EasyJet’s Embarrassment

Many families have them – the elderly relative who is brusque at best, all too willing to vent his forthright opinions and a bit of an embarrassment to be seen with in public. The problem is he has rather a lot of money and the family hope to get their hands on it.

Then they discover that, actually, there isn’t very much money and they don’t need it anyway and his opinions have grown so extreme, and his behaviour so boorish, that enough is enough. Time to parcel him off  to a nicely remote old people’s home.

The Board of easyJet might recognise the scenario. Stelios sits broodily over his 37% shareholding and releases vitriolic attacks on the airline’s management with numbing regularity. The airline has just announced plans to buy a new fleet of Airbus aircraft (many of which will replace existing planes) so Stelios is on the warpath as usual. He insists he will vote against it, rages at the dangerous expansion and mutters darkly about “secret prices” for the aircraft.

But everyone else seems to ignore him. Other investors and the stockmarket seem very happy with the current management, the airline is profitable and the shares keep reaching new highs. In fact, it might just be coincidence, but the shares seem to go up every time Stelios makes one of his threats to sell some of his families’ shares or vote against the Board. Maybe he is much cleverer than we imagine and this is just some complicated strategy to talk-up the value of his holding.

Like a broken clock, Stelios will be right at least once in the next few years. The airline business suffers more than its share of blips and there is bound to be a time when expansion looks less wise than it does now. However, the Board of easyJet are doing a good job and the airline is probably in the best shape it has ever been. Hardly surprising that no one is concerned about other investors voting with Stelios to scupper the aircraft purchase.

If he is convinced he is right, and the airline is toying with disaster, then surely he ought to put his money where his mouth is and sell all, or most of his shares before it is too late. Then he can leave everyone in peace and concentrate on all his other companies and shareholdings – not all of which seem to be quite as successful as easyJet.