EasyJet clashes with founder over A320 acquisition

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UK budget carrier EasyJet is defending itself against another hostile onslaught from founder Stelios Haji-Ioannou's, rejecting his renewed criticism over its aircraft acquisitions.

Haji-Ioannou, whose company EasyGroup is a shareholder in the airline, has conflicted with EasyJet several times over its fleet strategy, and his latest broadside centres on the exercising of 15 Airbus A320 options in early January.

In a letter to the airline today, Haji-Ioannou said EasyGroup had taken time to "reverse engineer the facts and true size" of the capital expenditure involved, and had "some very serious concerns and questions".

He claims shareholder consent "should have been obtained" regarding the order - an accusation EasyJet dismisses, insisting the commercial value of the deal fell below the threshold for such approval.

Haji-Ioannou accuses EasyJet of failing to make clear to shareholders that an original deal for Airbus A319s included options to take the "bigger and more expensive" A320, and even claims the price cited by the airline for the 15 jets - some $1.1 billion - is "deliberately understated" and "designed to mislead shareholders".

Haji-Ioannou argues that the "money of the day" cost of the A320s is "probably double" the figure originally given for the A319s, and questions whether other aircraft types are more affordable.

"It is time for the company to stop buying aircraft until the full facts are disclosed to shareholders and shareholders' consent is obtained," he says, and adds: "This 'incestuous' relationship with Airbus, developed by the directors, has to come to an end, and proper and transparent tenders have to be issued giving the opportunity to other aircraft manufacturers to compete for the company's business."

Haji-Ioannou has demanded that payment for the Airbus order is withheld until EasyGroup receives "satisfactory replies" to the issues it has outlined. He is threatening otherwise to call a general meeting to remove a "randomly selected" non-executive director, to demonstrate lack of shareholder trust in the board.

EasyJet has fired back, stating that while the January A320 deal was treated as new for regulatory purposes, it was carried out under the framework of a 2002 contract with Airbus. The commercial value of the A320 deal, it adds, "reflected substantially less than the current Airbus list prices for the aircraft".

While it intends to respond in more detail to Haji-Ioannou's comments, it insists that the Airbus agreement "complied with all relevant regulations".