Sir Stelios wants easyJet strategy change

14th May 2010 17:07

easyJet founder Sir Stelios Haji-Ioannou and his associate Bob Rothenberg have resigned from the airline's board in order to change the strategy of the business. Both men were representatives of easyGroup, which owns 26.2% of easyJet. Sir Stelios says that he wants to be free to seek a change in the company's strategy. It appears he is unhappy about the lack of return from the investment in new aircraft. He claims to have been outvoted on board decisions relating to the purchase of 59 new Airbus aircraft. Sir Stelios wants to requisition a general meeting and ask shareholders to reject the management's strategy of growing the number of planes and instead get the company to focus on improving profit margins. He may also try to get the board to renegotiate the purchase of the new Airbus aircraft. "For some time I have firmly believed that the easyJet management was pursuing the wrong strategy for the expansion of the business. A mere look at the share price graph over the last 10 years, practically a 'flatline', and zero dividends are proof of that. How can you buy 200 aircraft with shareholders' money and create no wealth for shareholders?", argues Sir Stelios.Sir Mike Rake, easyJet's chairman, says: "The board of easyJet annually reviews the Company's medium term growth rate, and at the last such review in June 2009 the board unanimously agreed the 7.5% medium term growth rate. As is the ordinary course the board will conduct its next annual review over the summer in conjunction with the new management team. Therefore, I regret and am surprised at Stelios' decision to resign from the board".easyJet reported a smaller than expected first half loss but cut its 2010 profit forecast due to the recent travel disruption caused by volcanic ash.Pre-tax profit is expected to increase to between £100m and £150m at current fuel and exchange rates. That is after estimated volcanic disruption costs of between £50m and 75m.