Budget airline EasyJet has reached an agreement with its founder and largest shareholder Stelios Haji-Ioannou, allowing the no-frills carrier to keep using the Stelios-owned brand name, ending a two-year dispute.
The deal also gives the company more freedom to use the name and enter co-branding agreements with other companies.
"It is definitely a benefit for us to have that clarity and the freedom to develop our ancillary revenues as we choose ... What we've got clarity on is the area of air travel and passenger air travel," EasyJet chief executive Carolyn McCall said.
Ms McCall said the deal was a separate issue from Stelios' disagreement with EasyJet over its business strategy, which he has revolted against. Ms McCall said she was confident the agreement would get shareholder backing at an extraordinary general meeting in the fourth quarter.
"We have already spoken to shareholders over the weekend and they have been very supportive of this. They see it as a good brand licensing aggreement for all sides," she said.
The deal would mean easyJet white label services related to passenger travel, such as car hire and hotels, would likely be preceded by the slogan 'brought to you by EasyJet' and not the 'easy' prefix, Ms McCall said.
The new agreement will allow EasyJet to use the brand for 50 years, with a minimum commitment of 10 years in return for an annual royalty payment of 0.25 per cent of EasyJet's revenues, to be paid to Stelios, who owns 37 per cent of the company.
The payment will be capped at £3.9 million and £4.95 million for the first two years of the agreement, EasyJet said.
The dispute started in August 2008 when Stelios, EasyJet's largest shareholder, who stepped down as chairman of the board in May 2010, said he would pull EasyJet's right to use the brand unless flight punctuality at Gatwick Airport improved.
"I am content this is a fair deal for both sides ... However the agreed royalty payable provides appropriate remuneration for EasyGroup thereby aligning the interests of both parties," Stelios, who owns EasyGroup, said in the statement.
Stelios has also been in a branding dispute with online matchmaker Easydate. Stelios said last month that unless Easydate stops using the name and online domain, he would take "further action to protect the easy name".
Reuters