Queen of the skies: easyJet CEO Carolyn McCall on piloting into the FTSE100

The MT Interview: Carolyn McCall has been dismissed as a 'media luvvie'. But she can afford a smile of satisfaction now, after she successfully launched easyJet into the FTSE100 in March.

by Matthew Gwyther
Last Updated: 08 Mar 2016

It's bloody early. A freezing spring morning on the apron of gate 52 at Gatwick's North Terminal. A troupe of Cossack dancers in full regalia try to keep warm as they get ready to leap about for the entertainment of the assembled media.

The UK's aviation minister, Simon Burns, waits in the background, smiling weakly. You can blame Richard Branson for the palaver. No announcement in the airline industry can now be made without a contrived airport photo opportunity. (Old Beardie's most recent stunt involved him appearing not in a dress but lifting a kilt for the Nikons to reveal a nasty pair of white Y-fronts printed with the legend 'stiff competition'.)

Today, however, is easyJet's day. The dancing Cossacks do their turn, but the centre of attention for the snappers and camera crews is Carolyn McCall, easyJet's 51-year-old boss, looking her usual confident, soignee best in a black frock.

The junket of travel and transport hacks are all about to embark on an inaugural flight to Moscow on an orange Airbus. (McCall beat Virgin Atlantic to be awarded the route, much to Branson's annoyance.)

The negotiations with the Russians have been long and arduous and the fine print is a secret, but easyJet is the first low-cost carrier into Moscow from the UK. If you'd booked even the week before, the four-hour flight would have cost only £80.

But there is more to celebrate: McCall's company has just entered the FTSE100 and has managed to raise its share price by 90% over the previous 12 months. The shares, which languished at under £4 when McCall took over in 2010, stand at nearly £11 now.

That's a jump Willie Walsh at British Airways - or IAG - with his high costs, stroppy Iberia staff and enormous pension fund would love to enjoy.

McCall is the star of the show all day - part gang-leader, part queen bee making sure her guests are comfy and getting what they need in terms of copy. For her head of communications she performs like a dream - fluent, articulate, engaging, human. The Russians love her.

As we come in to land at snowy Domodedovo airport she's even assisting the crew 'doing the gash', as they call putting the rubbish into bin bags. And she's still gamely partying on at nearly midnight in a Moscow nightclub, being entertained by a drag act named Pearl and Dean grinding out some Shirley Bassey, their stubble coming through the foundation on their faces.

Even Pearl and Dean are mucking in, low-cost style - both have day jobs as easyJet stewards based at Bristol.

There was little in the way of partying going on at easyJet's cavernous Luton shed when McCall took over three years ago, having moved from her role as CEO of Guardian Media Group (GMG). The airline was in the doldrums, suffering from low passenger satisfaction, poor morale and a bitter public shouting-match between its founder, Sir Stelios Haji-Ioannou - who remains the company's largest shareholder with a stake of around 36% - and its board. The feud had seen off previous CEO Andy Harrison, plus his chairman and finance director. (More of Sir Stelios later.)

The business world was surprised by her career move, wondering what had got into new chairman Sir Mike Rake in choosing a woman with a background not only in newspapers but in a newspaper - the Guardian - that didn't have to make any money. (When MT previously profiled McCall in November 2007, the headline said she balanced 'principle against profit'.)

But Rake is hardly an ingenu - he chairs BT, is deputy chairman of Barclays and becomes the new president of the CBI in June - and he was very pleased by his hire then and remains so now. 'She's highly intelligent, really understands people and has the inner steel and resilience necessary for a job like this. You cannot stop being tough on the cost side. Airlines aren't complex like banks or telecoms businesses and Carolyn understood very quickly what needed to be done.'

McCall was ready for a move, having worked at the Guardian for 24 years, and had already been offered the top job at Channel 4. She recalls her mental process in considering the easyJet role: 'I sat down and thought: well, they are both businesses about consumers, customers, brand, operations. They also both have issues with perishable inventory and yield. I was very familiar with all that. Few people saw the similarities, only the differences. But my reaction certainly wasn't: "Oh my God, aviation?"'

