Stelios Haji-Ioannou, who founded EasyJet and whose family holds a 34 percent share in the UK low-cost carrier, said Monday he will solicit support from other shareholders to terminate a contract with Airbus for “107 additional useless aircraft.” In a two-page statement, Haji-Ioannou called the termination of the £4.5 billion Airbus contract for A320-family jets the “only way to preserve the value for all shareholders and all the bondholders too.”
EasyJet will not need loans from the UK government to steer through the coronavirus pandemic if it cancels the contract, he said. Conversely, if the £4.5 billion liability to Airbus remains on the books, the London Luton-based low-cost carrier “will run out of money around August 2020, perhaps even earlier” and will need to raise fresh equity, according to Haji-Ioannou. “I will certainly not be throwing good money after bad,” he said, “For the avoidance of doubt, I will not inject any fresh equity in EasyJet whilst the Airbus liability is in place.”
The EasyJet founder also urged the LCC to plan a fleet size reduction “now—down from 350 to 250.” He dismissed as “pure fantasy” and “wildly optimistic” a forecast by Credit Suisse, published on April 2, that assumed the EasyJet fleet will return to the skies in June, drawing revenues of £1.5 billion in the summer months. “I think that EasyJet at the end of national lockdowns will feel more like a start-up trying to find a few profitable routes for a few aircraft at a time,” Haji-Ioannou noted. He described as “even more crazy” Credit Suisse’s assumption that EasyJet will fly all its current 330 to 350 aircraft to full capacity from October 2020 and earn higher profits in 2021 than it did in 2019.
Haji-Ioannou also called for the removal of CFO Andrew Findlay from his position as the “best way to stop him writing billion-pound checks plus to Airbus every year.” Last week, Haji-Ioannou tried—so far unsuccessfully—to remove former Lufthansa group executive, Andreas Bierwirth, from the board.
In a statement to AIN, EasyJet noted it had not yet received the formal request from Haji-Ioannou for a general meeting and that holding one would prove an “unhelpful distraction from tackling the many immediate issues our business faces.” It added the company remains “absolutely focused on short-term liquidity, removing expenditure from the business alongside safeguarding jobs and ensuring the long-term future of the airline.”