finance

EasyJet departures apart, buck ultimately stops with the chief executive | Nils Pratley


Not another unscheduled cancellation at easyJet. This time it’s the chief operating officer who is grounded, though the precise circumstances of Peter Bellew’s exit from the company were lost in the fog of corporate speak. He has quit “to pursue other business opportunities”, said the statement, without describing which opportunities.

Almost the only clear detail was that Bellew resigned on Friday. Since Monday morning at 7am, on the dot, would be the normal moment to inform shareholders, the other mini-mystery is why it took easyJet until 11.30am to do so. The corporate commitment to prompt communication needs work.

Bellew was hired from Ryanair amid much fanfare only two and half years ago, so you can understand why the stock market knocked another 4% off easyJet’s share price. An industry old-hand was assumed to be just the type of executive to restore order to operations after recent upsets. Instead, David Morgan, the director of flight operations, will “move seamlessly” into the role, said Johan Lundgren, the chief executive.

If a change of personnel makes the network run more smoothly this summer, nobody – least of all the punters – will grumble. One open question, though, is whether the switch is also an admission by easyJet that not all its woes can be blamed on Gatwick airport, air traffic controllers, labour shortages and general admin hassles. Operating conditions are tricky – no question. But Lundgren’s boasts in May about how easyJet had been “transformed” during the pandemic and had acquired “renewed strength” also read as grossly premature in light of events.

The other intriguing question is the role in the background of Stephen Hester, chair since last December. Hester – formerly of Royal Bank of Scotland and RSA Insurance Group – is a boardroom operator from the unsentimental old school. Lundgren will know that the buck ultimately stops at the chief executive’s door.

Possible need to raise cash is a question AO has yet to answer

Still, easyJet is outstripped in the premature optimism stakes by AO World, an online retailer of fridges, freezers, laptops and suchlike.

“I believe we’ve seen 10 years of change in 10 months,” declared the founder and chief executive, John Roberts, in January 2021 after lockdown conditions had put a rocket under demand. It was a mirage. Sales went into reverse when Covid restrictions eased and AO last month said it would abandon its seven-year-old adventure in Germany and stick to the UK. Now comes a reminder of how horizons have also shrunk at home: a tale of a credit insurer reducing cover.

The cover in question is protection bought by suppliers against the risk that a retailer goes bust. AO confirmed, in essence, the Sunday Times’ report that Atradius, one of the specialist firms in the market, had cut its exposure, but the accompanying reassuring-sounding explanation failed to have the desired effect. The shares lost 18%.

The cover was “rebased” in May, said AO, “from the heightened levels that had been in place and required through the period of the pandemic”. So was Atradius just engaged in a regular piece of housekeeping? Or are suppliers having to pay more, per fridge as it were, to get the same protection? It wasn’t entirely clear.

AO was more convincing about its efforts to protect its balance sheet. The cost of the German exit will be at “the lower end” of the original nil-to-£15m estimate. An £80m credit facility is in place until April 2024. Nothing has changed on the trading front since the last update in April and the rebased cover “has had no effect on AO’s liquidity position”.

Fine, all those points are relevant. But they don’t put to bed some City analysts’ questions about the possible need to raise cash to adjust to new trading circumstances. After the descent in the share price from 400p to 56p in 18 months, it is a natural question to ask.

Just Eat celebrations may leave investors scratching their heads

The party goes on Just Eat Takeaway, the Dutch food delivery firm that used to be a member of FTSE 100 index. The winter’s highlight was a skiing trip for staff to Switzerland reputed to have cost $16m (£13m). Now, via Bloomberg, comes news from the company’s German operation, Lieferando, of an “exclusive pool party” where the invitations specified that “drivers and contingent workers” were to be excluded.

All essential for head office morale-building, no doubt, but investors may wonder what they’re supposed to be celebrating: the share price is down 67% this year.



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