Wizz Air changes course on growth plans after Brexit vote

By Sarah Young

LONDON (Reuters) - Eastern European-focused budget airline Wizz Air (WIZZ.L) said it would switch some of its planned expansion away from Britain because of the weakness in the pound following the vote to leave the European Union.

Wizz had been intending to grow its UK business by 30 percent -- equivalent to four extra planes in this financial year -- but said it would reduce this to 15 percent as a result of sterling's weakness against the euro, in which it reports.

"This is a translation, FX issue, not underlying volume demand and or a change in consumer behaviour," Wizz Air CEO Jozsef Varadi said in an interview on Wednesday.

"We are a euro company, every (pound) sterling we earn in revenue translates into euros, and it is 19 percent less euro than what it was a year ago."

The airline, which has its headquarters in Budapest but listed in London last year, said it remained confident of meeting guidance given in May for net profit of between 245 million euros and 255 million euros ($270-281 million) in the financial year to the end of March, 2017.

That would represent growth of at least 27 percent and contrasts with profit warnings issued by British Airways-owner IAG (ICAG.L) and easyJet (EZJ.L) shortly after the UK referendum result last month.

Varadi said that Wizz had an advantage over those airlines given its different geographical focus and its ability to adjust its capacity quickly when needed.

"Overcapacity might be a feature of western Europe, I don't think it is a feature of central and eastern Europe," he said.

Wizz would redeploy planes to other countries away from Britain, which accounts for about 30 percent of its business. In Britain, it would still operate planned new routes but would not add the extra flights it had looked at.

Wizz said there was scope to add more routes, building on 10 new ones announced on Tuesday which included Gdansk in Poland to Grenoble in France, and Tuzla in Bosnia to Berlin.

Since Britain's vote to leave the EU on June 23, the pound has slumped 11 percent against the dollar and 9 percent against the euro amid warnings over a possible recession.

Wizz said it had not seen any changes to demand so far, but Varadi said this could change. The weaker pound may discourage Britons from travelling but at the same time make the country a more attractive travel destination, he added.

Shares in Wizz traded up 3.4 percent to 1,595 pence at 0910 GMT. Before the result of the Brexit vote was announced, they were trading at 1,995 pence.

(Editing by Keith Weir)