EasyJet Founder Escalates Feud With Board Over Jet Order
EasyJet Founder Escalates Spending Row With Challenge to Board
(Bloomberg) -- EasyJet Plc’s founder escalated his feud with the board, calling for the ouster of a director in a bid to pressure the discount airline into canceling a 4.5 billion-pound ($5.6 billion) aircraft order.
Stelios Haji-Ioannou, EasyJet’s biggest owner with a 34% stake, proposed a general meeting to remove director Andreas Bierwirth, according to a letter sent late Wednesday to the airline’s chairman, John Barton. He threatened to challenge one non-executive director every seven weeks, tying up the board with a series of cumbersome and divisive general meetings until it succumbs.
Haji-Ioannou, who has long opposed buying new aircraft, this week turned up the heat on a low-simmering campaign to halt the purchase of more than 100 Airbus SE narrow-body jets. The 53-year-old entrepreneur, emboldened by the coronavirus crisis that’s suddenly turned large spending commitments into a millstone, on Sunday demanded the deal for A320-family planes be terminated.
“The board is focused on managing the unprecedented challenges facing the airline and the aviation sector as a whole,” EasyJet said in response to Haji-Ioannou’s letter. “We believe that holding a general meeting would be an unhelpful distraction from tackling the many immediate issues our business faces.”
EasyJet shares fell 5.4% in London. The stock has declined 65% this year. The airline said Thursday in a stock exchange filing that the board was considering the contents of Haji-Ioannou’s letter and “further announcements will be made as appropriate.”
Bloomberg News reported on Wednesday that EasyJet is considering options including raising new debt and equity to provide a buffer against the downturn, which has forced the U.K. airline to ground its fleet.
The U.K. carrier is exploring various fundraising scenarios, including commercial and government sources, as well as a delay in plane orders to conserve cash if needed for a longer-term downturn, people familiar with the matter said, asking not to be named because the discussions are confidential. The airline would prefer loans to selling new shares, one of the people said.
EasyJet, which is seen as one of the European airlines better-equipped because of its existing cash and credit lines, is discussing the best options to navigate the pandemic-related slowdown and traditionally slower winter season, the people said.
The carrier said it had received confirmation Thursday that it is eligible for loans under the Bank of England’s Covid Corporate Financing Facility.
Adding liquidity would fortify EasyJet as it digs in for an undetermined period with little revenue. The International Air Transport Association this week warned that airlines will burn through as much as $61 billion worldwide in the second quarter as travel hits bottom.
Haji-Ioannou has also called on the company to raise 600 million pounds in equity through a rights issue to existing shareholders. He quit the board in 2010 in a dispute over growth, and has consistently objected to the airline’s growth plans.
“There is no doubt in our mind that all airlines have to attempt to delay all capex in the immediate future,” Bernstein analyst Daniel Roeska wrote in a reasearch note. He said he’s uncertain how practical it would be to cancel the order outright, given the potential penalties. “From a strategic point of view, we would see the new aircraft strengthening EasyJet’s long term position.”
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