easyGroup founder Sir Stelios Haji-Ioannou has branded the relationship between Airbus and easyJet “incestuous” as he continues his attack on the airline.
The flamboyant entrepreneur is unhappy about an easyJet order for 35 A320 aircraft, claiming the deal broke shareholder protection rules because of its size relative to the market capitalisation of the company.
“The order announced by easyJet on January 4th 2011 was for 35 A320s converted from orders or options for the smaller, less costly A319 aircraft.
“Given that the price difference between an A319 aircraft and an A320 aircraft represents an increase of more than ten per cent, a new vote on all aircraft purchases is required according to UKLA rules.”
Stelios is opposed to the purchase, which he claims will see easyJet expand too quickly in difficult market conditions.
A320 aircraft have a list price of $85m; a figure which is likely to increase to almost $100m by the time the aircraft are delivered due to inflation, argues Stelios.
In round numbers 35 aircraft at $100m each makes the consideration $3.5bn, or approximately £2.2bn.
“This purchase is being made by a company with a market capitalisation that has been less than £1.5bn,” argued Stelios.
“Listing Rules and their associated class tests exist for the protection of shareholders as they prevent directors of undervalued companies making transactions which are too large relative to the company’s market capitalisation.
“The rest of easyJet’s announcement is irrelevant.”
Not surprisingly, easyJet has denied the accusations and vowed to press ahead with the purchase.
“The board wishes to be clear that easyJet’s fleet announcement of January 4th complied with all relevant regulations and reflects discussions which took place in advance of its release with the UK Listing Authority,” easyJet explained.
“The commercial value of the deal reflected substantially less than the current Airbus list prices for the aircraft and fell under the threshold for Class 1 transactions requiring shareholder approval.”
The airline also sought to reassure investors it was not expanding too quickly.
“Given the current industry environment, with oil expected to remain over $1000 metric tonne and fragile consumer confidence across Europe, easyJet has already stated that it intends to hold the size of its fleet at a maximum of 204 aircraft in winter 2011 and winter 2012,” added a statement from the airline.
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