EasyJet founder says he will oppose takeovers after Monarch reports

By Sarah Young

LONDON (Reuters) – Stelios Haji-ioannou, the founder and largest shareholder of European budget airline easyJet, said on Tuesday he would oppose any takeover bid by the company, following media reports that the company was considering making a takeover bid for smaller rival Monarch.

The Sunday Times has reported that easyJet is considering a takeover of Monarch Airlines (MONA.UL), one of several stories about Monarch to emerge in recent days.

Other media reports say Monarch, the former travel airline that private equity investor Greybull Capital restructured in 2014 into a scheduled low-cost airline, is considering buying other European airlines.

Haji-ioannou, better known as Stelios, who founded the airline in 1995 and whose family still owns a 34 percent stake, said easyJet should avoid takeovers.

“As a shareholder, I believe easyJet should not make any acquisitions,” he said in an emailed statement.

“They typically destroy shareholder value.”

However, Stelios added that as owner of the “easy” brand, which includes hotels, buses and car hire, he would benefit from anything that increased easyJet’s revenues because it would mean an increase in licence fees for easyGroup, which it owns.

EasyJet declined to comment.

Since leaving easyJet’s board in 2010 following a dispute over strategy, Stelios has been an outspoken critic of the airline’s plans, including fleet expansion, executive pay and dividend policy.

easyJet, Europe’s second-largest budget airline after Ryanair, has previously declined to comment on the Monarch rumours.

Monarch, with just over 30 aircraft, would be a tiny operation compared to easyJet’s fleet of more than 240.

Cantor analyst Robin Byde said talks about a potential merger were likely. He expected Monarch’s offer to have an enterprise value of around £400m, but warned any deal would be scrutinised by competition authorities.

RBC analyst Damian Brewer added that easyJet may be looking to acquire Monarch to strengthen its position at London Gatwick Airport, easyJet’s largest base, although Monarch’s main base is London Luton.

“The slots on Gatwick’s Monarch runway represent a potential opportunity for easyJet if the company does not overpay,” he said.

Any acquisition of Monarch by easyJet may or may not require shareholder approval, depending on whether the transaction is classified as a Class 1 or Class 2 transaction under UK regulations.

(Editing: Greg Mahlich)