Simon Bowers
Monday 5 September 2011 19.23 BST
Relations between easyJet and Sir Stelios Haji-Ioannou deteriorated further on Monday after the group's outspoken founder called for yet another boardroom shake-up, provoking an angry response from the airline.
The budget carrier immediately hit back accusing Haji-Ioannou, who together with relatives speaks for 37.5% of shares, of attempting to "inappropriately determine the composition of the board and to override normal corporate governance protocols".
The surprise target of his latest call for blood in the boardroom is Professor Rigas Doganis, a non-executive director who has not previously been singled out for criticism. The move against Doganis appears to be a guerrilla tactic; part of a battle to disrupt a controversial aircraft purchase deal agreed between easyJet and Airbus earlier this year. "This is the only way we have to demonstrate to this board that they no longer enjoy the trust of the holders of the majority of the shares in this company," said Haji-Ioannou.
Earlier this year Haji-Ioannou had also called for the immediate departure of Sir David Michels, though he had already announced his exit. Michels and Haji-Ioannou were known to have had a strained relationship. In order to avoid the cost of a shareholder meeting Michels agreed to step down with immediate effect last month. He had briefly filled in as caretaker chairman until the recruitment of BT chairman Sir Mike Rake to head the board.
Past rowing between easyJet and Haji-Ioannou dates back to 2008 and led to the departure last year of former chief executive Andy Harrison. Last October Harrison's successor Carolyn McCall, formerly chief executive of the Guardian Media Group, brokered a settlement with Sir Stelios, which agreed a licensing deal in relation to the easyJet brand. At the same time Haji-Ioannou relinquished a right to install himself as chairman.
But hopes that relations with the airline's largest shareholder would recover proved short-lived. Hostilities were re-awoken two months ago when Haji-Ioannou sent an 11-page open letter to the board attacking a purchase of 35 Airbus aircraft approved in January.
In that missive he called for an urgent shareholder vote before any further payments be released in relation to the Airbus purchase: "If the board refuses to seek such shareholder consent, it would be our intention to call a general meeting to call for the removal of a randomly selected non-executive director from the board."
In his latest letter to the easyJet board, Haji-Ioannou calls for Doganis to be removed, citing his role in voting through an allegedly "value destroying" Airbus purchase. The singling out of Doganis looks odd because he was not the only director to vote on the Airbus order and because Sir Stelios appears to have voted in favour of his re-election to the board at easyJet's annual shareholder meeting in February.
Asked if the wider board had his confidence, Haji-Ioannou said his targeting of Doganis was designed "to limit the impact on the day-to-day running of the company".
Asked why he had waited until now to object to Doganis' boardroom behaviour in January, he said: "The full scale of the damage done by the order of the 4 January, and the profit warning of the 20 January, did not become apparent to me until a few months later."
The airline denies its first quarter trading update amounted to a profit warning. The company also plays down repeated attempts by Sir Stelios to characterise the strategy of the business as imprudently focused on sales growth at the expense of profit margin. It insists there is little difference between the board and its largest shareholders about the best strategy for the company.
Sir Mike Rake said on Monday: "We will continue to encourage [Sir Stelios's] easyGroup to meet with us in private to discuss its views on the business. We have made repeated efforts to do so in recent months."
One major institutional shareholder contacted by the Guardian is believed to be preparing to back the board against the latest assault, but did not want to be named. Nevertheless, an organised group of shareholders with about 40% of shares can be confident of winning shareholder votes at companies where remaining shares are widely held. This is because small shareholders and index funds frequently do not vote their shares.
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