easyJet profits plunge as boardroom row erupts

LONDON (AFP) - British low-cost airline easyJet announced a 45-percent slump in annual profits on Tuesday as a row erupted between its high-profile founder, who refused to approve its accounts, and top management.

Net profits tumbled to 83.2 million pounds (99.22 million euros, 125.27 million dollars) in 2007/08, weighed down by a surge in fuel costs, easyJet said.

The results were further clouded by tension between the airline's management and easyJet founder Stelios Haji-Ioannou, one of Europe's best-known entrepreneurs, who declined to approve the company accounts.

Haji-Ioannou, whose success was crowned when he received a knighthood from Queen Elizabeth II in 2006, wants the company to take a more cautious approach in the current climate and focus on cash flows, not carrying more passengers.

But he also wants easyJet to begin paying dividends for the first time in its history.

"Despite the board's already cautious approach, Sir Stelios has indicated that he wishes the company further to restrict future aircraft orders, to make future dividend payments in conjunction with a cessation or slowing of growth," easyJet said in a statement accompanying its results.

Andy Harrison, easyJet's chief executive, described the company's performance as "good" and insisted easyJet could benefit from the economic downturn as passengers seek better value in air travel.

"We recognise that economic conditions will be very difficult and easyJet is planning accordingly, which means focusing on offering customers great value, driving down controllable costs and preserving cash," he said.

Harrison added that the company had a "flexible approach" to fleet growth "which we intend to make full use of in such uncertain economic conditions".

On Friday the airline revealed that Haji-Ioannou, or Stelios as he is known in the British media, had raised his stake in the airline he founded 13 years ago from 16 to 27 percent.

Explaining his refusal to approve the accounts, 41-year-old Haji-Ioannou, son of a Greek Cypriot shipping magnate, said: "I am 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."

Among his complaints were that the accounts could overstate the value of its landing slots at Gatwick airport, just outside London.

He added that it also "makes good business sense for every properly run, mature company to plan to pay a dividend to its loyal shareholders one day."

His stake increase permits Haji-Ioannou and easyGroup, the parent company of easyJet, to appoint two nominees to be non-executive directors on the company's board.

In the event the directors are not appointed, Haji-Ioannou reserves the right to appoint himself as chairman, according to Friday's statement.

Chairman Colin Chandler said he expected a "continuing dialogue" with Stelios to resolve the "strategic debate" over the company.