More selling activity at Wizz

We have recently been witness to several director deals with seven-figure aggregates value, but they all look a little anaemic set against the £400m sale struck by Wizz Air (WIZZ) chairman Bill Franke.

The mega-deal, breath-taking as it may seem, needs to be set in context. Franke is the co-founder of Indigo Partners LLC, a private equity fund focused on air transportation, so we should not be too surprised to see a sale of this magnitude. After all, the fund has major ownership stakes in a handful of low-cost airlines across the globe, so you must presume that it will be looking to crystallise returns or raise liquidity from time to time.

Nonetheless, it did come on the back of several other weighty disposals by insiders, including a £6.4m deal registered at the beginning of March by Wizz co-founder and chief executive, József Varadi. So, investors would be justified in asking whether the shares have already reached their high-water mark since they slumped to an almost three-year low in March last year.

European passengers and carriers have both been trying to second guess government policy in the wake of the pandemic. Yet initial optimism through the early part of 2021 dissipated in short order once it become clear that the European Union had effectively botched the continental vaccination programme.

By contrast, Moody’s credit rating agency recently upgraded the outlook for US airports from negative to stable as passengers begin taking to the skies again. Much depends on whether European countries can adopt a common approach to the acceptance of test and vaccination certificates, along with exemptions for vaccinated travellers. Yet if numbers from the third wave of the pandemic continue to head in the wrong direction, any agreement on travel documents may be rendered academic anyway.

With Wizz trading at 4,792p a share (Franke offloaded the shares at 5,200p), we think you should follow the chairman’s lead. Sell.

Last IC view: Sell, 5,329p, 02 Mar 2021