EasyJet flies jet purchase vote past AGM opposition

11th Jul 2013 12:55

Low-cost airline easyJet has received institutional investor backing for its divisive purchase of 135 new aeroplanes. The plans of Chief Executive Officer, Carolyn McCall, to buy aircraft valued at $13bn had been strongly opposed by the company's founder and 36% shareholder Sir Stelios Haji-Ioannou. But in a shareholder vote at the FTSE 100 company's Luton headquarters, a majority of 193.8m votes, representing 57% of its shares, voted for the board's proposals, which defeated a large minority of 144.1m votes against.Chairman, John Barton said: "The vote in favour of our new fleet arrangements will allow easyJet to continue its successful strategy of modest, profitable growth and sustainable returns for our shareholders."Sir Stelios had opposed the deal as he said investors were not being given the full information about the deal, although it is not uncommon for airlines to withhold discounts they extract from plane manufacturers.In an open letter to shareholders on July 1st, he had said it was "a good deal for Airbus and a bad deal for easyJet shareholders".After the results of the vote on Thursday a spokesman for Sir Stelios told the London Evening Standard: "It's a disgrace that shareholders were not told the full facts of this transaction."Clearly the board got its way ? for now. But if in the coming years Sir Stelios believes this deal has been destructive of shareholder value, he will hold directors to account, legally if necessary."In his open letter the founder had said: "As an investor if there is one thing to remember about airline history, it is that most airlines are run by their executives in order to buy more aircraft from the two main suppliers - not to maximise shareholder value."I am not against replacing aircraft that have reached the end of their economic life. However I am against buying aircraft that are three times more expensive than the ones I bought with my own money in the early 2000s."McCall's plan is to replace 85 older aircraft with a mix of new and re-engined Boeing single-aisle planes, with the rest boosting capacity by as much as 5.0% per year. Shares in easyJet were down 0.5% to 1,330p at 13:20 on Thursday.OH