business

EasyJet Roiled by Battle with Founder

With profits way down at the budget carrier, Sir Stelios Haji-Ioannou refused to approve the board's annual statement of accounts

Sir Stelios Haji-Ioannou intensified his dispute with the board of easyJet yesterday by refusing toapprove the annual accounts of the budget airline he founded. His move came as the group said its profits were slashed by the high cost of fuel this year.

Sir Stelios, a non-executive director of the company, said he had abstained from approving the airline's accounts after "extensive discussions" with the board, following a disagreement over the group's strategy.

"I regret to inform you that as a director of easyJet I am unable to approve the annual accounts," he said, outlining a number of reasons in an official statement attached to the results. Sir Stelios once more raised questions about easyJet's acquisition of GB Airways and called on the airline to pay a dividend for the first time in its history, as well as slow its expansion drive.

Sir Stelios's move is the latest in a boardroom battle that erupted publicly last week, albeit a symbolic one because the accounts were passed by nine votes to none, with only him abstaining.

As well as his other concerns about cost management and the dividend, Sir Stelios demanded the appointment of two non-executive directors. On Friday, he said he wanted to appoint Andrew Cooper and Anthony Robb-John, who are easyGroup employees, to the board and even hinted that he could enact a clause to re-install himself as chairman. He later denied he wanted to return to the role he relinquished six years ago.

Sir Stelios, who holds 27 per cent of the company's stock, reaffirmed yesterday that he had no intention of ousting the current chairman, Sir Colin Chandler, and repeated his previous statement of support, saying: "We have been impressed with the way he has been managing this difficult situation on behalf of all shareholders."

The dispute deflected some attention away from the group's report yesterday. It said pre-tax profits for the full year had fallen by 35 per cent to £123m, although the returns did beat analysts' expectation by about £1m. The group's revenues increased by 31.5 per cent to £2.3bn but its profits were hit by the higher fuel costs, which rose by two-thirds to £708.7m in 2008.

Andy Harrison, the chief executive of easyJet, backed the results as a "good trading performance", pointing to a 17 per cent growth in passenger numbers, to 43.7 million a year. He said winter bookings were slightly ahead of last year but added that easyJet recognised that economic conditions "would be very difficult" and was planning accordingly.

Gert Zonneveld, an analyst at Panmure Gordon, said the outlook for the year remained difficult and uncertain. "Newsflow in the coming months may disappoint as trading conditions look set to deteriorate in the face of worsening economic conditions," he added.

Sir Stelios's statement called for increased caution, but he threw in an upbeat message. "I believe that with careful cash management and, in particular, more prudent capital expenditure, easyJet and its shareholders will be the winners in European short-haul aviation. We must focus on cashflow forecasts and not on carrying more passengers," he said.

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