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EasyJet founder steps up battle with management over Airbus order

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Via Yahoo Finance

LONDON (Reuters) – Stelios Haji-Ioannou, easyJet’s <EZJ.L> founder and biggest shareholder, on Monday intensified his battle with the airline’s management over a huge aircraft order with Airbus <AIR.PA> which he says it should cancel.

Haji-Ioannou said in a statement that he had told the airline he would not provide it with any new equity until it terminates a 4.5 billion pound deal with Airbus. He said he tried to change the company’s stance by calling for the removal of two of its directors.

Stelios, as he is better known, says that the 107 planes on order are “useless”, after the coronavirus pandemic brought air travel to an almost standstill. The huge bill for the planes puts easyJet’s survival at stake, he said.

Airlines across the world are struggling to say afloat. Whole fleets are now grounded, including easyJet’s 344 planes, due to travel restrictions and plunging demand over fears of contagion.

Separately, easyJet provided an update on its financial position on Monday.

It said a 600 million pound issue of commercial paper through the government’s Covid Corporate Finance Facility, and a request to draw down on its revolving credit facility meant it would have access to cash reserves of 2.3 billion pounds by April 9.

“Given the possibility of a prolonged grounding easyJet will continue to consider further liquidity and funding options,” the company said in a statement.

Stelios said easyJet will run out of money by August and said he would not help it financially until the Airbus order is cancelled. He also said he wants easyJet to reduce its fleet size to 250.

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Britain has told its airlines to raise new money from shareholders before it would consider helping them. While easyJet is taking advantage of government help schemes for businesses, it has not requested any specific state bailout.

INFLUENCE

Under UK company rules, Stelios’s only way of influencing management’s behaviour is to call for a shareholder meeting to vote for the removal of directors.

He plans to write to easyJet’s chairman to call for two directors to be removed, adding Chief Financial Officer Andrew Findlay to an earlier call for the removal of Andreas Bierwirth.

When asked about Stelios’s plans, the airline said that it believed holding a general meeting would be an unhelpful distraction at the current time.

The Luton-based budget airline on Friday rejected Stelios’s first call for a general meeting to remove Bierwirth on what Stelios’s team called a technicality, but a meeting, held electronically, will have to go ahead at some point, his spokesman said.

“I fully expect easyJet to follow the stipulations of the Companies Act 2006 and to call a meeting within a three week period,” said a spokesman for Haji-Ioannou.

The Haji-Ioannou family owns about a third of easyJet’s shares and Stelios has been a long-time critic of the airline’s expansion plans.

EasyJet also said in its statement it had agreed a deal with a union to furlough its pilots under the government’s job retention scheme. It agreed a deal with cabin crew last week.

(Reporting by Sarah Young in London, additional reporting by Juby Babu in Bengaluru; editing by Angus MacSwan and David Evans)

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