Andy Harrison has resigned as ceo of easyJet and will leave the airline next June. ABTN looks back at what has been a turbulent year for the low cost carrier.
Behind the friendly facade of one of the world's most popular airlines, easyJet has been caught up in the throes of a full-blooded row among its directors. The dispute had been simmering for months but it was not until November 2008 that it finally burst into the public domain.
Ironically it was the founder and major shareholder of the low cost carrier, Sir Stelios Haji-Ioannou who thrust the dispute into full view, rather than a furtive whistleblower.
What was unsettling Sir Stelios was the strategic direction his airline seemed to be taking and he signalled his grand displeasure by refusing to approve the airline's annual accounts. His objections were twofold: the first was unease at accounting methods; the second, and probably far bigger, was the order form for new aircraft which Sir Stelios thought was too big.
In an 850-word public statement, Sir Stelios, who founded easyJet in 1995, laid out four reasons why he would not sign the accounts. (These incidentally revealed a £123.1m underlying pre-tax profit for the year ending September 30, 2008, down 35.7% on the 2007 figure.)
These were how the accounts treated easyJet as a "single cash generating unit", rather than assessing individual routes, and three different concerns over accounting regarding easyJet's acquisition of GB Airways.
He said he was "concerned about the application of certain of the accounting policies adopted by the board in a way that I believe is at odds with current commercial realities and the macro-economic climate" adding that their implications "only became obvious to me this year because of the acquisition of GB Airways".
Sir Stelios also made it clear he thought the board should reduce its order for Airbuses and pay a larger dividend to shareholders.
To concentrate the minds of his fellow directors, Sir Stelios accompanied his statement with a transfer of 47,964,575 ordinary shares in easyJet, owned by his sister Clelia Haji-Ioannou, to his company easyGroup.
In a statement, he said he was "concerned about the application of certain of the accounting policies adopted by the board in a way that I believe is at odds with current commercial realities and the macro-economic climate."
He said their implications "only became obvious to me this year because of the acquisition of GB Airways."
Sir Stelios, in his 850-word statement, laid out four reasons for refusing to endorse the figures.
These were how the accounts treated easyJet as a "single cash generating unit" rather than assessing individual routes and three different concerns over accounting regarding easyJet's acquisition of GB Airways.
Sir Stelios said the four concerns left him "without any other options but to abstain from voting on the accounts as a director of easyJet PLC.
"I am doing so reluctantly but I believe it is in the interest of all shareholders to be more prudent at the present time."
He said he would not exercise his right to be named chairman of the easyJet board but wanted two employees of easyGroup, his company, to become directors of the airline. The move increased easyGroup's stake in easyJet from 15.6% to 26.9%. This is near the 29.9% stake which would require a takeover bid. Altogether the Haji-Ioannou family has a 38% share in easyJet.
He also demanded that two of his easyGroup employees joined the easyJet board.
While Sir Stelios later withdrew this last demand, there was little chance of things returning to anything like equilibrium. The damage had been done.
In April, Sir Colin Chandler announced his resignation as easyJet chairman and left in July. In May, Jeff Carr, easyJet's chief financial officer, also left. Andy Harrison, the ceo, nearly followed.
easyJet admitted in a statement on Wednesday night that in May 2008 it "amended the terms of Andy's service agreement to put in place a retention agreement to ensure his presence as Chief Executive through to at least the first quarter of 2010."
Had Mr Harrison gone in May, the consequences for easyJet could have been disastrous. To lose a chairman and cfo might be regarded as a misfortune; to lose them and the ceo looks like something much more than carelessness.
But if Mr Harrison stayed, at least for the time being, the airline's directors of commerce, communications and procurement all left in the succeeding months.
The easyJet board meetings for much of this year can not have been happy affairs. Sir David Michels, a senior director who took over as interim chairman when Sir Colin stood down, gave some clue when he referred to the "strong characters" who were easyJet directors.
This is the commercial equivalent of the "frank exchange" used by diplomats when describing a meeting of unlike minds. In plain English it is usually means a blazing row.
Now with the decision of Mr Harrison to leave next June, easyJet, or rather Sir Stelios has the chance to put together a group of directors who will share the roughly the same view of the best way forward for the airline.
But a year of squabbles has rubbed some of the shine off the cost easyJet image.
www.easyjet.com