EasyJet founder wants investor vote on Airbus deal

Industrials Reuters

By Rhys Jones

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LONDON, Jul (Reuters) - EasyJet's <EZJ.L> largest shareholder, Stelios Haji-Ioannou, wants to force a shareholder vote over the airline's plans to by new aircraft from Airbus, resuming a long-running dispute with the company he founded.

In January, easyJet confirmed an order with EADS <EAD.PA> unit Airbus for 15 A320 aircraft with options on further 33.

"My lawyers are in touch with the UKLA -- it will be good to see if the regulators have got any teeth in this country," Haji-Ioannou told Reuters.

"The price of Airbus planes is rising by around 5 percent a year at present and an A320 now costs at least $85 million at list prices, which is far greater than the price of $51 million which was given in an easyJet circular in 2006."

In an 11-page letter sent to Chairman Michael Rake this week, Haji-Ioannou, who with his family has a 38 percent stake and wants easyJet to cut its fleet, said the board should have sought shareholder approval for the order and investors should vote on the deal before any further payments are made to Airbus.

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Asked to comment on the situation, an Airbus spokeswoman would only say: "This is an internal easyJet matter."

If the board does not seek shareholder consent, Haji-Ioannou said he would call a general meeting and seek the removal of a randomly selected non-executive director from the board in a show of shareholder power.

The carrier has a fleet of about 200 aircraft -- all but two made by Airbus -- and has orders for a further 43 Airbus planes, including the A320s. Earlier this year, easyJet Chief Executive Carolyn McCall said the new orders would help deliver its growth strategy.

"I'm not micro-managing or criticising management but I do feel that the company is seriously underperforming," said Haji-Ioannou. "It's a tough environment -- that's why you shouldn't be buying planes."

EasyJet shares, which have fallen a quarter in value in 2011, were down 1.3 percent at 319.75 pence by 1135 GMT, valuing the business at around 1.4 billion pounds ($2.2 billion).

Haji-Ioannou also urged easyJet to consider other plane manufacturers, including Boeing <BA.N> and Bombardier <BBDb.TO>, which he claims offer better value than Airbus.

"This incestuous relationship with Airbus developed by the directors has to come to an end and proper and transparent tenders have to be issued giving the opportunity to other aircraft manufacturers to compete for the company's business," he said in the letter sent to Rake.

The tycoon's relationship with easyJet's board has deteriorated in recent years and he voted against a resolution to approve directors' pay earlier this year.

EasyJet said on Wednesday in response to the letter: "The commercial value of the deal reflected substantially less than the current Airbus list prices for the aircraft."

The Luton, southern England-based carrier said it intended to hold the size of its fleet at a maximum of 204 aircraft until at least the end of next year.

(Editing by Rosalba O'Brien and Dan Lalor and Jane Merriman)

(This article has been modified to correct the fleet number to about 200 aircraft instead of 186 aircraft in the ninth paragraph)