Easyjet pays up to keep name

11th Oct 2010 07:21

No-frills airline easyJet has agreed a settlement to its acrimonious dispute with founder Sir Stelios Haji-Ioannou over its continued use of the 'easy' name.The price is not cheap. For the next fifty years, easyJet will have to pay an annual royalty of 0.25% of revenues, fixed at £3.9m and £4.95m in the first and second years respectively.Sir Stelios's easyGroup will give up its right to appoint directors to the board of easyJet, while Sir Stelios himself gives up the right to appoint himself as the airline's chairman. Aside from the easyJet brand, easyGroup owns easyCar, easyHotel and several other 'easy' brands.The airline said the agreement ends the long-standing uncertainty arising from the on-going dispute and confirms easyJet's right to generate revenues from ancillary activities.In future, it will be allowed to arrange its own car hire, hotel and insurance deals, whereas the previous arrangement restricted it to earning 75% of revenue from air travel. It was claims by Sir Stelios that it had breached this restriction that sparked the legal dispute. "The amended and re-stated licence agreement continues easyJet's worldwide rights to the use of its brand on a basis which protects easyJet's current commercial activities and provides clarity and certainty over the terms of the licence," easyJet's statement said."This is a sensible resolution of a difficult dispute that provides a fair, clear, workable outcome that is an improvement for both sides. It provides easyJet with operational flexibility and commercial freedom to grow our business and it provides both sides with clarity," added Carolyn McCall, easyJet chief executive.Sir Stelios has been at loggerheads with the board of the airline over its strategy and use of the name for a number of years. He remains its biggest shareholder and controls 38% of the shares.'The agreed amendments will result in increased competition from the airline for the other easyGroup licensees (such as easyHotel, easyCar and easyBus),' he said. 'However the agreed royalty payable provides appropriate remuneration for easyGroup thereby aligning the interests of both parties. Let's hope this is a win-win for all concerned!'EasyJet's share price share price rose strongly last week after the airline indicated profits this year would be higher than its previous forecasts of between £100m to £150m. The shares were higher today as investors reacted positively to the certainty brought about by today's announcement.