The many achievements and occasional blemish of Johan Lundgren – as he gets the timing of his exit right
When Sir Rod Eddington stepped down as chief executive of British Airways in 2005, he quoted one of his sporting heroes – Australia’s greatest cricketing all-rounder, Keith Miller – in explaining his timing.
He recalled that Mr Miller, who also served with distinction in the war as a pilot with the Royal Australian Air Force and the RAF, had said it was best to retire at a time when people would ask why you were leaving, rather than at a time when they were asking why you were still around.
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A good time to go
That thought came to mind when, this morning, another long-serving chief executive in the aviation sector – easyJet’s Johan Lundgren – announced he would be stepping down in early 2025 after seven years in the role.
He could be forgiven for wanting a rest. The pandemic was tough for a lot of CEOs, but particularly in aviation, where the crisis was existential.
Mr Lundgren can look back with pride on how he kept easyJet alive during the pandemic, crucially, by persuading investors to support it with not one but two cash calls – one of £419m in June 2020 and another of £1.2bn in September the following year.
Almost as stressful was the end to lockdowns, with staff shortages, air traffic control strikes and caps imposed by some airports on passenger numbers forcing easyJet into cancelling hundreds of flights during the peak summer months in 2022 and alienating customers.
Two years on, things look better, with Mr Lundgren predicting a record summer for the carrier – which will have capacity of 100 million seats this financial year. Customer satisfaction levels have been restored to some of the best in the industry.
Strong financial performance
And financial performance has improved, too, as highlighted by today’s interim results.
Half year pre-tax losses – the airline, in common with many peers, makes a loss in the autumn and winter – in the six months to the end of March fell to £350m from £411m in the same period a year earlier. Costs, excluding fuel, were flat while revenue per seat was up 5%.
Strong demand has given easyJet the confidence to open new bases. Two have been established at Birmingham and Alicante during the last six months, while another will open at Southend Airport – which easyJet left during the pandemic – later this year with the creation of 130 jobs.
Aside from managing the airline through the pandemic, and its aftermath, Mr Lundgren would probably prefer to highlight one or two other achievements.
The first is the launch of easyJet Holidays. Now it is a successful business, contributing a quarter of group profits last year, but many were sceptical when easyJet Holidays began in November 2019.
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Renewed popularity of the package holiday
Thomas Cook had gone bust the previous September and the obituaries were being written for package holidays. It seemed strange for easyJet, which like other low-cost airlines benefited in its early years from people moving away from package holidays to arrange their own vacations, to start offering such a service.
But it has undeniably paid off. EasyJet is now rolling out easyJet Holidays to customers in Switzerland, France and Germany and is set for further expansion in the UK.
Mr Lundgren told Sky News today: “It’s still a relatively small part of our passenger numbers – this can go much further and beyond what we see today… And we’re seeing phenomenal growth in demand for it here in the UK.”
The second achievement is the investment in new aircraft.
Like rivals Ryanair and Wizz Air, easyJet is seeking to modernise its fleet and replace older jets with new, more efficient ones as it seeks to decarbonise.
It is still taking delivery of new Airbus A320neo aircraft and has an existing order book with Airbus, going out to September 2034, for a further 306. This is work that will stand his successors in good stead.
A lucky man
Mr Lundgren has also benefited from good luck in this regard.
Ryanair is experiencing delivery delays from its supplier, Boeing, while Wizz Air has also seen some of its Airbus aircraft grounded while safety checks are conducted on the Pratt & Whitney engines that power them. All the aircraft easyJet has bought from Airbus to date are powered by the Franco-American supplier CFM.
It was not the only piece of luck enjoyed by Mr Lundgren.
The rights issues during the pandemic diluted the shareholding of easyJet’s founder, Sir Stelios Haji-Ioannou, who had been a thorn in the side of several of Mr Lundgren’s predecessors. It meant Sir Stelios was less able to make life difficult for Mr Lundgren in the boardroom.
Not an unblemished record
While easyJet now looks in its best shape for years, that is not to say Mr Lundgren’s record is unblemished.
Some industry analysts compare his stewardship of easyJet during the pandemic unfavourably with that of Michael O’Leary at Ryanair.
The Irish carrier laid off far fewer employees during the crisis than its rivals and, as a result, rebounded far more quickly when restrictions ended because it did not suffer as many staff shortages. It recovered to pre-pandemic traffic levels much more rapidly than its rivals.
Even so, when easyJet seems set fair for solid growth, some will be surprised to see the amiable Swede bowing out.
Share price down
Mr Lundgren, news of whose departure sent easyJet shares down 4%, explained: “I’m going to have been in the company for over seven years when I retire in the early part of 2025 – that is longer than the average for the FTSE-100.
“It’s an absolute privilege to have this job – to be able to serve the purpose of democratising travel and making low-cost travel easy, something that 100 million customers can enjoy every year.”
Longevity
While Mr O’Leary’s remarkable 30 years at Ryanair is a record unlikely to be beaten in the industry, Mr Lundgren’s successor, the chief financial officer, Kenton Jarvis, will be only the fifth chief executive easyJet has had since it launched 29 years ago.
Ray Webster, the inspirational CEO who oversaw easyJet’s launch in 1995 and stock market flotation in 2000, was succeeded in 2006 by the former RAC chief executive Andy Harrison who, in turn, made way for the former Guardian Media Group chief executive Carolyn McCall in 2010. When she handed over the controls, at the end of 2017, Mr Lundgren had latterly been deputy chief executive at TUI Travel.
So it is perhaps another achievement of Mr Lundgren’s that, for the first time, easyJet has been able to appoint a new CEO from within.