Airline founded by Sir Stelios Haji-Ioannou could secure place among UK blue-chip firms on Tuesday bar share collapse
EasyJet, the airline founded in 1995 by Sir Stelios Haji-Ioannou with two borrowed planes, should by close of trading on Tuesday secure its place among Britain's blue-chip companies as a member of the FTSE 100.
Bar a last-minute collapse in easyJet's shares, the FTSE group will confirm on Wednesday the remarkable rise of the upstart airline from Luton that now operates more than 1,000 flights a day across 600 routes.
The airline's share price has more than doubled in the last year to 1018p – valuing the company at more than £4bn, not far off that of British Airways' parent firm, International Airlines Group at £4.4bn.
EasyJet's chief executive, Carolyn McCall, who took over in July 2010, would bring to three the number of women at the helm of a FTSE 100 company.
The airline's valuation has soared as traditional carriers have retrenched and cost-conscious business travellers have increasingly been filling its seats.
Haji-Ioannou started painting the aviation world a garish orange 18 years ago by flying from Luton to Scotland with two Boeing 737-200s on a "wet-lease" – hired complete with air and ground crew. The airline took delivery of its first fully owned plane the following year and started international flights to Amsterdam. In 2000 it floated on the stock exchange.
Significant milestones were the acquisitions of Go and then GB airways, greatly expanding easyJet's fleet and reach. Over the last decade it has opened bases in France, Germany, Spain and Italy, allied to its early Geneva base, capitalising on broader shifts in the airline industry and the problems besetting traditional carriers.
Douglas McNeill, investment director at stockbrokers Charles Stanley, said: "It doesn't have the inefficiencies of legacy carriers but now has the size to make economies of scale. Now it's not the upstart, it's the benchmark for others."
Yet easyJet's growth has also been accompanied by denunciations of the board from its founder, now no longer in charge but the largest single shareholder with around 37% in his family's control. Some of Haji-Ioannou's harshest words have been reserved for the outgoing chairman, Michael Rake – particularly aircraft orders – and excessive boardroom pay. This culminated in a stormy 2012 annual meeting when he attempted to make the airline part of the "shareholder spring" by ousting Rake.
For his part, Rake this year warned that elevation to the FTSE100 would mean shareholders should protect "London's reputation, and the company's reputation" by keeping dialogue constructive and private – a warning to which Haji-Ioannou responded he could "go fish".
But where the board and Haji-Ioannou were on Monday united was in expressing delight at the impending elevation.
EasyJet director of communications, Paul Moore, said that while the airline had never targeted a FTSE 100 place, it would be pleased to join the list. "The share price reflects our successful strategy. We want to become Europe's preferred short-haul airline," he said. "But it's not about size – it's about being the passenger's choice."
While Moore says the airline still operates on a low-cost basis, minimising unnecessary overheads – the headquarters are still the distinctly unglamorous address of Hangar 89 in Luton "and will be for some time to come" – he believes consumers no longer have that label in mind. In terms of passenger numbers it is the largest airline in Britain and the fourth largest in Europe, just behind Ryanair.
Moore added that only in Britain does consumer perception lump easyJet with Ryanair, and that the historic low-cost airline association is being gradually unpicked.
Easyjet believes allocated seating, on every flight since November, has broadened its appeal, with the previous boarding scramble having put off many travellers. The airline continues to expand in Europe: in the next month it will start providing competition on Italy's major domestic Rome-Milan route, as well as starting flights from the UK to Moscow.
Meanwhile, a spokesman for Haji-Ioannou said the Greek entrepreneur was delighted with the easyJet share price – which has doubled his £2bn fortune – and particularly proud to have made the rare journey from startup to the FTSE 100 in under 20 years.
He said that being an "active investor" had proved an ideal role for the founder, who was still concerned that the airline could be jeopardised with a large aircraft order. He said higher fares had been charged on fuller planes because routes had not been "flooded with seats" as a result of keeping aircraft capacity down, and that costs had been controlled. "Those factors, all of which Stelios has been involved in, have clearly done wonders for easyJet's prospects.
It's the fact that he's always on their case makes them a better board."
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