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EasyJet: Stelios planning to set up rival airline called Fastjet

Stelios Haji-Ioannou accuses airline he founded of running a smear campaign against him

Sir Stelios Haji-Ioannou, the entrepreneur behind easyJet, has threatened to take on the budget airline he founded by launching a rival after accusing the management of running a smear campaign against him.

EasyJet disclosed Haji-Ioannou’s plans on Monday, in what appeared to be a pre-emptive strike against the entrepreneur, who remains a major shareholder. Haji-Ioannou has had a turbulent relationship with the airline in recent years and agreed as recently as last October not to set up a rival.

Easyjet said that its founder “intends to set up an airline branded Fastjet”. Haji-Ioannou has already set up a website with the URL, which currently says only: “ by Stelios. Coming soon!” against a vivid red background that calls to mind easyJet’s own orange branding.

Haji-Ioannou declined to give more details of the launch, saying only that he will not now abide by the terms of last October’s agreement. He accused easyJet of breaching its provisions by smearing him in off-the-record briefings to journalists.

Under the terms of its flotation in 2000, easyJet licensed the brand from Haji-Ioannou’s company easyGroup. It agreed to use the brand only for its core activity – running an airline – and to limit any other revenues it made to no more than a quarter of total sales.

But after a boom in budget travel and the introduction of new revenue lines such as baggage check-in fees, Haji-Ioannou went to court to argue that the agreement had been breached.

The damaging row was resolved in October last year, with easyJet increasing the annual royalty it paid to easyGroup. Instead of getting £1 a year, easyGroup now receives a percentage of easyJet’s revenues, amounting to almost £9m for the first two years alone, and a possible £65m over 10 years.

Under the terms of that deal, Haji-Ioannou separately agreed “not to use his own name or a derivation of it to brand any other airline which flies to or from any country in Europe for a period of five years”.

Nor is he allowed to hold a stake larger than 10% in another European airline. He receives £300,000 a year in return for those commitments.

Haji-Ioannou said on Monday that the non-compete agreement had been invalidated because a clause committing both parties to enhance the reputation of the easyJet brand, as well as his personal reputation, had been breached.

He issued a statement, saying: “Sir Stelios strongly believes that the directors of easyJet, via a smear campaign conducted by off-the-record briefings to journalists, have repeatedly breached the clause, so he has terminated the effect of the letter for repudiatory breach and has rejected all payments offered under this letter since May 2011.”

EasyJet said that it would “take necessary action to protect the rights of easyJet and the interests of its shareholders”. It added: “Sir Stelios also alleges that easyJet has breached the terms of the binding comfort letter between him and easyJet of 10 October 2010 and that that letter is no longer in force, claims which easyJet emphatically rejects. EasyJet continues to seek constructive dialogue with easyGroup and Sir Stelios.” © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds