EasyJet's diminishing legroom

A skier who attains high velocity decelerates correspondingly fast when she collides with a tree. Carolyn McCall, chief executive of easyJet, knows what that feels like. Helped by a good ski season, the European low-cost airline turned a small, rare profit in the seasonally weak six months to March. Then, resistible force met immovable object when French air traffic controllers went on strike in April.

Ms McCall interpreted an 8 per cent drop in easyJet's shares in early trading as the market adjusting full-year expectations in response to the £25m cost of that dispute. But the sum was only 3.6 per cent of forecast 2015 profits. That suggests investors - who had marked the shares down 10 per cent by the close - also expect returns to be held back by weaker seat prices. These might result in part from lower fuel prices after airlines' oil hedges expire. Cheaper kerosene should make it easier for rivals, otherwise burdened with higher costs and national pride, to compete with easyJet.

In the longer term, easyJet hopes to ease pressure on yields by adding six more seats to the 180 contained in an A320 narrow-body jet. Ms McCall says passengers will have the same legroom, although it may not feel like that if you are taller than average. Can the day when smaller passengers are crammed into luggage lockers be far off?

Ms McCall's post-ski season tumble hardly qualifies as the kind of full, kit-strewing wipeout that US downhill racers refer to as a "yard sale". She is a shrewd boss who has dispelled doubts over competence and appears to have pacified Sir Stelios Haji-Ioannou, easyJet's exacting dominant shareholder. However, this earnings downgrade shows that, while free from the drag imposed by legacy costs, the airline is buffeted by the same headwinds as old-fashioned carriers. Easyjet shares look fully valued on a forward earnings ratio of 13 times.

The Pub Landlord, aka comedian Al Murray, failed to win the seat of Thanet South in last week's election when he ran satirically against Ukip's Nigel Farage. In contrast, tenant landlords are winners from legislation that will free many of them from the obligation to buy pricey beer from pub companies that own their premises.

That creates a problem for Enterprise Inns, which built an estate of more than 5,000 boozers through debt-fuelled acquisitions before the financial crisis. It can compensate for losing a premium on beer sales by increasing rents. But the group, which announced a new strategy on Tuesday, will find it harder to recoup economies of scale on its own bulk purchasing of drink.

The damage would depend on how many landlords choose to sever the beer tie after the new law is introduced next year. Enterprise said it expected up to 1,000 pubs to go rent-only by September 2020, sitting within a real estate investment trust it is setting up. Enterprise hopes to manage another 750-850 pubs directly. A sum on the back of a beer mat suggests the group might be left with about 2,400 traditional tenanted pubs in an estate of 4,200, having sold about 1,000.

To succeed, Enterprise will have to build a great managed pubs business, virtually from a standing start, and offer tenants a winning franchise. The plan is sensible. But Enterprise remains burdened with net debts of £2.4bn. Stiff execution risk is under-recognised in a share price ahead of November lows. Long-suffering tenant landlords have little reason to love big pub companies. From 2016, they will be able to repeat Mr Murray's catchphrase: "My gaff, my rules", and mean it.

Gateley, a Birmingham-based commercial law firm, plans to float on Aim. This small deal, valued at £130m-£140m, challenges the shibboleth that legal businesses do not benefit from stock market listings. If Gateley succeeds, other law firms may follow its lead. If the company languishes, the door to the market may clang shut.

Gateley's partners are becoming salaried employees through the transaction. By selling about half of the business, they are set for a windfall of up to £70m. But they will no longer be able to offer smart associates the reward of a partnership for bringing in new business.

Shares will be the alternative currency of appreciation. Lawyers who receive them will have to split profits with outside investors, instead of keeping the lot. This will be a decent deal for new fee earners if faster growth increases the size of the pie of which they get a slice.

Gateley hopes to buy other law firms and related businesses, as changes to the UK legal system allow. There is a discouraging precedent here: Tenon, an acquisitive accountant with a stock market listing, crashed into administration in 2013.

Gateley needs to grow more solidly. If it merely treads water, its best young lawyers will defect to rival firms in search of partnerships.

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