Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

EasyJet founder Stelios Haji-Ioannou drops vote on expelling board member

Tycoon’s easyGroup business withdraws request for extraordinary general meeting to remove Rigas Doganis

Sir Stelios Haji-Ioannou has abandoned a shareholder vote on expelling an easyJet board member in the wake of a dividend payout from the budget carrier that will net his family £72m.

EasyJet announced that the tycoon’s easyGroup business has withdrawn a request for an extraordinary general meeting to remove Professor Rigas Doganis as a non-executive director. The airline said: “The board of easyJet welcomes this withdrawal as it viewed an EGM as an unnecessary and costly distraction.”

This week easyJet’s chief executive, Carolyn McCall, expressed confidence in an EGM victory over Stelios, whose family speaks for 38% of the airline’s shares. However, easyJet was facing the task of rallying traditionally passive shareholders, such as small investors and index funds, in order to see off Stelios and retain the shape of its board.

EasyGroup’s withdrawal follows the announcement this week by the budget airline of a dividend payout worth £190m, on the back of a better-than-expected summer performance that saw full-year pre-tax profit expectations raised from up to £230m to between £240m and £250m.

However, analysts have warned that the dividend payout, and the withdrawal of the EGM request, do not augur a long-term truce at easyJet. Stelios is embroiled in a conflict with the board over a bn (£2.6bn) aircraft order that was signed in 2002 and contained options for further orders that easyJet continues to execute, despite warnings from its largest shareholder that fleet expansion is destroying shareholder value. EasyJet’s fleet size already stands at 204 planes, above the 200 level that Stelios has warned must not be exceeded without proof that the new routes used by those planes will generate annual profits of £2m per aircraft.

Andrew Lobbenberg, analyst at Royal Bank of Scotland, said the row over expansion will not go away because there is a strong business case for easyJet continuing to grow its fleet. “We think the company will come to order planes. Indeed we are firmly of the view that the company should buy more aircraft, to take advantage of structural growth opportunities in broader Europe … As and when the company does order aircraft, we would expect further challenging reactions from Stelios.”

guardian.co.uk © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds