Not another unplanned cancellation on easyJet. This time the COO has been punished, although the exact circumstances of Peter Bellew’s departure from the company have been lost in the fog of corporate conversation. He stepped down “to pursue other business opportunities,” the statement said, without specifying what opportunities.
About the only clear detail was that Bellew resigned on Friday. As Monday morning at exactly 7am would be the normal time to inform shareholders, the other mini-mystery is why easyJet took until 11.30am to do so. A corporate commitment to rapid communication must work.
Bellew was hired by Ryanair amid much fanfare just two-and-a-half years ago, so you can see why the stock market knocked another 4% off easyJet’s share price. An old-timer in the industry was believed to be just the type of executive to restore order to operations after recent turmoil. Instead, David Morgan, director of flight operations, will “step seamlessly” into the role, said Johan Lundgren, chief executive.
If a personnel change makes the net smoother this summer, nobody – least of all the punters – will be grumbling. One open question, however, is whether the change is also an acknowledgment by easyJet that not all of its problems can be attributed to Gatwick Airport, air traffic controllers, labor shortages and general administrative problems. The working conditions are tough – no doubt about it. But Lundgren’s boast in May of how easyJet had been “transformed” during the pandemic and gained “renewed strength” also read as wildly premature in light of events.
The other intriguing question is the background role of Stephen Hester, chairman since last December. Hester – formerly of the Royal Bank of Scotland and RSA Insurance Group – is an unsentimental old-school boardroom operator. Lundgren will understand that the buck ultimately stops at the CEO’s door.
The eventual need to raise money is a question that the AO has not yet answered
However, easyJet has been overtaken in premature optimism by AO World, an online retailer of fridges, freezers, laptops and the like.
“I believe we’re witnessing 10 years of change in 10 months,” founder and CEO John Roberts said in January 2021 after lockdown conditions put the rocket under demand. It was a mirage. Sales went into reverse when Covid restrictions were eased and AO last month said it would abandon its seven-year adventure in Germany and stick to the UK. Now comes a reminder of how horizons have also shrunk at home: a story about a credit insurer reducing coverage.
The coverage in question is protection bought by suppliers against the risk of a retailer going bankrupt. The AO essentially confirmed the Sunday Times report that Atradius, one of the market’s specialist firms, had reduced its exposure, but the accompanying soothing-sounding explanation failed to have the desired effect. Shares lost 18%.
The cover was “rebased” in May, the AO said, “from the increased levels that were available and necessary during the pandemic period”. So Atradius was just doing a routine chore? Or should suppliers pay more, per refrigerator, to get the same protection? It wasn’t quite clear.
The AO was more persuasive about its efforts to protect its balance sheet. Germany’s exit price will be at the “lower end” of the initial estimate of zero to £15m. A credit facility of £80m is available until April 2024. Nothing has changed on the trading front since the last update in April and the rerouted coverage “has had no effect on AO’s liquidity position”.
Ok, all these points are relevant. But they are not putting to bed questions from some City analysts about the possible need to raise cash to adjust to the new trading circumstances. After the share price fell from 400p to 56p in 18 months, it’s a natural question to ask.
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Just Eat’s celebrations may leave investors scratching their heads
The party continues at Just Eat Takeaway, the Dutch food delivery firm that was a member of the FTSE 100 index. The highlight of the winter was a staff ski trip to Switzerland, which is believed to have cost $16m (£13m) . Now, via Bloomberg, comes word from the company’s German operation, Lieferando, of an “exclusive pool party” where the invitations specify that “drivers and temporary workers” are to be excluded.
All essential to building morale at head office, no doubt, but investors may be wondering what they have to celebrate: the share price is down 67% this year.
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