EasyJet Prepares Brexit Contingency Plan To Meet Ownership Rules

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Today, easyJet, the British low-cost airline, said that it was ready to suspend the voting rights of a small number of shares in order to comply with the rules that require 50 percent plus one share of the firm to be owned by EU shareholders after Brexit.

Airlines that will no longer be majority owned by nationals of the European Union once the United Kingdom leaves the bloc will face the threat of losing their right to fly within the EU after Brexit because of share ownership rules, and airlines are now required to spell out their contingency plans.

EasyJet is considered to be in a less tricky position as compared to some of its rivals, as it said that its EU ownership, excluding to the British shareholders, had risen to 49.92 percent.

However, it still remains to be below the required threshold, and it said that its board was ready to activate its plan to suspend the voting rights of shareholders in respect of a small number of shares on a “last in first out” basis.

The British carrier also said that it is expected to set a “permitted maximum” of non-EU ownership in due course, suspending the voting rights of its shareholders if EU ownership dropped below 50.5 percent.

Just like other airlines, easyJet has the power in its articles of association to restrict voting rights, and Ryanair has already laid out similar plans.

As easyJet is already close to the 50 percent plus one threshold to comply with the rules of the European Union, analysts at Goodbody said that the contingency plan would be less dramatic for the carrier as compared to some of its peers.

In a note, the brokerage said regarding the easyJet plan: “This looks to be a sensible approach and one that is less onerous than many of its peers given its existing balance of ownership.”

Last Thursday, Theresa May, the Prime Minister of the United Kingdom, agreed with leaders of the European Union to delay Brexit until the 12th of April or the 22nd of May, depending on whether her deal gets the approval of the parliament.

The European Union has said that airlines have two weeks after Brexit to submit the plans regarding how they will comply with the rules. They will also be given a six month period to implement the plans.

However, in an interview with the Financial Times on Friday, Violeta Bulc, the top transport official of the European Union, criticised the airlines for being slow to submit their plans on how they plan to comply with the rules despite the given grace period.

She said that IAG, the owner of British Airways, was yet to complete its contingency plans. IAG said that it was confident that it would comply with the ownership rules after Brexit.