Dispute Settles and easyJet Retains Name While easyGroup Gets Revenue Payments

The easyJet company has spent over 4 million pounds in legal costs fighting the easyGroup founder.

The easyJet company has spent over 4 million pounds in legal costs fighting the easyGroup founder.

A two year dispute has just settled between easyJet PLC and easyGroup IP and the result is that easyJet gets to keep its name and other rights that will greatly benefit the company. The easyGroup founder Stelis Haji-Ioannou didn’t walk away empty handed though. Before going into effect the deal has to be approved by shareholders however at an upcoming Extraordinary General Meeting.

EasyJet gets to keep its name and can enter into new branding agreements and promotions with other companies that provide services to the travel industry such as car rental, hotels, and travel insurance. They can also lease non-easyJet aircraft or lease its own aircraft to other companies with permission from easyGroup. They also kept Haji-Ioannou from being able to appoint himself or a representative to the easyJet board.

Chief Executive Carolyn McCall said the airline expected major shareholders to be supportive of the deal since it gives more flexibility for the company to operate profitably.

Haji-Ioannou, who along with his family owns 36.3% of the company, will be paid funds from easyJet for a 50 year term and a 10 year minimum of the term is a requirement. A fixed payment of 3.9 million will be paid in 2011 and the amount will increase in the year 2012 to 4.95 million pounds. Starting in 2013 the payment will be 0.25 per cent of easyJet’s revenue.

Mike Rake, easyJet’s chairman, said: “I believe the revised agreement better aligns the interests of easyJet shareholders and the Licensor.”

While there could be further struggles between the company and the founder in the future, both have agreed to more rapidly settle disputes by arbitration to prevent costs to the airline. It is estimated that the current two year dispute has not only cost the company millions in possible earnings but over 4 million pounds in legal costs.

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