many people ever experienced such a feeling when hundreds of people, you know, basically declared that, you know, we are ready to die for you. And that was heartbreaking. Wizz Air floated on the stock market in London in 2014. Joseph Varadi has some fascinating views on what it's like being the boss of a UK-listed company and what it's like doing business in the UK.

30:13He was at the centre of a debate about executive pay in the media and among the investment community after Wizz Air proposed paying him a£100 million bonus. That bonus payment will be triggered if Joseph Varadi can increase the value of Wizz Air to more than£12 billion.

30:36If you really look at the ingredients of our success, a lot of it is what we have already discussed, you know, the entrepreneur spirit, our appetite for risks, our innovative approach to markets, to technology, etc. And you don't want that to be changed. Unfortunately, this is a fact of life. When you become a listed company, the public doesn't want you to take risks. To some extent, you are going against the trend. I remember with one of my directors of the board, I had a discussion and she said that, look, the problem is that the London Stock Exchange is going to push you to the middle. And I don't want to be in the middle.

31:14I don't want to migrate to mediocrity. I want to stay on one of the edges of the business to continue to differentiate the business and be different from others. And that's a challenge. That's a challenge. I think there is a strong force on you to comply and do everything the same way as all the others versus my personal drive. And I think it is also something to say on behalf of the whole organization that we want to be different because we think this is a competitive advantage and this is a way of long-term survival for the company. Probably I would say that we have been able to strike the right balance, be good from a public market standpoint on the one hand, but also we have been able to maintain the entrepreneurial spirit of the company.

31:58But it's a challenge and it's an ongoing challenge. Well, how do you view the view of the UK towards doing business? You obviously worked across Europe and worked for an American company. So what do you think of the UK view approach to this? I like the United Kingdom. I like doing business in the UK, but I've seen the countries going too socialist. And you have to be careful. You know, my personal background is different. I'm coming from the other direction. Hungary was part of the Soviet bloc. My family was exposed to that, and I went through socialism. And I can tell you this is something you don't want to have.

32:31The problem with socialism is not the stated values of equality and support to people. I think you have to do that. And being socialist and being socially responsible are two different things in my mind. You have to let the economy to prevail based on market principles, based on, in a way, some good old capitalist principles. And then you can look at how to distribute the value of that and how do you support people. But when you start affecting the operations of the economy with those principles, I think inherently you're going to be lowering the productivity of your economy. economy. And I think that's a challenge.

33:11And I totally understand why Europe, especially Western Europe, is driven for socialistic ideas and socialistic values. And there is nothing wrong with that. But the question is more the implementation, the execution of that, whether you execute it through the social system by allowing the economy to prevail and produce its maximum, and then you kind of get into the distribution side of the West, or you are already affecting the operation of the economy. And this is all in context of global competition. I mean, if you look at, I think in the US, capitalism continues to prevail. China is coming up, it's becoming increasingly competitive.

33:54So Europe needs to think about this. And I would also say that if you look at the European society model, a lot has been relied on cheap energy from Russia, industrial execution in China, cheap labor, and defense provided by the US. Now, it seems that the whole model is getting broken, or every element of the model is getting somewhat challenged. So I think this is a challenge for the UK strategically. But other than that, we love doing business in the United Kingdom. We like the consumers of the United Kingdom. We think we have learned a lot here, and we have been very successful in the UK. I mean, it's been a good source of competitive advantage for us.

34:35Who's driving that sort of socialism push? Is it the government with extra regulations? Is it investors or is it the media and sort of an anti-entrepreneurial tinge to the coverage? I think it's pretty systemic to be honest. I mean, I don't think this is one constituent. I mean, you see it more of a globalizing force if you wish. I mean, aligning politics with media, Um, you know, that translates into, um, investor behavior, et cetera. I mean, if, if I'm exaggerating a little bit, but just to make the point. So there is a lot of discussions here around stakeholder value, while in the U S we are still discussing shareholder value.

35:13So I think stakeholder value should nicely integrate shareholder interest and shareholder value, but here it almost feels like that, uh, especially in public speeches and in public appearance to say money, profit, shareholder value, it almost feels like you are going to be ashamed because you should only talk about what's right for the community, what's right for the individuals, etc. But we just have to be careful not to lose balance. This is really what I'm trying to say. What did you think about the commentary around your bonus scheme and the investors who did vote against that? Well, I mean, most of the investors voted against that relied on proxy agencies and proxy agencies by design, don't forget, proxy agencies didn't buy a single share of Bizzare.

35:59I mean, they are barking, but they are not putting their skin in the game. And I think that they tend to pursue a specific fairly biased narrative in their agenda, but all the major shareholders essentially who got real skin in the game were supportive of that scheme. And if you really think about this, what it is. So it is like creating a tremendous shareholder value and you pay like a 2 % commission for that. You don't find a bank in the world that would raise your money for less than 2%. Not one. As Wizz Air has grown rapidly, it has faced the same challenges with scaling up that other businesses can face.

36:38For example, data from the UK's Civil Aviation Authority suggested that it was the worst major airline for delays in 2021 and 2022, with a longer average delay to the time of departure on its flights than other airlines.

36:58organizational capacity i mean getting access to markets we manage that getting access to aircraft we manage that systems we manage that but the real challenge is people because scale not only drives volume but it also drives complexity inherently so essentially when you double the business the complexities of your business is probably going to quadruple by that time and finding the people who are capable of absorbing that kind of a complexity growth in the business intellectually capacity wise that's difficult that's difficult and and of course as your business is bigger you need more capable people but not only at the top of the company but also in middle management and and basically in every layer of the of the company so managing adequate human resources to support the growth of the business, I think is the single biggest challenge.

37:53Research suggested that you'd had more delays on some of your planes than others. Is that part of this that as you've grown rapidly, it's about getting the systems and people to catch up with the size and complexity? I think that research needs to be updated a little. Yes, indeed. And following the COVID times, we had a breakdown. Simply, we were not designed to process all the failures in the supply chain. Some of it is ourselves, but a lot of it was air traffic control failed, airports failed, ground handling failed, etc. But given that we are the contracting party with the consumer, all the blame came on us.

38:27And we had to process everyone's dirty laundry, if you want to put it that way. And we were not ready for that. And we were not prepared for that. Our structures, processes, people were not designed to be able to deal with the magnitude. So that was a very insightful and learningful experience. And we made very robust investments to make sure that we are upping our capabilities in terms of systems. We were adding a lot more deserves to the operating model, a lot more people, a lot more infrastructure, make sure that that doesn't happen again. And if you look at it today, today, Vizad is one of the best operating airlines in Europe.

39:05Look at completion rate, percentage of flights completed versus scheduled. We are in the top one, two, three on a continuous basis every month nowadays. If you look at on-time performance, we are also in the kind of two quartile of the industry. So yes, it was a very painful experience and that affected us for a good year. But I think by now we have fully recovered from that.

39:31You've been listening to Business Leader with me, Graham Roddick. Our producer is Anushka Tate. For more business interviews and analysis, please visit businessleader.co.uk.

40:05It's your chance to join the leaders who are shaping the future of business.