Stelios' move to exert control over easyJet sends share price skidding
Sir Stelios Haji-Ioannou, Director and beneficial owner of the largest block of voting shares in easyJet, has reorganised his family's interests in the carrier to allow Sir Stelios and easyGroup to appoint two board directors. He has also reiterated his right to become Chairman of the LCC.
The action follows an escalation of tension over the carrier's strategy, with Sir Stelios indicating he wishes the airline to restrict future aircraft orders and to make dividend payments from 2011, in conjunction with a cessation or slowing of growth. Earlier this year, a legal dispute erupted between easyGroup over the airline's use of the brand. A court case is pending in the New Year.
The intervention by Sir Stelios could not have come at a more delicate time for easyJet, which appears very well positioned in the current economic environment to benefit from the weakness of its rivals.
easyJet is scheduled to announce its preliminary results for the year ended 30-Sep-08 tomorrow (18-Nov-08), with results expected to be in line with market consensus.
Recent easyJet traffic reports have been buoyant, with strong passenger numbers and load factors growth. The carrier has confirmed its forward bookings and total revenue per seat (at constant currency) for the first half of the financial year are "currently slightly ahead of prior year".
Shareholders have reacted negatively to the Stelios development, sending the airline's shares down almost 5% on 14-Nov-08 in a rising market.
European selected airlines daily share price movements (% change): 14-Nov-08