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EasyJet Chairman Steps Down Amid Boardroom Tensions

Strategic Insights

— 2 min read

As the recession bites, easyJet is facing one of the toughest periods in its history. The airline's chairman, Sir Colin Chandler, has resigned after a long-running dispute with the company's largest shareholder, Sir Stelios Haji-Ioannou. Chandler cited the stress of running a high-profile public company and the presence of a dominant shareholder as factors in his decision to leave. Haji-Ioannou has argued for a limit on the airline's fleet size and warned that acquiring more than 100 aircraft during a passenger drought could severely damage the company's finances.

Key Takeaways:

  • EasyJet's chairman, Sir Colin Chandler, has resigned with effect from 1 July due to boardroom tensions and the stress of running a high-profile public company.
  • The airline's largest shareholder, Sir Stelios Haji-Ioannou, has opposed the company's ambitious expansion plans, warning that acquiring more than 100 aircraft during a passenger drought could severely damage the company's finances.
  • Haji-Ioannou's family controls 38% of easyJet's shares, and he has been publicly critical of the company's management strategy, citing the risk of a mismatch between easyJet's capacity and passenger demand.
  • EasyJet has ordered 109 aircraft by 2012 and is counting on maintaining its seemingly insatiable appetite for no-frills travel during the downturn.
  • The airline is adamant that it cannot radically alter the terms or cancel the Airbus order without incurring large financial penalties, leaving it with the option of deferrals or selling on the aircraft into a moribund second-hand market.
  • Some City commentators have openly supported Haji-Ioannou's stance, citing the risk of spreading fixed costs across fewer passengers and putting profits under pressure.
  • Haji-Ioannou has founded several businesses, including internet cafes, buses, and hotels, and has previously launched a succession of companies.

Statistics:

  • EasyJet's fleet has grown from 14 to 170 aircraft since its stockmarket debut in 2000.
  • The airline expects to have a net fleet size of 197 by 2011, as it sells off its older aircraft.
  • Haji-Ioannou's family controls 38% of easyJet's shares.
  • EasyJet has ordered 109 aircraft by 2012, which is expected to cost £5 billion (approximately $6.75 billion).
  • The airline's passenger figures fell in March, but rose by nearly 12% over the past 12 months.

Sources:

  • "EasyJet ordered £3.4bn Airbus jet deal despite recession" by Dan Milmo (The Guardian, 2009)
  • "EasyJet chairman steps down amid boardroom tensions" by Dan Milmo (The Guardian, 2009)
  • Interview with Sir Stelios Haji-Ioannou by Dan Milmo (The Guardian, 2008)

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