Carolyn McCall is getting irritated.
The chief executive of EasyJet, Europe’s second-largest budget airline by revenues, does not want to answer many detailed questions about its short or long-term growth strategy, including opportunities to expand into new markets or buy aircraft.
She insists this is because she cannot pre-empt EasyJet’s 2010-11 results on November 15, but she gives the impression that her reticence may have as much to do with trying not to antagonise Sir Stelios Haji-Ioannou, the company’s founder and largest shareholder.
Sir Stelios stepped down from EasyJet’s board in 2010, 15 years after he established the company – but his family’s 38 per cent stake in the airline means he continues to wield significant influence.
The airline’s September announcement that it would pay maiden dividends worth £190m in 2012 was a victory of sorts for Sir Stelios, who has spent the past three years saying that EasyJet should curb its fleet expansion and instead focus on returning cash to shareholders.
But 50-year-old Ms McCall – a former chief executive of the Guardian Media Group, owner of the Guardian newspaper – bridles at the suggestion that Sir Stelios is the tail that wags the EasyJet dog.
“I think the media is saying that,” she says in an interview with the Financial Times. “But I don’t think this is a business issue ... No one in EasyJet is going, ‘God, you’ve made a decision that isn’t the best thing for the airline’ ... So I think it’s a media issue – I think you guys have created it – the dog, and the tail and all the other nonsense.”
Her swipe at the media betrays her frustration at having to deal with regular questions about Sir Stelios, when she would prefer to dwell on EasyJet’s progress.
EasyJet’s pre-close statement on September 22 outlined how the airline expects to report pre-tax profit of £240m-£250m for the year to September 30, up from its previous guidance of £200m-£230m. The company’s dividend plans highlight how, unlike some European flag carriers, it has a robust balance sheet and can afford to return cash to shareholders.
But all that good news was drowned out by the bombshell announcement four days later by EasyJet that Sir Stelios had told the company he was planning to set up a new airline called Fastjet.
Ms McCall, who became EasyJet’s chief executive in July last year, says she does not know “anything” about Fastjet – but admits she was “surprised” at Sir Stelios’s plans.
This is perhaps because Sir Stelios signed an agreement with EasyJet in 2010 under which he agreed not to acquire an interest of more than 10 per cent in another airline licensed in the European Economic Area for two years.
However, he said on September 26 that he had terminated the agreement, alleging that EasyJet’s directors had breached its provisions through a “smear campaign” involving off-the-record briefings to journalists.
Ms McCall strongly denies this, saying such activity is “not in my DNA”. She can take some comfort from how some of EasyJet’s institutional shareholders have voiced support for her during the dispute with Sir Stelios.
Away from Sir Stelios’ allegations, Ms McCall has been busy supervising a new marketing campaign for EasyJet that seeks to remould the airline’s image from the retail equivalent of Lidl to that of J Sainsbury.
EasyJet is seeking to turn itself into a higher quality brand because it is targeting affluent consumers who fly more than once a year, and also trying to woo more business people. This strategy underlines how EasyJet regards its main competitors as the European flag carriers rather than Ryanair, Europe’s largest budget airline by revenue.
There are many differences between EasyJet and Ryanair – Ms McCall admits it will be difficult to ever match the Irish airline’s ultra-lean cost structure – but the starkest contrasts can be found in the personalities running them.
Michael O’Leary, Ryanair’s outspoken chief executive, last month outlined ambitious plans to increase the number of people flying with the airline from 70m to up to 130m over the next decade, by increasing its fleet from 300 to 500 and expanding in markets across Scandinavia and eastern Europe.
Based on her public pronouncements, Ms McCall has far more limited ambitions.
EasyJet currently has 199 aircraft, and has signed contracts for 53 new planes. She will not say whether EasyJet will exercise options, available until 2015, to buy a further 73 aircraft.
She wants EasyJet to concentrate on securing more revenues in its existing markets – such as the UK, France and Spain – and hopes the airline can raise its dividend over time.
Overall, she insists she is enjoying the move from the media industry to aviation, even though airlines are not just vulnerable to economic downturns but also unforeseen events such as extreme weather.
“Challenge doesn’t bother me,” she says. Sir Stelios – if he has not done so already – should take note.
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