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Fall is traditionally the season when airline bosses get nervous. When children go back to school and the summer holidays become a distant memory, it is suddenly all too clear which carriers are struggling.
In recent years, these have included Thomas Cook and Monarch, who both collapsed during the dreaded September and October slump.
According to easyJet boss Johan Lundgren, more are likely to go down this winter. He says, “I would have thought there would be more failures this year than mergers and acquisitions.
Confident: Johan Lundgren, CEO of easyJet, will soon release the company’s full annual results
“It’s looking pretty bad for a number of airlines and if you’re going through a rough patch now…” he sets his tone, adding: “There will be airlines that have a very tricky situation ahead of them. ‘
He points to Blue Air, a Romanian airline that seems to be failing, as a recent example in Europe.
Does he have any idea which other airlines are vulnerable? “Yes,” he says, leaning forward and smiling. “But I’m not going to tell you that,” he adds.
While his rivals may be shaking in their shoes, the former classical trombonist and coach guide is calm and composed. He says easyJet is one of the ‘least indebted airlines’ and ‘one of the few with an investment-grade credit rating’.
The FTSE250-listed company had to ground its fleet for 11 weeks during the lockdowns in 2020 without knowing when flights would resume. It was bleeding money at the time and within months raised more than £5.5 billion through share sales, refinancing and loans.
Once flights resumed, the UK was subject to ever-changing travel guidelines and restrictions, preventing many customers from traveling abroad.
Even last year it was difficult to navigate, as the UK remained at odds with the rest of Europe, where vaccinated travelers could get around with relative ease.
‘People in the UK don’t recognize that Europe flew last summer,’ he says
Lundgren, 55, is the quiet one compared to his arch-rival Ryanair boss Michael O’Leary, but he was a vocal critic at the time of this messy accompaniment.
When restrictions on the UK were finally lifted in March, Lundgren and his team planned to come back with a bang with an ambitious flight schedule expansion. But after disruption in the spring, it canceled 10,000 flights from its summer lei in early July.
But, perhaps surprising to many who have been forced to reschedule their first holiday since Covid hit in 2020, Lundgren insists easyJet’s customer ratings have actually improved.
“If you look at July and August, in those two months we flew 16 million customers with fewer disruptions on the day than in 2019. But it was difficult, because you can’t control everything.”
The ‘summer of discontent’ also appears to have thwarted early expectations that easyJet could turn a profit this year, after losing £1bn in 2021.
In May, Lundgren declined to offer any advice, but said cryptically that he was “not unhappy with the consensus that we would make a small profit.”
Is this still on the cards?
He hints that the answer is “no,” although he doesn’t want to say it explicitly.
‘We never gave advice on results for this. We’re going to have a profitable summer, but the annual results are slightly different.’
He points again to following the analyst guidance, which is currently forecasting a loss of £127 million.
The airline recently said its holiday business would generate a profit of at least £35 million, although the extent of the flight disruption will become apparent on October 13, when it releases its annual results.
Hopefully this will be a better day for Lundgren than the third quarter update, when he and his wife moved from a flat in Marylebone, central London, to a house a few miles away in Hampstead with a yard for their dog, Molly, who died heartbreakingly on the same day.
“I loved that dog, I didn’t want a dog in the beginning, I really didn’t. But I lost, three to one, the family did and I didn’t. When we worked from home during the pandemic, she was always there.’
While many airlines struggled to keep afloat, Lundgren faced the added pressure of a vicious boardroom row – and an attempted coup – from easyJet’s largest shareholder Stelios Haji-Ioannou, who founded the company in 1995.
Stelios, who called the directors “rogues” and took particular offense with an order for more than 100 Airbus jets, at one point tried to oust half of the board, including Lundgren.
Tensions have since abated, with Stelios selling some of his stake and relations between him and new chairman Stephen Hester are cordial. Lundgren shakes his head. ‘I’m harder on myself than’ [Stelios] could ever be.’
Now that Lundgren has seen easyJet through the pandemic, and almost to the other side, does Lundgren have any plans to move forward?
“No, I rarely planned my career that way, I never did when I was younger.”
Lundgren had more colorful beginnings in the working world than most. A passionate musician, he left school at the age of 16 to study classical trombone and played for three years under some of the biggest names in Sweden, the UK and the US.
But when he realized that he would never reach the heights he had hoped for, he abandoned music completely and started a career in the travel industry by becoming a tour guide on trips to the former Soviet Union.
His brother Per, to whom Johan donated a kidney, is a musician.
He then rose through the ranks at TUI, where he took second in command, before replacing Carolyn McCall, who became easyJet CEO in December 2017. For now, Lundgren’s eyes are firmly on the future. Last week, he unveiled a comprehensive plan to cut its carbon emissions, which will see it use more efficient aircraft, more sustainable fuel and carbon capture projects.
He has long criticized the idea of environmental taxes, claiming that travel would lead to travel becoming the domain of the wealthy.
In the shorter term, the potential for concerned customers to pull out the wallet is the biggest threat to easyJet this winter, although it has the advantage of being on the budget side of the market. “We are generally better off than our competitors as we head into recessions and downturns,” he says.
But even he has to admit that the choices are getting harder for ordinary people. “Of course, if people struggle to pay their bills and, you know, do what they have to do to just keep the house running, that can have an impact,” he says.
Still, he insists vacations are still important. “We know that people don’t want to give up their vacation or visit friends or family.”
He adds: ‘I think tourism in general is a force for good and ultimately it’s something that people value and cherish so much.’
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