Sir Stelios Haji-Ioannou refuses to approve accounts
Published: 19 Nov 2008
easyJet is facing a rift with founder and board member Sir Stelios Haji-Ioannou over the carrier's accounting and business strategy.
The company said Sir Stelios, the largest shareholder with a stake of 26.9 percent, had abstained from a board vote to approve the 2008 results because of concerns about the balance sheet value of some assets acquired in a takeover early this year of Gatwick-based GB Airways. Also, it is being said that Sir Stelios wants to make future dividend payments in conjunction with a cessation of slowing of growth.
"I regret to inform you that as a director of easyJet I am unable to approve the annual accounts," he said, outlining a number of reasons in an official statement attached to the results.
In a statement to the Stock Exchange, Sir Stelios said he was concerned about some accounting policies that were "at odds with current commercial realities and the macro-economic climate".
He has also expressed concern at the airline's rate of growth and believes that assets from the GB Airways' takeover have been overvalued, in particular take-off and landing slots at Gatwick and some aircraft that are up for sale. The value of the Gatwick landing slots was "based on optimistic assumptions about future revenues, particularly in the current economic climate", he said. "Given the fact that many airlines have already ceased operating from Gatwick, I believe slots will be freely available and hence it will be more prudent not to create Gatwick slots as an intangible asset on our own balance sheet."
easyJet's chief executive Andy Harrison said Stelios' concerns over the accounts had been discussed but then approved by the company's auditors PriceWaterhouseCoopers.
"The concerns Stelios has raised are not new news - they have been considered by management, the audit committee and auditors," he told reporters. "It is the board's view that it is premature for the company to be thinking about a dividend at the point in the cycle we are now in," he added.
Meanwhile, the airline said its pre-tax profits for the full year had fallen by 35 percent to £123m. The group's revenues increased by 31.5 percent to £2.3bn but its profits were hit by the higher fuel costs, which rose by two-thirds to £708.7m in 2008.
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Jim said on 24 Nov 08:
I know nothing about the account books at easyJet. But, this news article reminds me a time about four years ago when I met Stelios.
I was attending a travel distribution conference in London. By chance, Stelios took an empty chair next to me. There was an intermission and a delay while the next panel presentation was getting organized. I recognized Stelios and introduced myself.
What struck me was how friendly and open Stelios was. I asked a number of questions about easyJet and also asked about what other plans he had at the time. Stelios was forthcoming and apparently honest in talking about his company, unlike many other executives.
So, in a public dispute, I would tend to believe Stelios until facts to the contrary prove him wrong.