Stelios' bright orange brands have seen multi-million-pound losses. Daniel Rogers hears his plans to keep the easy mother ship afloat.
Despite several trips to easyGroup's chaotic headquarters in North London, I'm still surprised to see millionaire tycoon Stelios Haji-Ioannou sitting at a PC and rubbing shoulders with dozens of other young workers.
This encapsulates the attitude of the easy brand: an earthy, populist approach to business. But at this point in time the young entrepreneur - Stelios is still only 36 - really needs to get his hands dirty.
When Marketing interviewed Stelios for its first Brand Master profile back in January 2000, the world looked to be his bright orange oyster.
EasyJet had just been granted Superbrand status and was preparing for flotation. His first spin-off brand - easyInternetCafe - was reaping the benefits of the dotcom boom.
Today things look rather different. Forced to admit last month that he may have to close his latest venture - the easyCinema in Milton Keynes - by the end of the year, one national newspaper responded with the headline 'The easy boss hits hard times' and asked whether he could reverse his 'losing streak'.
The tables have turned on the hitherto master of media. First came the revelation that easyInternetCafe had lost pounds 80m cumulatively over the two previous financial years - something Stelios describes as 'the most expensive mistake of my career'. Then it emerged that his only proven success, the previously hugely profitable easyJet, had dipped pounds 48m into the red in the first half of this financial year.
EasyGroup companies, excluding the publicly owned easyJet, now appear to have lost about pounds 120m over the past four years. EasyInternetCafe forms the bulk of this, turning in about pounds 90m in losses since 1999. But easyCar has lost about pounds 20m, the internet shopping portal easyValue pounds 5m and the easyMoney credit card pounds 2.7m.
So how does Stelios respond to criticism from some quarters that he is proving a one-trick pony? 'Only time will tell,' he replies. 'There's no denying that easyGroup companies, particularly easyInternetcafe, have lost a lot of money. But these losses have largely been put behind us. It took us a few years to make the first profit at easyJet.'
Stelios insists easyCar and easyInternetCafe will only lose 'a few million pounds this year' and 'hopefully break even' in the year to September 2004. He says easyCar is still on track to be the second easy brand to float, in the autumn of 2005. EasyJet's second-half figures also look healthier.
Funding the future
Stelios' strategy is to keep incubating ventures from the easyGroup mother ship, eventually sell their stock to the public and then use the money to fund further projects.
It was by selling some of his personal shares in easyJet that he has managed to keep the ventures afloat. Indeed, last week saw Stelios sell a further pounds 17m of shares in easyJet. In a statement he said: 'I will use my proceeds to top up my fighting fund in the battle between easyCinema and the Hollywood Studios.'
The Haji-Ioannou family still holds about 42% of easyJet stock. But the City is twitchy about the effect of Stelios' share sales on easyJet's overall share price.
Meanwhile Stelios continues to talk about expansion. 'It's through growth in all our share values that easyGroup makes its money. We sell our past to fund our future,' he says.
It is here that easyGroup differs fundamentally from that other great brand-stretcher, the Virgin Group. Virgin charges royalties to third parties for use of the Virgin brand - Scottish Media Group for Virgin Radio and London Electricity for Virgin Energy, for example. 'While I admire Virgin, its approach is not a very shareholder-friendly way of doing business,' argues Stelios.
But the direction of the easy brand's growth worries some easyGroup stakeholders. …