The founder of easyJet, Stelios Haji-loannou, puts pressure on the board of directors of the British low-cost company in order to cancel an order for 107 Airbus aircraft, worth an estimated €5 billion.
The carrier is the largest airline operating out of London Gatwick Airport (LGW). But low demand amid the coronavirus outbreak has forced Britain’s second-biggest airport to shut down one of its terminals. Similarly, easyJet had to immobilize its entire fleet of more than 300 Airbus A319 and A320.
In this context, Haji-loannou says the airline cannot afford to buy the aircraft ordered from Airbus. The businessman, who owns 34% of easyJet shares and was criticized for receiving €67 million in dividends earlier in March, says the payment of the order constitutes “the largest single threat to the solvency of the company”. Instead, he believes EasyJet should enter an austerity plan, scrapping its fleet expansion and reducing staff.
But so far, the board appears to have other plans. easyJet Chief Executive Johan Lundgren has reportedly applied for government loans to stay airborne and expects to use the extra-fleet to gain market shares once the crisis passes.
“If we don’t pay Airbus we don’t need government loans,” argued Haji-Ioannou. His hostility could find its roots in the fact that a government loan might be conditioned to a renunciation of dividends for 2019, and maybe even longer. Moreover, state intervention could see the appearance of new shareholders, reducing the founder’s shares below the minimum of 33% that give him the final word on the company’s strategic decisions.
To enforce his vision, Haji-Ioannou said he would renew the whole board by removing a non-executive director every seven weeks. The deadline is set for April 1, 2020. The board said it would address the issue in private.