Published on Tuesday, April 28, 2020

Stelios urges easyJet shareholders to oust directors

EasyJet shareholders will vote next month on whether to support founder Sir Stelios Haji-Ioannou's bid to oust the airline's chief executive and chairman.

The vote, on whether to remove chief executive Johan Lundgren, chairman John Barton and two non-executives, will take place during a general meeting on May 22, which is likely to be held as a webcast.

Stelios says easyJet needs to react to the current Covid-19 crisis by terminating its entire £4.5 billion order with Airbus for new aircraft. He says shares in the airline would be worthless if the order went ahead. EasyJet has already deferred delivery of 24 new aircraft.

Chairman John Barton urged shareholders to vote against the resolutions, saying the timing was 'damaging and destabilising'.

He said: "The board of easyJet firmly believes that holding a general meeting is an unnecessary distraction at a time when the airline industry is facing unprecedented challenge.

"The resolutions to remove the directors are an attempt to force easyJet to terminate its Airbus contract.

"This is not in the best interests of the company or its shareholders as a whole."

Stelios needs the backing of over 50% of the shares voted.

In a letter to shareholders Stelios said easyJet was likely to become insolvent in 2020 if its board bought 107 aircraft from Airbus. He threatened to sue the directors if easyJet went into administration having paid money to Airbus.

He said he had seen no evidence that easyJet could remain solvent and pay Airbus £1.5bn in the next nine months under the deal. He accused the board of being 'wildly optimistic' about the prospects for the airline industry after the Covid-19 crisis, arguing it would take years for European air travel to come back.

"If the Airbus order is affirmed by these directors, the most likely outcome is that our shares will become worthless on or about December 2020," he said.

"I will sue the directors personally for breach of their fiduciary duty if the company is placed into administration having paid to Airbus even a single penny post the grounding."

Haji-Ioannou's family owns 34% of the airline he founded in 1995. The value of his stake fell by more than £1bn in a month as easyJet shares plunged during the crisis, according to Sharecast.

Last month, Stelios was criticised for taking a £60 million dividend just 10 days before easyJet was forced to ground its entire fleet because of Coronavirus.

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