Reports have been circulating in the European and UK press of the rising concern of investors in the large UK-European airline groups and how they and their individual airlines will be impacted in the event of a no-deal Brexit situation. These are not new questions but the urgency of the situation is increasing as the deadline approaches with no firm sign a deal is within reach. International Consolidated Airlines Group (IAG) is the main target for investor and media attention since it is formed of UK and European airlines. Spanish newspaper, El Pais, stated that IAG is negotiating with the Spanish government and the European Commission to prove it is a European-based airline, despite ownership of British Airways.
A piece in The Financial Times, published on November 13, includes comments from investors and shareholders that are demanding the airlines provide detailed contingency plans on how they are ensuring they will continue to fly, as well as take-off and land, post-Brexit. The piece highlights UK-based investor concerns that they could be forced to dump shares in the event of a no-deal Brexit or lose voting rights.
The European Commission has publicly stated that airlines will not be granted more time to prove that they are more than 50% owned by the EU shareholders to qualify for operating licences. Flipping shareholdings to comply with this will result in the loss of voting rights for UK shareholders.
The debate and rising panic will continue as the deadline looms closer. But the message is clear from investors, airlines need to clarify their position ahead of the deal deadline or risk losing shareholders with lower risk appetites and with no desire to ride out the Brexit storm.