RSS feedsWe’ve all heard of auditors qualifying the accounts, but a former chairman?
Sir Stelios Haji-Ioannou, now a non-executive director of easyJet is refusing to sign off its numbers. Despite only holding a NED role these days, he still owns a substantial stake in the airline.
Sir Stelios is feeling a bit queasy about the company’s taking-off and landing slot accounting. And there are no easy answers here.
What's happened?
A refusal by a company director-even a non-executive one-to sign off the accounts is almost unheard of.
‘It is quite unusual. Under normal situations if a director is unhappy or unsatisfied with accounts they would resign rather than sign-off. [Sir] Stelios is still a major shareholder in the company, so he is not simply going to give up,’ said Neil Mirchandani, partner at Lovells.
Sir Stelios’ astonishing move reflects a boardroom row, as he tries to get two non-executives of his choosing appointed to the board.
The move is even pitting him against the company’s auditors, PricewaterhouseCoopers, who signed off the numbers.
Sir Stelios said he did not agree with the accounting for the acquisition of GB Airways.
The airlines landing and taking off slots at Gatwick were, according to easyJet’s founder, too generously accounted for.
‘Given the fact that many airlines have already ceased operating from Gatwick I believe that slots will be freely available and hence it will be more prudent not to create Gatwick slots as an “intangible asset” on our own balance sheet this year,’ said Sir Stelios. the airline valued the slots at £72.4m.
Airlines have only recently started to value landing and taking off slots on their books, but when they began, with bmi an early adopter, nobody predicted that they would provoke such a row.
What's going to happen?
The stand-off is continuing. easyJet’s share price plummeted in the wake of the revelations, down 35p or 12.8% by the early afternoon after the announcement was made.
Overall, the numbers are not too bad. easyJet’s interim results for the six months to 31 March 2008 revealed strong revenue growth.
Total revenue grew by 24% to £892.2m with underlying pre-tax margin in line with expectations. Passenger numbers also increased 15% to 18.9m.
But the prospects, with jet fuel prices still relatively high, and cost pressures at Gatwick, it could be tough for Sir Stelios’ company. Uneasy times.
