DAVOS, Switzerland (Reuters) - Budget airline easyJet faces a grim summer in 2009 as recession bites, underlining the case for capping the size of its fleet, the group’s founder said Thursday.
“I‘m very worried about next summer,” Stelios Haji-Ioannou told Reuters, pointing to a rising unemployment rate that will hit travellers’ budgets over the peak holiday season.
EasyJet has become embroiled in a boardroom row with founder and non-executive director Stelios over its plans to grow the fleet rather than focus on potential future dividends.
Stelios said he welcomed last week’s quarterly results, when easyJet predicted first-half revenues would be better than expected, partly due to a rise in business travellers, but said he remained bearish on prospects for the year ahead.
“It’s always dangerous to drive a car by looking at the rear-view mirror. We’re looking at the quarter ended December and that’s history now -- revenue went well but it’s a different environment now,” he said.
Speaking on the sidelines of the annual meeting of the World Economic Forum, Stelios said sterling’s weakness against the dollar was also cause for concern.
“We have significant dollar costs and no dollar revenues,” he said. “I still believe the board should push the right buttons to keep the fleet at 170 aircraft.”
Shares in the company ended down 8.1 percent at 309 pence, underperforming a 2.4 percent fall for Britain’s FTSE 250 index of medium-sized companies.
The stock was also hit by news that Chief Executive Andy Harrison had sold 400,000 shares.
Stelios said he did not want to take the company private but that, given its size, easyJet should look to pay a dividend when it became financially prudent to do so.
“I‘m not in a hurry,” he said, adding that the prospect of a two-year-long recession in the UK meant it was unlikely to happen before 2011.
EasyJet was almost big enough to become a member of Britain’s FTSE 100 index of blue-chip stock, he noted.
“How many FTSE 100 companies don’t pay a dividend?”
Writing by Paul Hoskins; editing by Simon Jessop and Erica Billingham