And, of course, she would be going from managing one group of unionised, fractious, conspiracy-obsessed individuals (journalists) to another (pilots). Her politic way of putting it is that both are 'intelligent, sceptical and opinionated'.

Being naturally cautious, she was careful to do the research before she leapt. It was a turnaround job and she wanted to know the extent of the malaise and its causes. She was the only candidate who asked to see the operations director to find out what was really happening on the inside.

'He was very interesting,' she says. 'He told me we'd lost the faith of customers and needed them back onside; that we'd also lost the trust of our own people and let them down; and, finally, that we didn't have a proper team working together at the senior level - everyone was doing their own thing.' Not much of a turnaround task, then. (If anyone doubts her steely side, that operations director then had to go once she established herself.)

EasyJet was suffering from a bad brand problem. Its cheerful, cheeky, no-nonsense image as a plucky start-up challenging the legacy carriers had morphed into something much less attractive.

This wasn't helped by endless re-runs on TV channels like Dave of the legendary easyJet docu-soap Airline, which showed hours of hapless young people in orange sweatshirts at check-ins or in the plane aisles, trying - not always successfully - to deal with irate customers whose planes were late or whose bags had gone Awol.

This all played into the hands of management at deadly rival Ryanair, which - although it has all the tender mercy of an axe-murderer towards its customers, at least normally performs the job of carting its cattle from A to B quickly and efficiently. (Ryanair boss Michael O'Leary, incidentally, wrote off McCall early on as 'some old media luvvie'.)

Anyone who felt McCall lacked the killer commercial instinct necessary must have forgotten that she spent a good while on the board at Tesco under Sir Terry Leahy and had resigned when Tesco sued her paper for libel over allegations of tax avoidance.

Tesco was not an outfit noted for a gentle attitude to getting on in the world and she learned much at its Cheshunt HQ. She won't be drawn on Tesco's subsequent difficulties, its apparent fall from grace since Leahy left, noting only in her classic diplomatic style: 'Tesco is not a failing company.'

She'd also been a non-exec at Lloyds TSB and at New Look, won the Veuve Clicquot Businesswoman of the Year award in 2008 and was awarded an OBE for services to women in business in the same year.

Newspapers' big problem is that fewer and fewer people want to buy them. The huge difficulty in aviation is coping with a multitude of unpredictable factors beyond your control: oil price hikes, exchange rates, erupting volcanoes, air traffic control, the weather. Aviation is a fickle seductress: since the days of Juan Trippe at Pan Am fighting Howard Hughes at TWA, airlines have been a tough way to make a return on capital.

So she took the job - and flew straight into some clear-air turbulence. 'My first six months were about as bad in terms of adverse events as any CEO could have,' she recalls. 'We had a terrible crew shortage, which led to cancellations during the vital summer months, as there was no way we could wet-lease any new aircraft.'

A salty Sunday Times article pointed out that easyJet, with a desperately poor sub-50% punctuality record at Gatwick, was getting fewer aircraft away on time than Air Zimbabwe.

'That was followed by the worst winter weather in 30 years,' she adds. 'The next year, we had the worst in 40 years. The summer brought us awful air traffic control strikes in Europe. Then, just after Christmas, oil prices went through the roof and the hedge that we'd done was working against us. So that first year was really, really tough. But, do you know, I found it completely energising.' She's not into negativity and is not a moaner.

She got through it, learning the business all the while, and started on her strategic plans. She found a new finance director, Chris Kennedy from EMI, and recruited the able Peter Duffy, who'd been marketing director at Audi. She has now started to move easyJet away from being a less successful mirror image of Ryanair. McCall does not wish to run a company that goes to war with you as soon as you enter its website and continues the battle until you disembark at your destination - however successful.

She is courting business-class travellers, who now number 10 million annually, with allocated seats to avoid the usual scrimmage for a decent berth. This goes some way to addressing one of the big problems facing all low-cost airlines: their business is carrying holidaymakers in the summer, leaving expensive aircraft sitting idle in the winter.

She also refuses to fly to out-of-the-way airports miles from cities, sticking to primary locations. But it's a knife-edge game: easyJet had to maintain a near-90% load factor in the year to last September to stay on course. Her big worry must be that BA - once it has sorted out its Iberia woes - will focus its gaze in her direction.

