Jeremy Warner: Stelios tries to crimp easyJet's growth plans

Outlook Sir Stelios Haji-Ioannou, founder of easyJet, may have set about his campaign to trim the airline's expansionist ambitions in the wrong way, but he seems to have a point. With the global industry now forecast to lose a stomach-churning $2.5bn next year, and Giovanni Bisignani, director general of Iata, calling it the worst revenue outlook for 50 years, is this really the best of times for EasyJet to have committed itself to purchasing more than 100 new airbuses with a list price of over $5bn?

Stelios has been doing the rounds of leading City shareholders again this week trying to convince them of his case. Bizarrely, some of these meetings have been in conjunction with the chairman, Sir Colin Chandler, who is presumably still on side with the company's executive management in wanting to push ahead with the purchase plans. They must have made an interesting pair.

For Stelios and his family, with a continuing 38 per cent stake in the company, easyJet has been a big disappointment in recent years. It has grown enor- mously, but it hasn't created any shareholder value in the eight years since it was floated. Now it wants to continue growing at a pace of knots into one of the worst downturns in aviation history. Stelios fears the plans will put the company's very existence in jeopardy.

The company points out the great bulk of the orders are replacement aircraft, while some of them can be delayed. Moreover, what additional capacity is planned is not nearly as ambitious as that of Ryanair. This doesn't satisfy Stelios, who worries that it is impossible to sell retired aircraft in the present environment, and in any case would prefer it if the company restricted growth, improved its yields and pays fatter dividends.

Where this strategic debate goes from here is unclear. Stelios has softened his initial abrasive approach to the matter, and the presence of Sir Colin at some of his recent meetings may indicate the company is willing to compromise a bit too. If all companies abandon their growth plans because of the downturn, there really is no hope for the economy. Yet there is no point in bravery if it threatens survival, and in this environment there is something to be said for strapping on the seat-belt until the turbulence passes.