easyJet has resolved a long-running dispute with founder Stelios Haji-Ioannou over a revised brand licence agreement.
The dispute centres on easyJet’s right to generate revenues from ancillary activities, with Stelios attempting to impose limits on this source of income.
Pictured: easyJet founder Stelios Haji-Ioannou
The amended licence agreement clarifies the limits of what easyJet may do in this area, while maintaining its worldwide rights to the use of the brand.
easyJet hopes the operational flexibility of the airline will be improved, while easyJet will have the freedom to enter new co-branding agreements with other travel service providers as well as white label partners such as car hire, hotels and travel insurance companies.
easyJet chairman Sir Mike Rake commented: “easyJet has grown and developed since the brand licence was signed and the licence agreement needed to be clarified to allow the company to move forward.
“I believe the revised agreement better aligns the interests of easyJet shareholders and the licensor.”
When the company floated in November 2000 the easyJet brand rights were transferred to Sir Stellios’ EasyGroup in pertuity for an annual royalty of £1.
When the dispute erupted earlier this year Stelios - who along with his family owns around 37 per cent of easyJet - threatened to withdraw the brand from the airline.
However, this is now unlikely to happen.
Following the judgement the easyJet founder said: “I am content this is a fair deal for both sides.
“The agreed amendments will result in increased competition from the airline for the other easyGroup licensees (such as easyHotel, easyCar and easyBus).
“However the agreed royalty payable provides appropriate remuneration for easyGroup thereby aligning the interests of both parties.”
Under the new brand agreement he will receive an annual royalty of 0.25 per cent of easyJet’s total revenues, capped at £3.9 million and £4.95 million in the first and second years respectively.
He added: “The way low cost airlines make money has changed over the ten years since the original licence was signed.
“This amendment allows the airline to now grow its business even further by removing some of the restrictions imposed by the original agreement.”
The deal requires shareholder approval. When secured Stelios will give up the right to appoint himself as easyJet chairman and end easyGroup’s rights of representation on the board of easyJet.