Easyjet founder warns airline could run out of money by August
Easyjet’s founder and largest shareholder, Sir Stelios Haji-Ioannou, has warned that unless a £4.5bn order for new Airbus planes is scrapped the carrier will run out of money by August.
The Greek businessman is also seeking the removal of Easyjet chief financial officer Andrew Findlay.
Haji-Ioannou said sacking Findlay “is the only way of preventing him writing billion pound cheques to Airbus every year”.
Last week Haji-Ioannou threatened to sack a board member every seven weeks unless Easyjet’s chairman John Barton complied with his demands.
Due to Barton’s failure to do so, in a new letter Haji-Ioannou has said he will now seek the removal of two board members, including Findlay.
He wrote: “Terminating the Airbus contract is the only chance current shareholders have to maintain any value in their shares.
“If Easyjet terminates the Airbus contract”, he said, “then it does not need loans from the UK taxpayer and it has the best chance to survive and thrive in the future with some injection of additional equity provided for by the markets”.
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The budget carrier’s chief executive Johan Lundgren has been among UK airline bosses to call for state aid to keep the industry afloat during the coronavirus crisis, which has seen the airline industry collapsed around the world.
The airline has grounded its entire fleet in response to the crisis.
Easyjet faces pressure to cancel Airbus order
Haji-Ioannou cited a Credit Suisse report saying Easyjet will have a negative cash balance of £164m by September.
However, he added, this is based on “wildly optimistic assumptions” that the Easyjet fleet will return to the skies in June. That could bring in profitable revenues of £1.5bn over the summer months, Easyjet has said. But Haji-Ioannou described the situation as “pure fantasy”.
However, the note does not take into account any of Easyjet’s cost-cutting plans nor the chance of it securing additional funding.
He also said that Easyjet should begin making plans to reduce its fleet size from 350 planes to 250 due to a long-term fall in demand when the crisis is over.
Haji-Ioannou’s Easygroup owns 34 per cent of the low-cost carrier. Last month Sir Stelios’ family received some £60m in dividends from the company.
An Easyjet spokesperson said: “The board is managing the unprecedented challenges facing the airline and the aviation sector as a whole.
“We remain absolutely focused on short term liquidity, removing expenditure from the business alongside safeguarding jobs and ensuring the long-term future of the airline.
“We believe that holding a general meeting would be an unhelpful distraction from tackling the many immediate issues our business faces”.