02 September 2011

EasyJet Musical Chairs

The continuing boardroom farce at Easyjet seems to have roped in some new blood which hopefully will bring a degree of stability to Big Orange. (With due deference to Braniff).

For those who have not been following the saga - Stelios has been having a bit of a feud with the board and the management of his favorite child Easyjet. His concern has been that he disagrees with the move for expansion vs profitability that the company has been pursuing. He launched his latest broadside in July. Stelios is concerned that the relationship between his former protoge and Airbus has become a bit too incestuous. And is concerned that the company is paying too much for its aircraft and buying larger machines unnecessarily. The company now has A320s and A321s it acquired when it board GB Airways but has stepped this up by buying new A320s. Note the company could argue that its larger capacity needs were so severe that it needed to lease a different aircraft type (2 Boeing 757s) during the summer 2010 season to accommodation this. The company is now exclusively Airbus as the last 737-700s were returned this year.

For those of us on the sidelines - the battle seems a little silly since the airline is doing nicely thank you. But a battle there is. As the leading shareholder Stelios is entitled to make his point and he has done so. For the record - his family own 38% of the stock.

Latest to leave is deputy chairman Sir David Michels. The revolving door has seen a parade of folks rotating through the board room in Luton. Among the recent hires as board members are Andy Martin and Adele Anderson. They join recent Deputy Chairman recruit Charles Gurassa. The upheavel is so new that the website has not yet updated the composition.

You can discern the tea leaves here of a change in board direction for the company. On board we now have a bunch of real traditional travel stalwarts.

Let's have a little peak.

Out goes also Sven Boinet (ex - Lastminute.com),
Charles Gurassa has as noted above an excellent travel pedigree
Newcomer Andy Martin is ex Forte, Granada and First Choice (now TUI).
The board seems to have a blue chip set of players. Both women, including its new CEO, on the board shared top 50 most powerful women in the UK status as far back as 2002. Adele has experience in aircraft financing - this seems to be at part of the battle that Stelios is fighting.

For those of us with a little memory this was the company that was founded on the premise that travellers should "cut out the travel agent", we can get an impression that the board will likely take a more traditional approach to distribution. One can infer that the company will become more like a regular carrier and discontinue a key plank of Stelios's product positioning.

Stelios's arguments about the board being a bit cosy - does seem to have some merit. Newcomer Adele and the non-exec chairman were both colleagues at KPMG in the 1990s and 2000s. Rigas Doganis has a long history of working with airlines as an academic and board member of Olympic and SAA. Keith Hammil is currently on the board of Travelodge and was part of the original team of Go.

Clearly this story will run for a long while.


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