Coronavirus blowups – bankers, family businesses, non-family managers…and rats


Expanding on a characteristic of nature, the writer C.S. Lewis asked the question: “Surely what pops out before the man has time to put on a disguise is the truth?” He expanded: “If there are rats in the cellar you are most likely to see them if you go in very suddenly.”

His thoughts are particularly relevant now with the coronavirus pandemic, which has surprised the whole world in its magnitude and grimness. And, if the epidemic has shocked the world, some parts of it are displaying Lewis’ rat/truth analogy more than others. In the corporate world, the airline industry is right up there. 

And by exposing the relationship between the airline industry, plane-makers, and the financial sector, he’s revealing the often rentier-like nature of the corporate world…

No better is this revealed in a tussle between the family owners of Easyjet – the 252 biggest family business in the world – its non-family leaders, some bankers, and a cartel-operating planemaker.  

Sir Stelios Haji-Ioannou, one of the UK’s most successful entrepreneurs, and his family own just over a third of Easyjet, the big European budget airline company, making the family the biggest single shareholder.  So Stelios and his family might be expected to have some say on the running of the group. 

But Stelios, 53, isn’t too happy, to put it mildly, with how the board of Easyjet, which he left ten years ago, is managing the group. Nor is he too happy with Easyjet’s broker Credit Suisse and the planemaker Airbus, which Easyjet buy the majority of its planes from.  

Recently, he’s issued various statements about, what he sees, is the mismanagement of Easyjet. Stelios is particularly incensed about the board’s decision to place a £4.5 billion order with Airbus for 107 new aircraft. And he doesn’t agree with the board’s decision to ask for taxpayer money to bail out the airline because of the disruption the pandemic has caused for its business.  

Stelios has also pointed the finger at the Swiss bank Credit Suisse, or at least one of its analysts, for painting a very rosy picture about Easyjet’s future profits. The airline’s board has used the forecast as part of its justification for buying the new planes, says Stelios. 

If the Airbus deal goes ahead with the taxpayer bailout, Stelios goes on to say it will mean Easyjet will be subsidizing the planemaker with taxpayers money. The British taxpayer will be subsidizing a Franco-German company with an order based on a “wildly optimistic” forecast of the rebound in the fortunes of the airline industry, so Stelios’ argument goes. 

Instead, Stelios thinks Easyjet should cancel the order, thin down the airline, and let shareholders bear the burden of the downturn. 

Stelios might not be doing this intentionally, but with his statements and pronouncements, he’s underlining the importance of values at his family business. By wanting to thin down the airline he started, he’s looking at the longer-term viability of Easyjet. By not wanting the taxpayer to bailout Easyjet, he’s looking at the wider community Easyjet serves. 

And by exposing the relationship between the airline industry, plane-makers, and the financial sector, he’s revealing the often rentier-like nature of the corporate world that benefits senior managers, their bankers, and supply chain producers, but doesn’t do much for other stakeholders. In fact, the system probably rips them off.  

Coronavirus might have surprised some rats. The only depressing thing is rats have this almost mythical power to outlive pretty much any other living creatures on earth. 

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