Staff at Guardian Media Group (GMG), the publishers of The Guardian and The Observer, were this morning waking up to the shock news that their chief executive, Carolyn McCall, is set to quit the company in favour of running the budget airline easyJet.
McCall is in advanced talks to leave GMG and join the airline founded by Stelios Haji-Ioannou, who is believed to have approved the appointment.
The development comes after GMG posted pre-tax losses of £90m in the year to March 2009, compared with a profit of £306m the previous year. The paper is in the process of cutting 150 jobs, and some of its own staff, members of the National Union of Journalists, have begun investigating their own company's financial record and corporate-governance standards.
In order to shore up its business, the group was forced last month to cut its historic links with Manchester by selling the Manchester Evening News, to which it had been tied for 142 years. At the same time, GMG sold 31 of its other regional newspapers to Trinity Mirror in a deal which raised only £7.4m in cash and led to the termination of a printing contract.
Ms McCall justified the sale on the grounds that the survival of The Guardian was the group's overriding priority. "GMG is mandated to secure the future of The Guardian in perpetuity," she said. "We have a strong portfolio, which has to be in the right shape to achieve that goal. The group board and the Scott Trust have made the decision to sell in light of these strategic objectives."
The Scott Trust was set up in 1936 in honour of the former editor C P Scott to "preserve the financial and editorial independence" of a paper which was founded as The Manchester Guardian in 1821. The group, which is losing £100,000 a day, has no shareholders other than the Trust.
In recent years, GMG management and the newspaper's long-standing editor, Alan Rusbridger, have embarked on a strategy to rebrand the paper as "the world's leading liberal voice", moving into a new headquarters in King's Cross, north London. GMG has invested very heavily in its online operations and has attempted to establish a strong presence in the US, launching a Guardian America site with a dedicated staff in 2007.
As GMG's financial year draws to a close at the end of this month, GMG is set to take a significant hit on its investment in publisher Emap, sending it to an annual loss for the second year in a row. The group is expected to write its investment down by between £100m and £200m because of difficult market conditions.
Ms McCall, a former non-executive director of Tesco, is said to have nurtured ambitions to run a publicly listed company.Reuse content