EasyJet Chairman Defends Strategy After Stelios Exit

May 19, 2010

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EasyJet's chairman defended the budget airline's strategy on Tuesday, days after the surprise resignation of its founder, promising investors the board would consider returning cash to shareholders.

Shares in airline easyJet fell after founder Stelios Haji-Ioannou, known widely as Stelios, quit the board on Friday. He accused management of pursuing the wrong strategy, pointing to a lack of share price progress and the absence of a dividend.

Chairman Michael Rake, in a letter to shareholders, said the board was "surprised and disappointed" to find itself in dispute with Stelios and said he considered there were no grounds for a dispute.

Rake said the board kept the issue of returns to shareholders "under review": "Given the strong underlying performance of the company this year, I believe the board could well be in a position to consider the matter of some sort of return within a reasonable time frame."

Stelios also revolted against plans to increase the airline's fleet, but Rake said easyJet's stated medium term growth rate of 7.5 percent in seats flown per year was approved unanimously by the board last June.

He added no further orders would be placed with Airbus until the group's new chief executive and finance director, Carolyn McCall and Chris Kennedy, join on July 1.

In a separate dispute over the easyJet brand, the company said its interpretation of the brand license was well-founded and would not be offering concessions to Stelios's easyGroup.

Stelios controls 26 percent of easyJet via easyGroup, while his brother owns 11 percent.