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EasyJet founder warns airline 'will run out of money by August'

Edmund Heaphy
Finance and news reporter
EasyJet aircraft parked in Geneva, Switzerland in March. (Salvatore Di Nolfi/Keystone via AP)

EasyJet (EZJ.L) founder Stelios Haji-Ioannou on Monday stepped up his campaign to force the cancellation of a £4.5bn ($5.5bn) Airbus (AIR.PA) order, warning that the airline will run out of money by August unless it uses the coronavirus crisis to scrap the deal.

In a statement, Haji-Ioannou, who last week threatened to oust a non-executive director every seven weeks unless his demands are met, also called on the airline to remove chief financial officer Andrew Findlay.

Arguing that it would mean that the airline would not need loans from the UK taxpayer, Haji-Ioannou said that terminating the Airbus contract would give EasyJet “the best chance to survive and thrive in the future.”

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EasyJet chief executive Johan Lundgren said last month that he thought it was “appropriate” for the airline to seek help from the UK government, noting that the support would likely come in the form of commercial loans.

Haji-Ioannou said that he would not inject any fresh equity to support the airline’s shares unless the Airbus order is cancelled.

“Terminating the Airbus contract is the only chance current shareholders have to maintain any value in their shares,” he said.

“But if EasyJet stumbles along whilst taking UK taxpayers’ money as loans only to pass it on to Airbus, it will have to raise fresh equity anyway in the next three-six months — reducing the value of our current shareholdings to close to zero.”

EasyJet has more than 100 outstanding aircraft orders from Airbus, and Haji-Ioannou has argued that the coronavirus crisis is a “force majeure” that the airline could use to escape the deal.

The prediction that the airline will run out of money by August or “perhaps even earlier” is based on what Haji-Ioannou called an “optimistic forecast” by an analyst at Credit Suisse, the airline’s house stockbroker.

Credit Suisse, Haji-Ioannou said, predicted that the airline will have a cash shortfall of £164m by September 2020.

“It must be noted that almost every country in Europe has now closed its borders to foreigners,” he said.

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“Nobody really knows when they will open again. And even then, nobody believes that people will be willing undertake foreign travel in such large number by June,” he said.

EasyJet on Monday said that holding a general meeting to oust directors would be “an unhelpful distraction” from the current crisis.

“The board is managing the unprecedented challenges facing the airline and the aviation sector as a whole,” a spokesperson said, noting the airline was focused on the long-term future of EasyJet.

EasyJet faced criticism in recent days for going ahead with its recent shareholder dividend, even as the coronavirus pandemic pushes the aviation industry into an unprecedented crisis.

Haji-Ioannou, whose family owns 34% of the airline’s shares, received a £60m cheque as part of the payout.

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