Aer Lingus owner IAG unconcerned at post-Brexit ownership rules

Brussels tells airlines they must be 50% EU owned to retain flying rights across bloc

Aer Lingus owner IAG also owns Iberia and British Airways. Photograph: Cyril Byrne

Aer Lingus owner IAG also owns Iberia and British Airways. Photograph: Cyril Byrne

 

Aer Lingus owner IAG has brushed off concerns in Brussels over the Anglo-Spanish airline group’s preferred strategy to continue flying freely in the event of a no-deal Brexit.

The Spanish-registered and UK-based owner of British Airways and Spain’s Iberia airline said it was “confident” it would “comply with EU and UK ownership and control rules post-Brexit”.

The Financial Times has reported that part of IAG’s strategy to retain both EU and UK operating rights post-Brexit is to argue that its flag-carrier airlines are domestically owned through trusts and companies rather than part of a bigger group that is majority owned by non-EU investors.

European airlines have been told by Brussels that post-Brexit they must show that they are more than 50 per cent EU-owned and controlled to retain flying rights across the economic bloc.

The newspaper quoted an unnamed senior EU official dismissing IAG’s strategy as a solution.

IAG had not initially weighed the risks of the group being linked to the UK as a third country after Britain left the EU, but since last year it has engaged with the European Commission and the Spanish government to argue that it should be considered an EU-based company and covered by its rules.

The group has argued that Aer Lingus and its other flag carriers have long-established air operator certificates and large workforces and substantial businesses in those countries.

The commission said that Aer Lingus was currently EU-majority owned and effectively controlled and holds a valid EU operating licence and that to maintain a valid licence and freedom to provide air services, including in a no-deal scenario, it must be majority EU-owned and controlled.

Operating licence

A commission spokesman said that each member state’s licensing authorities will decide whether an airline must resubmit an operating licence for approval if there is a change in its “legal situation”.

Political divisions in London over the draft divorce deal increase the likelihood of a hard Brexit, putting pressure on affected airlines to submit compliant plans before the UK leaves on March 29th.

“Given the short delay left to prepare, it is desirable for air carriers to have their plans verified by the competent licensing authorities as early as possible ahead of the withdrawal date, in order to ensure continued compliance with EU ownership and control,” said the EU spokesman.

He said he could not speculate on reports that the EU was considering extending the time companies have to address ownership and control issues post-Brexit.

A spokeswoman for Aer Lingus declined to comment beyond IAG’s response. The Department of Transport did not respond to queries.

Stephen Furlong, analyst at Davy stockbrokers, said that in a hard Brexit IAG could solve any problems with EU ownership and control rules by not allowing UK investors to have voting rights as Ryanair have indicated would happen in the event of a hard Brexit with their non-EU shareholders.

“I don’t think this is a flying issue; it is a shareholder issue. It is still feeding into general uncertainty if we do have a hard Brexit,” said Mr Furlong.

The Government listed the EU’s requirement on ownership and control rules post-Brexit in its contingency plan for a no-deal scenario, published last month.