By Rhys Jones
LONDON, June 18 EasyJet's multi-billion dollar
deal to buy 135 jets from Airbus has sparked a
new battle with the budget airline's founder and biggest
shareholder Stelios Haji-Ioannou, who has voiced his opposition
to the deal.
EasyJet agreed to buy 35 current-generation A320 aircraft
and 100 new A320neo jets, with options for a further 100, the
airline announced on Tuesday, day two of the Paris Airshow.
Haji-Ioannou, better known as Stelios, who founded the
airline in 1995 and has a 37 percent stake, believes buying new
jets will destroy shareholder value and that the money would be
better spent on improving returns to investors.
EasyJet did not reveal the value of the deal, which is worth
around $11.9 billion at list prices, but said it had negotiated
a "very substantial" discount that was greater than its last
deal with Airbus, which was struck amid a downturn in the
aerospace industry in 2002.
"This is yet another huge capital expenditure deal with the
same supplier at 'secret' prices," Stelios said in a statement
sent to Reuters. "It raises more questions than answers."
Reuters reported last week that a $10 billion plus deal was
imminent after easyJet entered exclusive talks with Airbus,
dealing a blow to its U.S. rival Boeing which had hoped
to undo the airline's defection to Airbus over a decade ago.
The deal is subject to a shareholder vote, where it must be
approved by investors representing more than 50 percent of the
Sources close to easyJet CEO Carolyn McCall said she is
confident of winning approval for the deal from shareholders
despite opposition from Stelios, who is expected to vote against
it at a shareholder meeting due to take place next month.
EasyJet is sending a detailed circular to shareholders this
afternoon and airline executives will meet its top institutional
investors to discuss the order in the coming weeks, sources
close to the airline said.
"We will ask all our questions when we have seen the full
shareholder circular which must include the actual price to be
paid for each aircraft and the incremental profit each of these
aircraft will actually deliver," Stelios added.
Stelios quit the airline's board in 2010 after a row over
strategy. Since then he has been critical of many of the
airline's plans, including fleet expansion, executive pay and
McCall is popular among the majority of shareholders given
the annual dividend and profits have doubled since she took the
helm in July 2010.
"Stelios has previously voiced strong opposition but despite
this, the order is likely to be approved in our view," said
Espirito Santo analyst Gerald Khoo.
Shares in easyJet, which have risen 64 percent this year,
were up 2.6 percent at 1,285 pence by 1315 GMT, valuing the
company at around 5 billion pounds.
Airbus and Boeing have been pitching commercial terms to
Europe's second-largest budget carrier in recent weeks after
easyJet completed the technical evaluation of its favoured jets,
the re-engined Airbus A320neo and Boeing 737 MAX.
EasyJet began operations in 1995 with Boeing aircraft but
shifted to Airbus in 2002 with a deal for 120 A319s, plus
options for a further 120, after a bitter competition.
The current generation A320 aircraft will be delivered
between 2015 and 2017 under an existing agreement, easyJet said,
with the new 'neo' variant due to be delivered between 2017 and
2022 under a new deal.