Brussels is to give airline groups such as Ryanair and IAG, owner of British Airways and Iberia, a seven-month deadline to overhaul their shareholder make-up in order to retain full flying rights within the EU if Britain crashes out of the bloc without a deal next month.
The tight adjustment period for airlines, which must show they are majority owned and controlled by EU nationals in order to have full rights to fly through the continent, is outlined in revisions to a draft law seen by the Financial Times.
EU member states are broadly supporting the approach ahead of Britain’s scheduled departure on March 29th, although the European Commission noted this week that Ireland, with Spain, France, Cyprus and Hungary, continues to express concerns about ownership rules.
Aviation is a closely-regulated sector that faces a double blow from Brexit, since an abrupt UK departure from the EU would disrupt not only flying schedules but the licences that carriers currently use to operate, which are administered based on the nationality of shareholders.
Senior EU officials say the proposed seven-month grace period is coupled with exacting requirements and deadlines, which would force carriers such as IAG and Ryanair, which also has a large number of UK shareholders, to potentially trigger forced-sales of shares by non-EU investors.
Plans by airline groups to maintain existing licences must be presented to regulators within two weeks of the draft law being adopted, which could come later this month.
“That plan shall set out, in a complete and precise manner, the measures intended to achieve full compliance with the [EU] ownership and control requirements as from October 27th, 2019 at the latest,” the draft legislation states. “Where the air carrier has not presented a plan within the [two-week] time limit, the competent licensing authority shall revoke the operating licence.”
While Ryanair and Luton-based easyJet say they have contingency plans in place to ensure 50 per cent of their shareholders are EU nationals, potentially by using forced sales of shares, IAG has been reticent in explaining its proposals to cope with a no-deal Brexit.
Independent estimates suggest IAG faces the biggest challenge of all, with some analysts putting its current EU ownership as low as 25 per cent.
Brussels has warned IAG its favoured plan to continue flying freely around Europe would not comply with EU laws, according to senior officials.
At a press conference on Friday, IAG chairman Willie Walsh declined to comment on the work IAG was doing with its Spanish airlines to make them ready for Brexit. He added that he expected the UK and EU to reach “a comprehensive agreement” on Brexit.
An IAG spokesperson said the group was “confident” they would comply with EU ownership rules post-Brexit.
José Luis Ábalos, Spain’s minister of public works, told parliament this week that Iberia and other airlines were “working intensively” to adjust their ownership and control structure to be ready for Brexit.
Source- The Irish Times