easyJet says founder to set up rival airline Fastjet

26th September 2011, Comments 0 comments

British no-frills airline easyJet said Monday that its founder Stelios Haji-Ioannou will set up a rival low-cost carrier called Fastjet, adding that the plan infringes on a deal settling a long-running row.

Sir Stelios, whose family owns 38 percent of easyJet, was not immediately available for comment.

In a statement, easyJet said "it has received notice from Sir Stelios Haji-Ioannou that he intends to set up an airline branded Fastjet and that a website, www.Fastjet.com, has already been established."

Haji-Ioannou founded the easyJet airline in 1995 and remains the single biggest shareholder in the group, which is based at Luton airport north of London.

However his relationship with the board remains strained, even though the two sides settled a long-running dispute last October concerning use of the company's brand.

easyJet on Monday pointed out that following an agreement with Haji-Ioannou late last year, the airline "has a number of rights" which it promises to safeguard amid the Fastjet project.

"To the extent that any activity of Fastjet, Sir Stelios or any company controlled by him infringes or would infringe those rights, easyJet will take necessary action to protect the rights of easyJet and the interests of its shareholders," the airline said.

easyJet added that it "emphatically rejects" claims by Sir Stelios that the airline has breached the terms of a letter between him and the airline dated October 10, 2010, making it no longer in force.

It was agreed 11 months ago that the airline's right to the easyJet brand would last for 50 years in return for an annual royalty payment to Sir Stelios of 0.25 percent of the group's revenue.

Sir Stelios also won a demand for easyJet to pay a first dividend to shareholders, which will total £190 million (219 million euros, $296 million).

The deals were reached after Haji-Ioannou's company easyGroup IP Licensing (EGIP) had claimed that easyJet breached the terms of a branding licence agreement, specifically by increasing its income from non-ticket revenues beyond an agreed 25 percent of total sales.

© 2011 AFP

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