June 22, 2017 / 2:19 PM / a month ago

Wizz Air opens first western European base at Luton

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FILE PHOTO: Wizz Air's logo is seen on the side of an aircraft parked on the tarmac at Budapest Airport July 10, 2014.Bernadett Szabo/File Photo

LONDON (Reuters) - Budapest-based airline Wizz Air (WIZZ.L) has opened a new base at Luton airport, its first in western Europe, part of plans to expand its capacity.

Luton was the destination for Wizz Air's first ever flight in 2004, and the airline said that the base would help to serve its routes from the airport more effectively. It will allow the airline to keep aircraft at Luton overnight and will create 36 jobs.

"London Luton has been a very important part of our story, and it remains so," Owain Jones, chief operating officer at Wizz Air, told Reuters.

"We've got 13 percent growth (in traffic) here this year, and having the aircraft based here, having the local crew, it will enable us to keep that strong growth going."

Wizz Air already flies about a third of the flights from Luton, and some months it has more flights from the airport than rival easyJet (EZJ.L), which is headquartered there.

CEO Jozsef Varadi has said the new base reflected the size of the Luton operation, where it served 5 million passengers last year, making it the second largest airline there behind easyJet.

The two airlines generally compete on different routes, with Wizz Air focused on Central and Eastern Europe, while easyJet's focus is more towards western Europe and the Mediterranean.

"We have limited overlap with easyJet from Luton," he said. "easyJet has a very different business model and a very different network from us."

Wizz Air's logo is seen made from balloons during a ceremony at the Chopin International Airport in Warsaw, Poland May 17, 2016.Kacper Pempel/File Photo

Goodbody analyst Mark Simpson said that while Wizz only competes directly with easyJet on the Split and Tel Aviv routes, he currently favoured Wizz Air as an investment over easyJet.

"Exposure to growth and improving cost structure are the two core reasons to be buying Wizz Air," Simpson said.

Wizz Air's rapid expansion has been helped by its niche in the growing central and eastern European market and its low cost base.

Jones said that Wizz keeps costs down because of its young fleet, which flies primarily from secondary airports and avoids doing connecting flights. Wizz Air said on Wednesday that it had ordered 10 new Airbus A321ceo planes.

Wizz Air reported record profit last month and said it saw few signs of a hit from Britain's decision to leave the European Union.

Jones said that the decision to have a base at Luton showed that the airline was backing its British business.

"This is really a vote of confidence in our British business. Following the (Brexit) vote last year ... we're continuing to fill our aircraft to the same extent as we were before," Jones said.

(This story corrects figure in paragraph 4 to 13 from 30.)

Reporting by Alistair Smout. Editing by Jane Merriman

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