Easyjet investors set to back jet order

EasyJet investors are planning to line up against Sir Stelios Haji-Ioannou, the company's largest shareholder, and back a multibillion-dollar aircraft order to expand the low-cost carrier's fleet.

Sir Stelios, easyJet's founder and owner of 37 per cent of its shares, on Monday attacked the deal, saying he would vote against it and urge other investors to follow suit.

However, three top 10 shareholders said on Monday they were likely to back the management plan. This means Carolyn McCall, chief executive, has a strong chance of gaining approval for the order despite the reservations of the airline's founder.

EasyJet said last month it had entered arrangements to buy 35 A320 and 100 of the forthcoming A320neo short-haul aircraft, with options to purchase another 100 aircraft. Its founder had branded the idea a "vanity exercise".

The airline said it had secured a substantial discount on the order, although it has not disclosed the cost, which at the list price it quoted would be £11.9bn.

One top 10 shareholder said: "This looks like a sensible deal for the company and will help them grow and take on the big flag carriers."

Another of the big shareholders said: "We are likely to back this proposal as we feel that it is a sensible plan that will help the company grow and add to shareholder value."

A third top 10 shareholder added: "This is a plus for easyJet, which is why the shares have risen." Shares rose 3.94 per cent to close at £13.47.

The investors, who own more than 15 per cent of the company's shares, expect the transaction to be approved in a vote on July 11. Analysts have described the deal as attractive.

In an open letter to investors on Monday Sir Stelios criticised the "secret deal with Airbus" and threatened to hold the board members legally to account should their decision damage shareholder value.

"As the person with most to gain if this company increases profitability and the most to lose if the outcome from this order is not as promised by the board, it is my firm opinion that this is a good deal for Airbus and a bad deal for easyJet shareholders," Sir Stelios said.

"As an investor, if there is one thing to remember about airline history, it is that most airlines are run by their executives in order to buy more aircraft from the two main suppliers [Airbus and Boeing] - not to maximise shareholder value."

EasyJet refused to comment on Sir Stelios's remarks, saying only that it had discussed the order with shareholders.

It has 211 aircraft in its fleet and 85 of the 135 on order would be used to replace older planes, although the airline also wants to add more flights. It says expanding its fleet will help it to deliver sustainable returns over the long term.

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