Oct. 11 -- EasyJet Plc resolved a brand-license dispute with founder Stelios Haji-Ioannou, giving Europe’s second-largest discount airline greater freedom to boost revenue through marketing deals with other travel companies.
The airline will retain the right to the EasyJet name for as long as 50 years, with a minimum commitment of 10 years, by paying an annual royalty of 0.25 percent of total revenue, fixed at 3.9 million pounds ($6.2 million) and 4.95 million pounds in the first and second years, EasyJet said today in a statement. The Luton, England-based company reported sales of 2.67 billion pounds in the last fiscal year.
Stelios, who prefers to be known by his first name, alleged that EasyJet had infringed on an agreement it signed with his EasyGroup holding company in November 2000, shortly before the airline’s initial offering of shares to investors. The dispute centered on whether the carrier was violating terms of the contract specifying that at least 75 percent of sales must come from airline operations.
“We see this as a new chapter in working with EasyGroup going forward,” EasyJet Chief Executive Officer Carolyn McCall said today on a conference call with reporters. “It gives us more freedom to use the brand.”
EasyJet’s other investors, who must approve the agreement, are “very supportive,” McCall said. The executive, who became CEO in July, said the dispute with Stelios, the carrier’s biggest shareholder, had cost the company about 4 million pounds in legal fees.
Strategy Review
EasyJet rose 2.7 pence, or 0.6 percent, to 454.3 pence in London trading today, boosting the company’s market value to 1.95 billion pounds.
The stock has risen 29 percent this year, propelled by its biggest gain in 20 months on Oct. 6, when the company said full- year profit beat its forecasts. EasyJet will report earnings for the year ended Sept. 30 on Nov. 16, when McCall will also present a strategy review.
Today’s agreement gives EasyJet greater scope to market its brand name and allows it to enter into new agreements with car- rental companies, hotels and travel-insurance providers, as well as conduct promotions with other companies.
“The way that low-cost airlines make money has changed over the last 10 years since the original license was signed,” Stelios said in the statement. “This amendment allows the airline to now grow its business even further by removing some of the restrictions imposed by the original agreement.”
Stelios, 43, also agreed to give up the right to appoint himself chairman of EasyJet and to end EasyGroup’s representation on the airline’s board, the company said. The entrepreneur owns about 36 percent of EasyJet, according to EasyGroup, including a portion through the holding company.
Read more Aviation News http://www.businessweek.com
View Model Aircraft
No comments:
Post a Comment