Stock market shows its unease as new chief is set to take helm at easyjet
HAVING charted the airline through the turbulence of the pandemic and into brighter skies, it was perhaps not the biggest surprise to hear that Johan Lundgren will be stepping down as chief executive of easyjet early next year.
The heavy losses which arose from air travel restrictions are fading in the memory for the Luton-based airline, which delivered a robust interim report the city today. First-half losses were slashed by £61 million to £350m and revenue surged by 22% to £3.27 billion, amid an increase in flown capacity, pricing strength and ancillary product sales. There was also further encouraging news to report on the progress of easyjet holidays.
But for all the reasons to be optimistic, the reaction in the City today suggested in the opposite. Shares in the airline fell sharply and one analyst was in no doubt it was down to the succession plans announced by the airline alongside the results today.
Easyjet announced that Mr Lundgren will be replaced by Kenton Jarvis, its current chief financial officer, and as far as Russ Mould of stockbroker AJ Bell was concerned, the prospect of its corporate strategy staying the same caused shares to tumble.
Shares in easyjet dropped by 5.99%, or 31.7p, at 497.7p, well adrift of the 1,270.03p they had reached immediately before the pandemic broke out.
“The negative share price reaction implies that the market doesn’t approve of the appointment [of Mr Jarvis] and that investors wanted an outsider to come in and shake things up,” Mr Mould said.
“One of the key goals for airlines is to make sure planes are as full as possible each flight. Easyjet expects its planes to be fuller this summer and says it is on track to hit a medium-term target of more than £1bn pre-tax profit.
Normally such news would be reassuring, but it’s just not enough to please the market.”
Other commentators were more philosophical. Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “Johan Lundgren has navigated a particularly turbulent period for easyjet in the last seven years and his departure will be a loss to the company. But he leaves the airline in a strong position and there are clear succession plans in place, providing a good deal of stability.”