easyJet boardroom bows to Stelios’s call for caution

easyJet‘s boardroom has bowed to pressure from founder and 41-percent shareholder Stelios Haji-Ioannou by cutting back on its expansion plans.

At the AGM today, Chairman Colin Chandler indicated plans to add 30 aircraft to raise its fleet size to 197 by 2011, could be shelved against a backdrop of slackening demand.
EasyJet’s January passenger numbers slowed to 2.8 percent growth.

Chandler said: “In light of the current economic environment the board will continue to adopt a cautious approach to growth and will focus on maintaining a strong balance sheet.

“The board will continue to monitor capital expenditure plans and conserve the company’s cash. Fleet planning decisions will be made by the board prudently, on the basis of the trading outlook.

“Naturally, this fleet plan for 2010 of 185 aircraft and 2011 of 197 aircraft may change if the macro-environment worsens in the next three to six months and given the lead-time for building aircraft,” he added.

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The public spat between Stelios and the board started late last year when he accused the growth plans as being imprudent. However, as recently as a fortnight ago, at the announcement of its quarterly results, directors were sticking to their fleet expansion plans.

Stelios also refused to sign off the company’s report and accounts, saying easyJet is a maturing airline which should start conserving cash and paying its shareholders dividends.

However the row has seen Stelios’s popularity with shareholders nosedive and in the vote to re-elect Stelios as a non-executive director more than a fifth of the shares cast refused to back him.
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