Sky-high figures, but don't call it easy

The dividend has not downed the dogfight between Sir Stelios and easyJet's board

Having slain one dragon in the form of easyJet's previous chief executive, you'd think Stelios Haji-Ioannou would be happy with the pot of gold he's received. Buoyed by a princely looking set of results, the low-cost airline is giving £195m back to its shareholders, in the form of its first regular dividend plus a £150m special payout.

Sir Stelios and his family control38 per cent of easyJet's shares, so they have a £74.1m windfall coming to them.

Plans to expand the company's fleet – much criticised by Sir Stelios – have also been scaled back from the 7 per cent a year once mooted by Andy Harrison, who may be happily raising a glass at one of the pubs run by his new company Whitbread now he's clear of the mess. The company's 204-strong fleet is up by about 4 per cent on last year and easyJet says it will stay at this level, although only for the next year or so.

And yesterday, its results won a warm reception from the City with pre-tax profits for the year to 30 September up by 61 per cent to £248m, despite a £100m rise in unit fuel costs, on revenues of £3.45bn, up 16 per cent. Strip out one-offs such as the disruption caused by Icelandic volcanoes in 2010, and underlying profits are still up 32 per cent.

"Despite the headwinds of higher fuel costs and a weak and uncertain economic outlook, our focus on customers, robust operational performance, the strength of easyJet's network combined with cost control and capital discipline means that easyJet is well placed to succeed," says Mr Harrison's replacement Carolyn McCall.

EasyJet would much prefer to talk about this, its increasing number of business customers and its trialling of seat allocation for the first time, following a similar move by Ryanair, than Sir Stelios. The company will not publicly speak about "individual shareholders" (unless its chairman Sir Michael Rake is writing another furious letter to investors in response to Sir Stelios). But he's clearly a very touchy subject. It also insists the dividend move and scaling back of its plans follows consultations with all shareholders.

However, it is Sir Stelios who has led the charge. And while Ms McCall, spirited away from the loss-making Guardian Media Group, appears to have sought to meet Sir Stelios half way, it clearly hasn't worked.

Sir Stelios was at it again yesterday, producing a lengthy analysis of why easyJet is, in his view, failing and warning he will not support the re-election of directors at the 2012 AGM. He accuses the company of implementing plans that will "destroy shareholder value" and argues directors are paid too much.

Should the company have anyway bowed to the pressure from Sir Stelios? Howard Wheeldon, a senior strategist at BGC Partners, says: "Rightly, easyJet CEO Carolyn McCall needs to be conciliatory in her dealings with Stelios just as she must with all major shareholders. But she is the person on the board and she has the overall responsibility of looking after all shareholders' interests." He adds: "That easyJet is now paying a dividend may in part reflect a more conciliatory approach from the easyJet board, but great care should always be taken to ensure that a single shareholder, no matter what the size of their holding, should not disrupt a well-defined and agreed strategy put in place for the potential benefit of all others."

Doug McNeil, a transport analyst at stockbroker Charles Stanley, thinks the payment of the dividend should actually be viewed as "a major step forward", pointing out that for any airline to be paying anything to its investors is very rare. As for demanding more, and calling for an end to fleet expansion, he says Sir Stelios is within his rights to ask. But the board is within its rights to say no.

"Clearly [Sir Stelios] is on course to receive a handsome sum but he's within his rights to argue for more. That's a judgement for him to make," says Mr McNeil.

As for the ongoing undeclared war between Sir Stelios and the company he founded, Mr McNeil is reasonably sanguine, with one caveat. "I think there was a time when the ongoing disagreement was unnerving to investors but now it's more of a given that he has these objections. The board's position is well known and it only becomes a problem if it results in the departure of key management. You don't want to be losing talented people, but there is no sign of that at the moment."

Perhaps the real problem for Sir Stelios is that having taken his company public he now finds that he has had to surrender control, a bitter pill for many entrepreneurs to swallow.

In September, he said that he planned to set up a new airline, Fastjet. That could mire both sides in a legal battle if the new airline competes directly with easyJet in Europe. Meanwhile, until and unless Ms McCall and Sir Michael open up the treasure chest and stop all talk of fleet expansion, it's going to be daggers drawn between the company and its biggest investor.

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