EasyJet’s board orders more aircraft just to tick off its founder and majority stakeholder
Two easyJet planes at Faro airport in the Algarve, Portugal. curimedia / Flickr.com
If that’s not disfunction, then I’ve got a few dozen mothballed Dreamliners to sell you. EasyJet’s toxic relationship with its founder and major stakeholder does nothing but provide snarky websites with more ways to tweak the challenged low-cost carrier.
EasyJet is to defy its biggest shareholder, Sir Stelios Haji-Ioannou, and push ahead with plans to place a major aircraft order this summer.
The low-fare airline, which this weekend announced the looming departure of chairman Sir Mike Rake, is expected to seek shareholder approval for an order of at least 100 new aircraft. The carrier, which has a 217-strong fleet, could announce an EGM to vote on a proposed contract as early as June.
Last week, Sir Stelios, whose family has a near-37pc stake, sold a token 200,000 shares and said he would sell more “if the board places another order for aircraft”. Any such move “could screw up this financial success story”, he claimed.
But a senior easyJet source said yesterday: “We are not going to be intimidated by Stelios. We will do the right thing for the company in the long term.” The airline is looking at a similar deal to the one with Airbus that Sir Stelios helped successfully to negotiate in 2002, comprising firm orders for 120 A319 jets and options on a further 120.
Company sources stress many of the new aircraft, which are at least 15pc more fuel efficient, would be replacements for existing fleet, with growth in capacity averaging a far more modest 3pc-5pc a year – an issue easyJet claims Sir Stelios overlooks. The carrier is talking to both Airbus and Boeing.
Sir Mike will step down in the summer after three years in which the share price has more than doubled – but also seen bruising encounters with Sir Stelios, including the entrepreneur’s bid to oust him.
Sir Mike, who also chairs BT and is deputy chairman of Barclays, is not leaving due to a further breakdown in relations with Sir Stelios. Sir Mike said that with easyJet on the verge of the FTSE100 “it is the right time for me to stand down”. It is against corporate governance guidelines to chair two FTSE100 companies. easyJet non-executive Charles Gurassa is the main internal candidate to succeed Sir Mike. Sir Stelios did not respond to a request for comment.