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Stelios to vote against easyJet's 'secret' Airbus deal

07/02/2013 | Reuters

LONDON (Reuters) - Easyjet's (EZJ.L) estranged founder Stelios Haji-Ioannou said on Monday he would vote against the budget airline's plan to buy 135 new Airbus (EAD.PA) planes because they were not needed and their real cost had been kept secret.

Haji-Ioannou, better known as Stelios, founded easyjet in 1995 but quit the board in 2010 after a row over strategy. He still has a 37 percent stake and frequently disagrees with the airline on fleet expansion, executive pay and dividend policy, arguing that new jets hurt value for shareholders.

EasyJet announced last month it would buy 35 A320 aircraft and 100 new A320neo jets, with options for a further 100, adding that around two thirds of the new planes would be used to replace its ageing 156-seat A319s, the bulk of its fleet.

It did not reveal the value of the deal - which must be approved by major investors at a meeting on July 11 - but said it had negotiated a "very substantial" discount. The planes are worth around $11.9 billion at list prices.

EasyJet sent a detailed circular to shareholders late last month and airline executives have been meeting top institutional investors to discuss the order over the last two weeks, sources close to the airline said.

Stelios said the company circular threw up an "unexplained difference" between the $76 million list price it gave for the planes and the $88 million for the same plane published on the Airbus website.

"I believe these decisions have been made behind closed doors mostly by City insiders playing with other people's money," Stelios said in a statement on Monday.

"It is also conceivable that people close to Airbus have bought shares in easyJet in order to influence the vote."

Easyjet declined to comment on Stelios' remarks. Airbus also declined to comment.

Stelios, who also criticized the airline for failing to specify which routes the planes would be used on, said he expected the deal would nonetheless be passed by the majority of the budget carrier's shareholders.

Sources close to easyJet CEO Carolyn McCall said she is confident of winning approval for the deal from shareholders despite the opposition from Stelios.

McCall is popular among the majority of shareholders given the annual dividend and profits have doubled since she took the helm in July 2010.

(The online version of this story corrects figure in the fourth paragraph to $11.9 billion)

(Editing by Sophie Walker)

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