By KAVERI NITHTHYANANTHAN
Airline entrepreneur Stelios Haji-Ioannou is investing in an effort to start a new no-frills, low-cost African airline which might see him cross swords again with easyJet PLC, the U.K. airline he founded.
Haji-Ioannou's easyGroup, which runs ventures from car hire to hotels and gym membership, is to invest in Rubicon Diversified Investments PLC. Rubicon said Monday it plans to set up the airline under the fastjet.com name, a brand recently created by Haji-Ioannou.
Rubicon, listed on London's specialist market for small companies, will pay easyGroup a royalty in return for easyGroup's initial 5% investment, managerial advice, and use of the fastjet.com name. Rubicon's current market capitalization is £3 million ($4.7 million).
The move may yet be challenged by easyJet which, despite flying mainly to European destinations, does have routes to Morocco and Egypt. The airline and its estranged founder, who together with his family retains a 38% stake in the company, signed a "comfort letter" in October 2010 that prevents Mr. Haji-Ioannou from setting up a rival airline or becoming a holder in another carrier under certain conditions. Among other things, the two parties agreed Mr. Haji-Iannou can't use his own name or a derivation of it to brand any other airline, flying to and from Europe, for 5 years. EasyJet has previously said it will fight to protect its shareholders' interests. An easyJet spokesman said Monday the matter remains "under review."
EasyGroup officials weren't available for comment. However, Mr. Haji-Ioannou did say in an emailed statement he was looking forward to bringing low-cost air travel to Africa. "Africa must now represent the final frontier of this aviation revolution which started in the U.S. in the 70s and which I was proud to have led in Europe in the 90s," he said.
Rubicon Chairman Robert Burnham said there are no plans for the airline to fly globally. The "focus is very much in Africa," he said. Air traffic in Africa has grown sharply in recent years as the continent has enjoyed a commodities-led economic boom. Passenger traffic in October rose 4.2% on a year-to-year basis, according to the latest data from the International Air Transport Association, or IATA.
In the Rubicon deal, which still needs to be approved by shareholders, easyGroup will be issued with shares representing 5% of the company, with an option to subscribe to a further 10%. Rubicon will get exclusive rights to use fastjet.com for 12 months but will need to take delivery of a "western standard" aircraft or conduct a reverse-takeover of another company within that time to hold on to the brand.
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