EasyJet Grounds Fleet as Board Battle Looms

People boarding easyJet airplane
The airline's founder Sir Stelio Haji-Ioannou has reportedly threatened to call an extraordinary shareholder meeting every seven weeks to remove one of easyJet's non-executive directors if an order with Airbus is not cancelled.

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EasyJet plc said Monday, March 30, that it had grounded its entire fleet of aircraft due to travel restrictions imposed by governments due to the Covid-19 pandemic.

The move comes after reports suggested the budget airline’s founder would seek to remove its entire board unless an aircraft order was cancelled.

EasyJet said Monday that it is in discussions with liquidity providers to provide a cushion to see the company through the crisis.

The London-listed airline said it is trying to remove costs and non-critical expenditure from the business, and the grounding of the aircraft removes significant cost.

EasyJet said it does not have to refinance debt until 2022.

The airline’s founder Sir Stelio Haji-Ioannou has reportedly threatened to call an extraordinary shareholder meeting every seven weeks to remove one of easyJet’s non-executive directors.

In a letter to Chairman John Barton, seen by Sky News, the billionaire said the airline’s lack of transparency over a £4.5 billion ($5.48 billion) order for 107 Airbus SA planes was destroying shareholder value.

Haji-Ioannou along with family members own 33.7% of easyJet shares, according to Factset Research Systems Inc. data.

Sky News reported that Haji-Ioannou wrote that the aircraft order could threaten the future of the airline, and unless the order was cancelled by Wednesday, April 1, he would begin a rolling program of EGMs to remove non-executive directors beginning with Andrea Bierwith.

“Even with a resumption of air traffic, any income from passengers is likely to be too low to keep up with outgoings and would most likely render easyJet insolvent if it continues to pay Airbus for more aircraft,” he wrote, Sky reported.

“This crisis may result in the insolvency of easyJet plc and if it transpires that a single penny from the company has been paid to Airbus between the grounding of the fleet and the date of the insolvency or any equity-raising which would prevent insolvency, I will personally sue all the easyJet directors for gross negligence and for defrauding easyJet’s creditors with the favoring of one creditor (Airbus with dubious rights to these monies) over all others,” the letter read.

The airline has nine independent non-executive directors including the chairman, according to BoardEx, a sister publication of The Deal.

Haji-Ioannou also offered to subscribe to new equity as part of a wider share issue.

EasyJet shares fell 6.96% in Monday trading, changing hands at 553.4 pence and giving it a market capitalization of £2.21 billion.

Follow Lisa Botter on Twitter and LinkedIn.

About the author

Lisa Botter
London Bureau Chief at | + posts

Lisa Botter is London bureau chief, covering public- and private-market deals, activism and bankruptcy across the U.K., Europe and Asia. Lisa produces the Europe Daily and Asia Insider newsletters. Before joining The Deal, Lisa was assistant managing editor of Agenda, a Financial Times publication. She covered corporate governance and executive compensation out of the FT’s New York office. Before joining Agenda, Lisa was the deputy editor of Pensions Expert and a senior reporter at MandateWire, both FT publications based in London.

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