Brussels official calls IAG Brexit plan ‘totally absurd’

Brussels official calls IAG Brexit plan ‘totally absurd’

The announcement by IAG, the owner of British Airways, that it would consider UK shareholders as EU investors after Brexit has been described as “totally absurd” by a senior official in Brussels.

The Spanish airline group said this week that it had put a cap on the number of non-EU investors who can own shares in the event of a no-deal Brexit. But it also suggested it would count UK shareholders as EU investors even in that scenario.

Airlines must show they are more than 50 per cent owned and controlled by EU investors to retain flying rights within the bloc, posing a challenge for some European carriers, such as IAG, Ryanair and easyJet, with their diverse investor bases.

IAG said UK investors “are not and will not be subject to the restrictions on share acquisitions . . . unless IAG notifies shareholders otherwise. IAG has no plans to issue such a notification.”

The EU official said IAG had not approached the European Commission to discuss its move, which appeared directed at maintaining its flying rights in case of several potential Brexit outcomes.

Once the UK leaves the EU, a company’s UK investors will not count towards the target, meaning a company which was previously European will no longer be. EasyJet recently announced it had reached 49 per cent EU ownership.

IAG, Ryanair and easyJet all have corporate provisions to strip voting rights from non-EU shareholders and to force them to sell their shares so they can meet the target, and IAG reiterated on Monday night that it would do so.

The group, which also owns Spain’s Iberia, said it had fixed the maximum level of share ownership by non-EU persons at 47.5 per cent, its current level.

Any non-EU investor who tries to buy IAG shares will have the shares’ voting rights removed and will be required to sell them within 10 days.

The company added: “There can be no assurance as to when, or if, the permitted maximum will be removed.”

Brussels has proposed giving airline groups such as IAG 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.

However, it is still to agree final terms.

A lawyer, who did not wish to be named, said that IAG’s statement about not treating UK investors as non-EU entities after Brexit “makes no sense”.

IAG has been reticent on the subject of Brexit. The group’s chairman, Antonio Vázquez Romero, has said it has “contingency plans” but did not provide further details.

IAG, which is a Spanish company that has its headquarters in the UK, declined to comment.

Additional reporting by Alex Barker in Brussels

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