Hester will join the airline’s board as a non-executive director at the start of next month. He will then succeed incumbent John Barton as chair of easyJet on 1 December.
Barton will stand down after nearly nine years in the budget carrier’s chair role.
Hester brings 35 years’ major business experience to the role, including stints as chief executive of RBS, chief executive of British Land and chief executive of Abbey National.
He has also held senior executive roles with Credit Suisse First Boston in London and New York, and was non-executive deputy chair of Northern Rock.
For the past seven years, he has served as chief executive of RSA Insurance group, and is currently a senior independent director of energy firm Centrica.
EasyJet chief executive Johan Lundgren said Hester joined at an "important time" in the carrier’s history as it seeks to take advantage of opportunities arising from the Covid crisis.
He also paid tribute to Barton for his "wise leadership" and lauded his "outstanding contribution" to the airline’s fortunes over the best part of a decade.
Hester said he was a long-standing admirer and customer of easyJet, and was looking forward to "playing his part in driving its continued success".
"I see so many opportunities for this iconic brand in the coming years, all underpinned by its proven business model, unrivalled network and loyal customer base," said Hester. "I am convinced we can be winners in the European airline industry of the future.
Barton said Hester’s "significant and varied experience" leading several major international businesses in regulated industries was ideally suited to guiding easyJet’s recovery in the post-Covid era, and would complement and add to the skills of the existing board and the airline’s leadership team.
Reflecting on his tenure, Barton said it had been an "absolute privilege", and stressed it was "the passion of its people" that had driven the airline’s success.
"I am proud of how easyJet has not only navigated through the pandemic but has adapted and built back stronger leaving it extremely well positioned for the future," he said.
"So it is with much confidence I will hand the reins over in the coming months to Stephen who will continue to drive easyJet’s future success."
Julie Southern, easyJet senior independent director, said: "I would like to thank John for the outstanding contribution he has made to easyJet.
"He has successfully guided the business through many challenges and successes including significant increase in customers and growth of the network, the launch of our industry-leading sustainability strategy, as well as more recently having navigated the airline through the pandemic to ensure it is positioned to emerge with renewed strength. We wish him well in the future."
