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EasyJet founder seeks to oust directors over strategy row

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Via Yahoo Finance

The chairman and chief executive of EasyJet, together with two other directors, face being axed on Friday as EasyJet’s founder, Sir Stelios Haji-Ioannou, seeks to oust them in a row over strategy.

Haji-Ioannou is counting on major investors to abstain on a vote to remove the four directors in a special shareholder vote as he seeks to cancel a £4.5bn order for more than 100 new aircraft which he believes puts the future of the airline in doubt.

Related: EasyJet to resume flights in UK, France and four other European airports

Haji-Ioannou wants to oust chief executive, Johan Lundgren, chairman, John Barton, finance chief, Andrew Findlay, and non-executive director Andreas Bierwirth because they have refused to cancel the aircraft order, placed with Airbus.

Haji-Ioannou has offered £5m for a whistleblower to come forward with information that would scupper the Airbus deal and has called the four executives “scoundrels”.

The airline has rejected “any insinuation that easyJet was involved in any impropriety”.

Haji-Ioannou and his family control about 34% of easyJet’s shares. The resolutions to remove the directors requires support of more than 50%, meaning the easyJet board could lose if a third of shareholders abstain or vote against the resolution.

However, no institutional investors with large stakes in the airline have publicly supported the resolutions, and influential shareholder advisory services ISS, Glass Lewis and Pirc have recommended voting against.

Lundgren has also expressed confidence that the resolution will fail, telling the Sunday Telegraph that he had spoken to investors holding 45% of votes, and that none had said they would vote against the easyJet board.

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Three City investors who speak for some 17% of the votes – Invesco, Phoenix Asset Management and Ninety One – have said they will support easyJet’s board.

Large passive investment managers including BlackRock, State Street and Vanguard, rarely vote against company boards.

EasyJet has already deferred the delivery of 24 new aircraft from Airbus as it seeks to preserve cash, and taken £600m in taxpayer-funded loans.

Some investors believe removing the company’s directors would be a major distraction at a time when easyJet, like all other airlines, faces the largest crisis in the history of commercial aviation.

EasyJet is also dealing with the fallout from a four-month hack which resulted in the travel and email details of 9 million customers being exposed.

EasyJet has outlined plans to resume flights in June, as have other carriers, but aviation bosses have warned that it could take five years before demand returns to 2019 levels.

Forecasts of long-term lower capacity have prompted job cuts at many airlines around the world. EasyJet’s bitter rival Ryanair has already announced that 3,000 job cuts are likely, British Airways plans to cut 12,000 jobs, and Virgin Atlantic also plans 3,000 redundancies.

EasyJet has not yet given any indication of plans to cut its workforce. Haji-Ioannou has called for the easyJet fleet to be reduced from 337 aircraft to 250, on the grounds that it would be more profitable. A fleet reduction on that scale would result in large job losses.

Airbus, BlackRock, State Street and Vanguard declined to comment.

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