The African budget airline Fastjet is considering legal action against its second-biggest shareholder, easyJet founder Sir Stelios Haji-Ioannou, after he said the company was at risk of going bust.
In an astonishing escalation of the row between Sir Stelios and Fastjet, the airline yesterday said it was “taking legal advice” after the businessman published a letter stating concerns about the risk of an “insolvency event” in the months ahead.
The letter was triggered by a profit warning two weeks ago that triggered a halving in the share price and led to the resignation of chief executive Ed Winter earlier this week.
Sir Stelios — who owns 12.6 per cent of the shares through his comoany easyGroup Holdings — threatened to pull the licensing agreement he struck with the airline in May 2012 to use the Fastjet name in return for annual royalty payments.
He has also demanded that the company resume publishing monthly traffic figures, which Mr Winter stopped in December, as well as providing him with monthly information on Fastjet’s cashflow.
The company holds easyGroup responsible for any damage
His letter stated: “If the licensee is unable to pay its debts and the flights are grounded then many customers who have pre-paid for their tickets will lose their money and that will damage our brand.”
The shares fell another 6.1p or 16.9 per cent to 30.125p yesterday as Fastjet said: “Whilst the board welcomes constructive engagement with all shareholders, it cannot understand why easyGroup, acting as either a 12.6 per cent shareholder or brand owner, has published this particular letter without first raising its concerns with the company.
“The board considers the publication of this letter as wholly inappropriate and is taking legal advice on the matter. The company holds easyGroup responsible for any damage caused to the business by the publication of this letter.”
An unrepentant Sir Stelios responded by launching another attack on Fastjet’s chairman, Colin Child. He said: “Potential breach of a brand licence agreement is a very serious legal matter. EasyGroup is both well advised on this occasion and very experienced in handling brand licensees under the terms of their respective agreements. For example it should be remembered that easyJet is an easyGroup licensee.
“Colin Child should be taking proper legal advice with a view to complying with the agreement without trying to cover the matter in a veil of secrecy. As brand owners, easyGroup is concerned to protect brand customers as well as its reputation from any future damage. Other shareholders should be putting pressure on Colin Child to cut costs and resume publication of the passenger statistics.”