Chocs away as easyJet starts to replace fleet
BUDGET airline easyJet has been given the green light to modernise its fleet after shareholders backed plans to order up to 235 new aircraft – defying objections from founder Sir Stelios Haji-Ioannou.
The airline said 57% of votes backed the multibillion-pound order for new Airbus planes at a meeting yesterday – despite vocal objections from Sir Stelios, who with his family controls a near-37% stake in the airline.
He attacked the deal and urged fellow shareholders to join him in voting against it, arguing it was "a good deal for Airbus and a bad deal for easyJet shareholders".
With about 85% of the company's shareholders voting, 43% of votes were cast against the plans at the meeting held at its Luton headquarters, short of the 50% needed to overturn the plan.
Chairman John Barton said: "The vote in favour of our new fleet arrangements will allow easyJet to continue its successful strategy of modest, profitable growth and sustainable returns for our shareholders."
EasyJet will upgrade and expand its fleet by acquiring 135 Airbus planes over nine years. The no-frills carrier said it secured a steep discount for the aircraft but has not disclosed the cos. At list price, the 135 planes are thought to be worth £11.9bn.
It has ordered 35 current generation A320 planes for delivery between 2015 and 2017 and 100 new generation A320neo aircraft from 2017 until 2022. There is also an option to buy a further 100 Airbus planes as part of the deal.
The deal is expected to allow easyJet to boost passenger numbers from the current level of 60m a year to around 90m.
The new purchase will see 85 of easyJet's current 211-strong fleet replaced and give the airline room to expand, add routes and cut its operating costs.
Sir Stelios, who founded the airline in 1995, was not at the vote yesterday. The meeting was attended by about 100 people.
Sir Stelios had called it as a "secret deal with Airbus" and threatened to hold the board legally to account should it damage shareholder value.
He told them: "I am not against replacing aircraft that have reached the end of their economic life. However I am against buying aircraft that are three times more expensive that the ones I bought with my own money in the early 2000s.
"Nor am I against directors trying to engineer some top line growth – but not at the expense of the profit margin."
EasyJet will not disclose the cost of the deal but said it has been given a bigger discount than its 2002 order for more than 200 Airbus planes.