Stelios refuses to approve accounts as profits dive

The row between Stelios Haji-Ioannou and its board has deepened after the easyJet founder today refused to approve the airline’s annual results.

In a statement attached to easyJet’s results, Sir Stelios sets out his concerns over accounting policies adopted by the rest of the board, which he argues do not reflect the “current commercial realities and the macro-economic climate”.  He also voiced his disagreement with the management’s recent takeover of GB Airways and the valuation of aircraft and slots at Gatwick airport accompanying the deal.The figures themselves show the effect of high oil prices with net profit slumping 55% from £152.3m to £83.2m, despite a strong gain in revenue.

The latter rose 31.5% to £2.36 billion boosted by the acquisition of GB Airways in January and a 17 percent gain in passenger numbers to 43.7 million. The load factor rose 0.4 percentage points to 84.1 percent.

“We recognize that economic conditions will be very difficult and easyJet is planning accordingly, which means focusing on offering customers great value, driving down controllable costs and preserving cash,” said Chief Executive Andy Harrison.

Stelios is trying to have two non-executive directors appointed to the board, and is in dispute with the management over the pace of growth at the airline and its continuing failure to pay a dividend.

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The two parties are negotiating what his rights of boardroom representation are, as set out in an agreement drawn up prior to him stepping down as chairman in 2002.

The dispute is whether he can nominate a chairman and one director or a chairman and two directors. Sir Stelios has said he does not wish to be chairman.

“I am left without any other options but to abstain from voting on the accounts as a director of easyJet,” he says. “I believe it is in the interest of all shareholders to be more prudent at the present time.”

Andy Harrison has fought back saying the airline was taking a “very practical approach” to future growth, and in deliveries from Airbus, which provides its craft. “We have flexibility with our Airbus order. We’re able to defer up to half of future deliveries, assuming we give Airbus enough notice.”
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