EasyJet CEO Carolyn McCall Will Be a Hard Act to Follow

Carolyn McCall’s appointment as CEO of low-cost airline EasyJet back in 2010 left plenty of airline insiders confused.

“Am I missing something?” one analyst asked the Financial Times. “I don’t know her, but I read the press release about her appointment and I can’t see how they came to the conclusion she was the right person for the job.”

Seven years later, after turning EasyJet into one of Europe’s strongest airlines, McCall is returning to her media roots having had the last laugh on those who said she wasn’t up to the task.

She’s not quite quitting at the top – last year’s Brexit vote has taken off some of the shine – but her successor Johan Lundgren will arrive for work on December 1 to find a company in pretty good shape.

Some of its closest competitors are either struggling or have gone out of business, the acquisition of a portion of Air Berlin will give it greater exposure in Germany, and the threat posed by the UK’s departure from the European Union has been partially nullified by setting up a new airline based in Austria.

“It’s probably the easiest it’s been actually for quite a long time in terms of the plates that are spinning… because we chose to do Air Berlin, we know what we’re doing,” McCall said on a conference call with journalists after EasyJet’s full-year results announcement. “We’re very, very strong at execution and therefore that’s in our control.

“We have really reduced the risks of Brexit to this organization by having a European airline in Austria, [and] by having a UK airline in the UK. So actually the risks of Brexit from where we were in June 2016 to today are massively reduced… all we need at the moment is a bilateral [agreement] between the UK and Europe and every airline needs that and every consumer needs that.”

Hard Act to Follow

Coming in to the job in such a favorable environment is what makes things tricky for Lundgren.

He is following a CEO who arrived with no experience and managed to change the fortunes of what had been a pretty dysfunctional airline. One of McCall’s biggest achievements has been to keep founder and largest shareholder Stelios Haji-Ioannou relatively happy.

Creating a new European airline may have helped deal with the initial shock of the Brexit vote but it won’t be able to protect EasyJet from a slide in consumer confidence in the UK if negotiations with the EU go badly.

And then there are the risks from digesting Air Berlin.

“Air Berlin slot costs are considerable, with £60m ($79.4 million) of operating losses and £100m (132.4 million) of exceptionals in 2018E, on top of the purchase cost,” analyst at Liberum said in a note to investors.

The deal won’t become profitable until 2019, long after its main architect has left.

Lundgren has a firm base on which to build, but events have a habit of disrupting even the best airlines. To understand that he only needs to ask his predecessor.