'My predecessor Andy (Harrison) professionalised easyJet and oversaw massive growth of 15%, 16%, 17% annually,' she says, recalling those seat-of-the-pants days. They were taking delivery of a new plane every nine days. Chris and I have tried to take stock, slow that growth and re-set the brand internally.'

FOUR CHALLENGES FACING MCCALL

  • Keeping a weather eye out for volcanoes, oil price hikes, striking European air-traffic controllers and the wrong sort of snow

  • Keeping big shareholder Sir Stelios in his box

  • Maintaining and further burnishing easyJet's brand lustre

  • Persuading business people that her airline offers a proper alternative to legacy carriers

 

She was hired for her people skills, and getting her staff back onside was the first major task for an organisation in which morale was low. 'You must look after your people. Yes, we operate a low-cost model, but taking care of colleagues is the way you will make yourself the best operator within that model. If you're a value brand as an employer, you need to ensure the same rules apply to everybody.'

A festering sore had been the withdrawal of free food and drink for crews. She reversed this. 'They work very long hours at a busy and intense job and rely on crew food and drink. Taking it away was deeply demoralising.'

She also changed rostering patterns to make them more predictable. Now she receives emails from pilots suggesting new ways of improving fuel saving and efficiency. But, she says, they still complain about the food.

The one big, angry bluebottle in the ointment is the ongoing row with Stelios. It's an unseemly spat for an FTSE100 company, but Stelios shows little inclination to give it a rest - he's a tireless briefer of the media. McCall refuses to be drawn on him. She won't even express an entirely understandable mild exasperation.

I ask: does he ever say well done or even thanks? She has, after all, done very well for him in the value of the shares and has offered a dividend. 'We'll be completely open with any investor, we have nothing to hide,' she fudges. 'I'll give any detail or reassurance.'

But isn't what Stelios is doing very destabilising and doesn't it risk putting the company's success in the shade? 'It hasn't put our success in the shade,' she retorts. 'My job is to keep our people focused on what we do. It is not personal and we don't let it get in the way of delivery. I won't allow myself to be distracted.'

This sounds like a subject she's spent many hours on with her coach and advisers. One gets the impression that when his name comes up, she goes to that secret happy place in her mind. She has to leave the openly expressed anger to her chairman, Rake, who has warned that Stelios could send easyJet down if he's not careful.

Recently, for the third year in a row, Stelios voted his 36% against the board. He noisily questions strategy and remuneration and has recently off-loaded 2% of his shares in yet another gesture of protest. The bone of contention remains the purchase of new aircraft, which are of course hugely expensive.

Yet compared with BA, with its lumbering old fuel-thirsty 747s, easyJet has a youngish all-Airbus A320 fleet and it needs more aircraft to expand. The airline is also being constantly enticed by both Boeing's and Airbus's new generation of aircraft, due to enter service in 2017, offering 15% less fuel burn. That could save tens of millions in costs.

McCall says her team is spending all this year studying the complex pros and cons and she doesn't have to make her mind up yet. But when she does you can be sure there will be an almighty row with the airline's Monaco-based founder.

Rake, who steps down in the summer, has already advised his successor, Next chairman John Barton, not to 'rise to the bait on unnecessary provocation'. He told MT: 'We have enjoyed relatively benign conditions in the past 18 months. We cannot afford to be diverted by constant noise, which is not good for the company. We have to get on with the job. We're always open to listen.'

EasyJet's advance into the FTSE100 has done something to redress the fact that the number of female leaders of these blue-chips has gone down over the past year, with the departure of Marjorie Scardino from Pearson and Cynthia Carroll from Anglo American.

Over the years, McCall has done more than her bit for the Women in Business cause - she was a loyal supporter of Business in the Community's 'Opportunity Now' campaign - but she is opposed to positive discrimination and a quota system for women on boards, as practised in Scandinavia.

'I'm against quotas because of their tremendous potential to cause a backlash and sets things back still further,' she says. 'Scandinavia is different from here - it's smaller and has always had a culture of equality when it comes to issues like paternity leave. But there has to be a better balance on boards. It's the pipeline of female executive talent that we should focus on.'

