Stelios refuses to sign off easyJet accounts
18.11.08
Sir Stelios Haji-Ioannou, the easyJet founder and controlling shareholder, has refused to sign off the budget airliner’s 2007/08 accounts. In a statement to the stock exchange last night, Sir Stelios said: ‘After extensive discussions with the easyJet Board and having taken appropriate professional advice at my own expense, I regret I am unable to approve the annual accounts.’
His reasons for the decision are:
1) The business should be treated as a ‘single cash generating unit’ for the purposes of testing goodwill and intangible asset for impairment. This would allow the airline to monitor the profitability of acquisitions such as GB Airways on a route-by-route basis
2) The £72.4m ascribed to slots at Gatwick acquired as part of the GB Airways acquisition is too ‘optimistic’, particularly in the current economic climate and when a number of other airlines have stopped operating there.
3) The seven Airbus A321 acquired from GB Airways should be written down to their estimated market value since ‘this has probably fallen since we first placed them for sale in February 2008’
Sir Stelios also believes the airline should change its policy on dividends and plan to pay one to shareholders ‘by, say, 2011 if the markets and the liquidity of the company allow. Dividends must be planned several years ahead as they compete for cash with capital expenditure. It just makes good business sense for every properly run, mature company to plan to pay a dividend to its loyal shareholders one day.'
Despite his statement, the annual accounts were approved by the rest of the board and signed off by the budget airline’s auditors PwC.
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