EasyJet is standing behind its chief financial officer and its decision to borrow millions from the UK government after a fresh attack from founder and major shareholder Stelios Haji-Iaonnou, who is threatening to take legal action against the budget carrier.
The dispute is centred on an order for 107 Airbus aircraft, which Haji-Iaonnou argues should be cancelled or renegotiated in light of the heavy toll the coronavirus pandemic is taking on the aviation industry.
After threatening to dismantle EasyJet’s board one director at a time – starting with Andreas Bierwirth and moving on to chief financial officer Andrew Findlay – Haji-Iaonnou said on 6 April that he would not inject any fresh capital into the airline while the Airbus contract remained in place.
EasyJet has since announced plans to borrow £600 million ($740 million) from the UK government’s Covid Corporate Financing Facility (CCFF) – a move Haji-Iaonnou describes as a “misuse of UK taxpayers’ money”.
In a strongly worded statement published on the London Stock Exchange on 8 April, he writes: “The reason Findlay wants to borrow this £600 million from the UK taxpayer is to pay [Airbus] £2 billion – that is the liability between this year and next year, and before the government loan is due for repayment.”
He adds that if EasyJet sends money to Airbus and fails to repay the UK government in March 2021, he will “personally sue” those involved for breach of their fiduciary duties.
Questioning the logic of keeping an aircraft order while much of the airline industry remains grounded, Haji-Iaonnou asks: “When was the last time in the history of aviation that one airline went from having £6 billion in revenues per year to zero revenues inside one month, with no firm date set in the future for returning to carrying fare-paying passengers? Why are these directors of EasyJet so keen to keep paying Airbus for additional redundant planes?”
EasyJet has responded to this latest escalation by saying it “fully supports Andrew Findlay” and “stands by its collective decision to access the CCFF, which was made in the best interests of the company”.
The carrier adds: “We remain absolutely focused on removing expenditure from the business, engaging with all of our business partners and suppliers including Airbus, and on safeguarding jobs and short-term liquidity.”
Holding a general meeting would, EasyJet argues, “be an unhelpful distraction from tackling the many immediate issues our business faces”.
In an 8 April research note, HSBC writes that the money raised through the government facility and the planned drawdown of a $500 million revolving credit facility will strengthen EasyJet’s financial position, but the bank expects the dispute with Haji-Iaonnou to rumble on.
“We think that recent developments have been constructive for the company’s liquidity, de-risking its outlook,” writes HSBC, adding that “the debate with the founder is likely to continue until the shape of the post-virus business is defined and its cash distribution policy is defined”.
Haji-Iaonnou has in the past argued that EasyJet should adopt a fixed dividend payout amounting to half of post-tax profits, and follow rival Ryanair’s approach of buying back shares.
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