Newsmaker: Stelios Haji-Ioannou, EasyJet founder
O'Leary's apology was a victory for the EasyJet chief, but it's not all plain sailing at his airline
Saturday July 17 2010
This week's £50,100 (€59,200) libel award and grovelling apology represented a clear victory for Stelios Haji-Ioannou, founder and largest shareholder of EasyJet, in his bitter feud with Ryanair and its boss Michael O'Leary.
Even by the standards of legally extracted apologies, this one was a humdinger. Headlined "Retraction and Apology" and featuring a photograph of a beaming Stelios, the half-page apology, which appeared in both the 'Daily Telegraph' and 'the Guardian', stated that both Ryanair and its boss Michael O'Leary "unreservedly apologise" to Stelios.
The apology relates to a Ryanair advertisement that appeared in the 'Daily Telegraph' and 'the Guardian' earlier this year. In the advertisement, Ryanair mocked EasyJet, which hasn't published weekly punctuality statistics since May 2009.
So far, so ordinary. However, as if to add insult to injury, the advertisement also included an image of Stelios as Pinocchio, described him as "EasyJet's -- Mr Late Again" and demanded that he "stop hiding the truth".
While Ryanair and Mr O'Leary may have thought the advertisement was no more than good knock-about fun, there was one problem.
Despite being the founder and, with a 38pc stake, by far the single biggest shareholder in EasyJet, Stelios was merely a non-executive director of the airline at the time the decision was taken to stop publishing the monthly punctuality statistics. This, of course, meant that he had no hand, act or part in the decision.
Ballistic
Stelios, not surprisingly, went ballistic when the advertisement appeared and immediately sued Ryanair and O'Leary.
The statement Stelios issued after the settlement of the case this week did nothing to disguise the extent of the animosity between himself and O'Leary.
"It is not often that someone as powerful and as arrogant as Michael O'Leary is forced to apologise to someone else in public and in writing", he said. "I would like to dedicate this little victory to all those members of the travelling public who have suffered verbal abuse and hidden charges at the hands of O'Leary".
Do these guys hate each other or what?
Ryanair and EasyJet are the two giants of the European budget airline sector.
EasyJet was founded by Stelios in 1995, nine years after the late Tony Ryan founded Ryanair. It now carries about 45 million passengers a year, less than two-thirds of the Ryanair total of 73.5 million. Unlike Ryanair, which is an exclusively Boeing airline, the vast majority of EasyJet's aircraft is supplied by its European rival Airbus, mainly A-320s and A-319s.
Ever since EasyJet emerged as Ryanair's main rival, the Irish airline has mercilessly goaded EasyJet. According to Ryanair, EasyJet is not a "real" low-cost airline, pointing out that its average fare of over £46 is much higher than Ryanair's average fare of just €35.
Nonsense, says EasyJet. Comparing its fares with Ryanair's in this way is a bit like comparing apples and pears. EasyJet generally flies to dearer but more convenient primary airports, while Ryanair prefers cheaper but less convenient secondary airports.
However, despite trading insults with one another for most of the past decade and a half, the two airlines have generally been careful not to compete directly on the same routes. Their mutual antipathy will not, it seems, be allowed to interfere with the bottom line.
Shipping
Haji-Ioannou, who is known to friend and foe alike as Stelios, was born in Athens in 1967, the son of Greek-Cypriot parents who owned a shipping business. Like many wealthy Greeks he was educated abroad.
After graduating with a bachelor's degree in economics from the London School of Economics, he went on to successfully study for a master's degree in shipping, trade and finance from London City University.
After working in the family shipping business for seven years he founded EasyJet in 1995. Operating out of Luton Airport, its orange-liveried aircraft quickly became part of the fabric of late-'90s, early-noughties Britain.
With a talent for self-publicity matched only by O'Leary, Stelios plugged EasyJet at every turn. However, unlike his great rival, Stelios's public persona is much more emollient than that of the often-abrasive O'Leary. His decision to donate this week's libel award to charity will have further burnished his image.
EasyJet even had its own TV series, 'Airline', which ran between 1999 and 2007 and featured regular appearances by Stelios.
While O'Leary is still utterly consumed by Ryanair, 18 years after he first became chief executive, Stelios's relationship with his creation is a far more ambiguous one. When EasyJet was floated on the London Stock Exchange he became non-executive chairman before stepping down from the board in 2002.
In 2005, he rejoined the EasyJet board but quit again in May of this year.
Apart from the Stelmar Shipping Group, which was sold for $677m in 2004, most of Stelios's other business ventures have not enjoyed the same success as EasyJet.
His attempts to create a global Easy brand -- Stelios still owns the Easy trade name which he leases to EasyJet for £1 per year -- have not been crowned in glory. Easy hotels, car hire, hotels and cruises have all enjoyed no more than modest success.
Stelios's failure, so far at least, to develop another major Easybranded business has in turn complicated his dealings with EasyJet. The past few years has seen a steady stream of directors checking out at the airline. The latest to go were chief executive Andy Harrison and chairman David Michels earlier this year.
In recent years there have been two main areas of contention between EasyJet and Stelios. He consistently opposed the airline's ambitious growth strategy, which envisaged a 15pc annual increase in passenger numbers, and argued that EasyJet should instead ease back on its expansion plans and return cash to its shareholders.
This position has been at least partially vindicated by EasyJet's decision to reduce its growth target to just 7.5pc a year. Interestingly, Ryanair, which had been pursuing a 20pc annual increase in passenger numbers, has also drastically scaled back its expansion plans.
With the recession having made a severe dent in the demand for air travel, Stelios's demand that EasyJet adopt a more restrained growth strategy now looks very prescient. If the board had stuck to its original 15pc annual growth target, EasyJet would now be either flying a lot of half-empty planes or else have had to slash its fares in a desperate effort to put bums on all of those extra seats.
THE more serious clash between Stelios and EasyJet is over the ownership of the Easy brand. The two are currently embroiled in a legal dispute, with Stelios alleging that EasyJet has violated the licensing agreement, which stipulates that 75pc of its revenues must come from aviation-related activities.
The case is currently being heard by the High Court in London. At this stage the most likely outcome is that EasyJet either buys the Easy brand from Stelios or else changes its name.
Even if EasyJet buys the brand name it still has a potentially disgruntled dominant shareholder on its hands.
With his 38pc stake having a market value of £720m, Stelios cannot afford to adopt a hands-off approach to EasyJet.
Too much of net worth is tied up in the airline for him to be a passive investor. He should either take the company private or else sell his shares on the open market.
Irish Independent