But didn't she find things slow to advance? 'Yes, but it's two-way. Women have got to want to do some of those tough jobs.' She acknowledges that she'd climbed to the top of the Guardian pile before she had her son, now 11, followed by twins, now nine. 'I hadn't planned it that way but it certainly made things easier for me.'

Her schedule sounds punishing: a lot of 4am starts for a 6am flight and at least two nights per week away from home. Although living as she does in Berkhamsted in Hertfordshire, she's closer to the office than she was in her Guardian days, she probably sees less of her kids than she used to.

'Children always want to see more of both parents,' she says. 'Look, our weekends are usually fine. I do phone calls but they don't have to be intrusive. I feel very lucky to have three children and I remain totally grounded by them.' Her husband, Peter, whom she met at university, runs his own sports development consultancy, International Cricket Group.

The fact that McCall is a rare woman at the top of business still leads to some quite nasty stuff. Satirical magazine Private Eye recently published a story about what a lecherous 'Middle Eastern gentleman' is supposed to have to said to her at a Guardian party. It wouldn't have been there if she were male.

easyJet CEO Carolyn McCall often starts at 4am and spends at least 2 nights a week away from home

Her ability to combine warmth with a steely core comes from her upbringing. McCall was born an only child in Bangalore to British expat parents. Her father ran the Far East division of a US textile multinational and her mother worked at the British embassy in India. She has said she inherited her mother's organisational skills and impatience and her father's ambition and calmness.

After a degree at Kent University she was for a while a teacher at Holland Park Comprehensive. You can see how she would have been a gifted member of that profession, but it wasn't for her. After a short spell as a researcher at Costain, she got a job as a planner at the Guardian, where her talent for sales was spotted. Besides networking, another strong suit is negotiation.

One of the biggest deals she ever swung - GMG's £1bn purchase in partnership with Apax of the publisher Emap in 2007 - brought perhaps the most controversy of her career. The standard line - usually from a disgruntled Guardian journalist - is that it was an overegged deal done at the top of the market and it has landed the newspaper in it. Emap slumped following the great crash and McCall departed, leaving the current management to clean up the mess. Apax subsequently wrote its investment in the business down to zero.

She won't have any of this and in private vigorously defends the deal. It is true that following GMG's sale of a large chunk of its cash cow Auto Trader, something had to be done with the £250m windfall, such as investing in a trading asset, or it would otherwise have attracted punitive rates of taxation.

GMG has now withdrawn from the ailing regional newspaper and radio markets, enabling it to focus on its core product, the welfare of which is the sole remit of the Scott Trust. 'The Guardian,' she maintains, 'is the only paper you can guarantee will still be around 25 years from now.'

She is well rewarded at easyJet for the success she has delivered. Late last year, she bagged a £1.27m bonus on top of her basic salary of £712,000, which makes her significantly better paid than Willie Walsh at BA. She also has a LTIP of £2.86m that Stelios opposed, but she is nowhere near as rich as Michael O'Leary.

As she is only 51, one wonders what will come next. As a seasoned 21st-century CEO with a proper turnaround scalp on her belt, she is likely to be in big demand for some years. One could see how she could run M&S, for example, if that slot became vacant.

She could run the BBC when Tony Hall has had his fill, although that may be a bed of nails too many.

But she refuses to countenance such talk and on the late return flight from Moscow - piloted by a Spanish female - she again chats to the passengers and helps clear the wine bottles and sandwich wrappers into that plastic bag.

There's a long, profit-laden and volcano-free summer to look forward to. She'll be in the hanger again early the next day.

 

MCCALL IN A MINUTE

1961

Born 13 September in Bangalore, brought up in India and Singapore.

Studied at the University of Kent (BA, history and politics) and the

University of London (MA, politics)

1986

 Joined the Guardian as a planner in the marketing department

1995

Appointed ad director of Guardian Newspapers Ltd

1999

Launched Guardian Unlimited

2000

Managing director, GNL

2006

Chief executive, Guardian Media Group

2010

Appointed chief executive of easyJet

Mar 2013

Easyjet enters the FTSE100

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