easyJet power struggle between board and founder Sir Stelios Haji-Ioannou
On the evening of 13 November the Board of Directors of easyJet plc ("the Company") received a letter by email from their fellow director and beneficial owner of the largest block of voting shares, Sir Stelios Haji-Ioannou. Sir Stelios' interest in easyJet shares is held through easyGroup Holdings Limited, a Cayman Islands company ("easyGroup").
The letter notified the Company of a transfer of the legal interest in 47,954,575 ordinary shares in the Company from Clelia Holdings Limited (owned by Clelia Haji-Ioannou, sister of Sir Stelios) to easyGroup and was accompanied by a stock transfer form and share certificate. As a result of the transaction, the letter indicated an increase in easyGroup's holding of the Company's issued ordinary share capital from approximately 15.6% to approximately 26.9% (representing the same proportion of the voting rights in the Company).
Accompanying the notification of the share transfer in the letter was a corresponding notice of intent on easyGroup's behalf seeking to exercise rights of Sir Stelios and/or easyGroup under Article 87.1 of the Company's Articles of Association. This permits Sir Stelios and easyGroup to appoint two nominees to be non-executive directors on the Board of the Company in so far as they own in aggregate at least 25% of the issued share capital of the Company and the Company is entitled to continue to use the 'easyJet' brand pursuant to the brand licence dated 5 November 2000. Both of the proposed new directors are employees of easyGroup. Sir Stelios also stated in his letter that in the event these directors are not appointed he reserves his rights to appoint himself as Chairman.
There has been an ongoing discussion at the Board over the strategic direction of the Company in relation, amongst other things, to the future expansion of the Company's fleet against the backdrop of the current macro-economic climate. The Board has sought to adopt a cautious approach to fleet growth given the direction of economic indicators in its core market and has taken steps to conserve cash, reduce growth plans and dispose of surplus aircraft. Despite the Board's already cautious approach, Sir Stelios has indicated that he wishes the Company further to restrict future aircraft orders, to make future dividend payments in conjunction with a cessation or slowing of growth. Certain associated accounting matters continue to be the subject of discussion with Sir Stelios.
Sir Colin Chandler, Chairman of the Board of the Company made the following statement:
"There has been a far-reaching debate over these issues in respect of which the remainder of the Board has sought and received detailed professional advice in support of its position and its objective to act in the best interests of all shareholders. The ongoing dialogue with Sir Stelios continued during the scheduled meeting of the Board on 13 November 2008 following which it appeared as though a resolution of these matters was within reach prior to receipt of the letter from Sir Stelios last night. In the circumstances, despite what we expect to be a continuing dialogue with Sir Stelios in anticipation of resolving the strategic debate, the remainder of the Board believe that some context is required to accompany the announcements of the share transfer to easyGroup and the related request for the appointment of new nominee directors.
In all the circumstances I would like to make it clear up front that the other non-executive directors and I fully support the executive management of the Company."
The Company will announce its preliminary results for the year ended 30 September 2008 on the morning of Tuesday 18 November 2008. easyJet's profit before tax for the year ended 30 September 2008 is expected to be in line with market consensus. Additionally easyJet's forward bookings and total revenue per seat at constant currency for the first half of the financial year are currently slightly ahead of prior year.