Ryanair is serious. At the end of the year, the low-cost airline will withdraw voting rights from its British shareholders. Ryanair announced this step on March 11, 2019 in the event of a hard Brexit. The company wants to ensure that it will be able to operate all planned flights in the EU from 2021.
The flight rights are based on the condition that a company belongs to a majority of shareholders from the EU or is under their influence. Ryanair is based in Ireland, but almost half of the shareholders are from Great Britain. If they were to buy more shares, the decisive threshold would quickly be exceeded.
For the same reason, Ryanair’s competitor Wizzair, based in Hungary, announced that it would withdraw voting rights. Because the company has shareholders from Great Britain and other non-EU countries, around 60 percent of the shareholders are now excluded from voting at general meetings. Otherwise Wizzair could have lost its status as an EU airline.
Transitional arrangement ends
So far, airlines have benefited from a transitional arrangement that gave them the same rights after formal Brexit as they did before the UK left. But the deadline is now running out without a full-fledged follow-up regulation being resolved in the Brexit agreements last week. The negotiating partners had only agreed to explore an opening clause for a further twelve months.
Immediate flight bans were therefore probably not imminent, but the companies are now choosing the safer route. The majority of companies owned by British investors will also formally lose rights for EU flights that neither take off nor land in Great Britain or cross British airspace. Connections from Sweden to Spain or from France to Romania would become a problem if, due to Brexit, EU owners no longer control the majority of voting rights.
Numerous airlines respond
Not only Ryanair and Wizzair have taken precautions to avert disruptions in air traffic. The British Airways parent company IAG claims that the holding company is based in Spain, as are the British Airways sister companies Iberia and Vueling. It should be ensured for these that they are considered to be EU companies.
The British low-cost airline Easyjet had already set up an offshoot under Austrian law for EU flights in the past, but has now published a board decision that voting rights should also be withdrawn if an agreement between the EU and Great Britain does not come about by New Year’s Eve. However, Easyjet only wants to collect voting rights from shareholders who had recently purchased in order to push the voting weight of non-EU owners below 49.5 percent. Most recently, according to Easyjet, it was 52.98 percent.
The vacation airline Condor can, however, forego such steps. In the past, Brexit was also an issue at the headquarters near Frankfurt Airport. Condor was part of the British company until the travel group Thomas Cook went bankrupt in autumn 2019. After the restart, however, all shares are now held by a German trust company, which it pledged to the state-owned KfW bank as security for aid loans granted.