Buffett of the airline business is in for the long haul
Bill Franke has spent 20 years disproving Warren Buffett’s adage that airlines are a “death trap for investors”. But as a novice private equity executive touting his first fund in 2002, he struggled to persuade big investors and pension funds to pour money into a notoriously cyclical and unpredictable industry. “They were all like ‘not in the airline industry’,” Franke said. Two decades later, the 84-year-old Franke is considered by some to be the most successful airline investor in history after buying stakes in a clutch of small carriers and pushing them into rapid growth by installing the ultra-low-cost business model pioneered by Southwest in the US and Ryanair in Europe. While passengers often chafe at the no-frills model, which includes piling seats into aircraft and charging for add-ons, this part of the industry is expected to emerge strengthened by the pandemic, reinforcing Franke’s reputation further as the Buffett of the airline business. Franke’s Indigo Partners owns stakes in six airlines, including Frontier in the US, Volaris in Mexico and Canada’s Enerjet. But it is Hungarian airline Wizz Air, which is 40% owned by Indigo and chaired by Franke, that has caught the imagination of a battered industry. Wizz hopes to use the crisis for a breakneck growth spurt, and its ambitions were underlined when an audacious bid for easyJet was revealed, and rejected, last week. Franke would not discuss easyJet, but said Indigo was “actively considering opportunities” as the airline industry emerges from the chaos unleashed by Covid. “It is a time for the industry to look at consolidation, and we would clearly want to be a consolidator [buyer],” he said. Wizz CE József Váradi has also been offered an eye-catching GBP100m bonus if he can more than double the share price over the next five years. “That’s typical Bill,” said John Leahy, the former head of sales for aircraft manufacturer Airbus, who has had first-hand experience in negotiations with Franke as a seller of passenger jets to his airlines. “It won’t pay out unless [Váradi] delivers and if he doubles the stock price, then Bill is willing to share,” he said. Story has more.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2021-09-20/general/buffett-of-the-airline-business-is-in-for-the-long-haul
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Buffett of the airline business is in for the long haul
Bill Franke has spent 20 years disproving Warren Buffett’s adage that airlines are a “death trap for investors”. But as a novice private equity executive touting his first fund in 2002, he struggled to persuade big investors and pension funds to pour money into a notoriously cyclical and unpredictable industry. “They were all like ‘not in the airline industry’,” Franke said. Two decades later, the 84-year-old Franke is considered by some to be the most successful airline investor in history after buying stakes in a clutch of small carriers and pushing them into rapid growth by installing the ultra-low-cost business model pioneered by Southwest in the US and Ryanair in Europe. While passengers often chafe at the no-frills model, which includes piling seats into aircraft and charging for add-ons, this part of the industry is expected to emerge strengthened by the pandemic, reinforcing Franke’s reputation further as the Buffett of the airline business. Franke’s Indigo Partners owns stakes in six airlines, including Frontier in the US, Volaris in Mexico and Canada’s Enerjet. But it is Hungarian airline Wizz Air, which is 40% owned by Indigo and chaired by Franke, that has caught the imagination of a battered industry. Wizz hopes to use the crisis for a breakneck growth spurt, and its ambitions were underlined when an audacious bid for easyJet was revealed, and rejected, last week. Franke would not discuss easyJet, but said Indigo was “actively considering opportunities” as the airline industry emerges from the chaos unleashed by Covid. “It is a time for the industry to look at consolidation, and we would clearly want to be a consolidator [buyer],” he said. Wizz CE József Váradi has also been offered an eye-catching GBP100m bonus if he can more than double the share price over the next five years. “That’s typical Bill,” said John Leahy, the former head of sales for aircraft manufacturer Airbus, who has had first-hand experience in negotiations with Franke as a seller of passenger jets to his airlines. “It won’t pay out unless [Váradi] delivers and if he doubles the stock price, then Bill is willing to share,” he said. Story has more.<br/>
