Stelios shocks EasyJet with plan to launch new airline

Stelios has written to EasyJet saying that he intends to form the new airline, called Fastjet, and has set up a website, www.fastjet.com, which currently has a message reading: “Fastjet.com by Stelios. Coming soon!”.

EasyJet quickly raised the threat of litigation, saying that it would “take necessary action to protect the rights of EasyJet and the interests of its shareholders” if any rights it has under agreements with Stelios were infringed. The billionaire entrepreneur hit back, saying he was the victim of a smear campaign from the company.

Yesterday’s developments came as a shock upping of the ante in the feud between Stelios and the airline, in which he and his family still have a 38 per cent holding.

City analysts said that it looked as if the two sides had settled their differences last week, after EasyJet agreed to pay £190 million in dividends to shareholders, including the founder and former boss.

One City transport specialist said: “This is a big shock, very perplexing. Not least because there seemed this very recent thaw of relations.”

Late last week Stelios withdrew his request to convene an extraordinary general meeting of EasyJet to remove a non‑executive director, Rigas Doganis, following the airline’s decision to pay a one‑off dividend of £150m and a maiden annual dividend of £40m.

Stelios had been calling for such a payout for several years, with he and his family standing to pick up about £70m. EasyJet’s board had said the dividends were the result of better‑than‑expected trading.

However, City analysts said yesterday that the timing of the launch of Fastjet was also a jolt, given the faltering global economy and the high price of oil.

“It would be no mean feat to launch an airline at this time,” one said. “Stelios did it successfully in the mid‑1990s but that was then, this is now.

“Then he was taking on legacy airline players that had become operationally flabby. That is not the case now, with all the industry consolidation and cost-cutting. And oil, the major cost for any airline, cost a lot less then than it does now.”

Some airline industry executives believe Stelios might target the business class market with his new airline.

“Otherwise, even without any potential legal action, Stelios would risk cannibalising EasyJet traffic and hit the earnings that might otherwise fund future dividend largesse,” one said.

EasyJet also said yesterday that it “emphatically rejects” allegations that it said its former boss had made that the airline had “breached the terms of the binding comfort letter between him and EasyJet of 10 October, 2010 and that the letter is no longer in force”.

It is understood the agreements prohibits Stelios from taking a stake of more than 10 per cent in an airline whose operations are mainly in Europe, or having an executive role.

A further stipulation is said to be that the EasyJet founder – who quit his non‑executive position on the board in 2007 – cannot use his own name to help brand a new airline.

EasyJet said it continued to “seek constructive dialogue” with Stelios and his company, EasyGroup. One source said: “At this stage the priority is to establish how credible the new airline is. But it is clear EasyJet’s board was not expecting this.”

EasyJet’s shares took events in their stride yesterday, closing up 1p at 353p.