easyJet confirms pursuit of additional EU AOC
Following the United Kingdom’s recent vote to leave the European Union, easyJet (U2, London Luton) has now officially confirmed it has indeed put in motion plans to secure an Air Operator’s Certificate (AOC) from one of the bloc’s twenty-seven remaining members.
“As part of easyJet’s contingency planning before the referendum we had informal discussions with a number of European aviation regulators about the establishment of an AOC in a European country to enable easyJet to fly across Europe as we do today,” it said. “easyJet has now started a formal process to acquire an AOC.”
But, while it has confirmed the pursuit of a third AOC to compliment that of its UK mainline operation as well as easyJet Switzerland (DS, Geneva), the budget carrier has denied reports it is looking to move its headquarters away from the UK.
“Until the outcome of the UK/EU negotiations are clearer easyJet does not need to make any other structural or operational changes. We have no plans to move from London Luton – our home for 20 years.”
easyJet CEO Carolyn McCall said in the immediate aftermath of the vote that the carrier’s initial focus would be to accelerate discussions with UK and EU governments and regulators to ensure that the UK remains part of the single EU aviation market.
While most talk on the impact of Brexit in the international press has focused on UK-based operators, Ryanair (FR, Dublin Int’l) CEO Michael O’Leary has also warned on its consequences to European carriers.
Given that a large percentage of Ryanair’s shareholders are based in the UK, should the UK be excluded from the EU and also the European Economic Area (EEA), then, O’Leary said, Ryanair would no longer qualify as a “European carrier” as defined by the European Commission (i.e. an airline whose majority 50.1% shareholding is owned by EU or EEA nationals). This could then result in Ryanair being excluded from the single EU aviation market.
“European airlines can fly anywhere in the EU,” he told Fortune magazine. “But a European airline with those rights has to be at least 50.1% owned by EU [or EEA] shareholders. A large part of Ryanair’s shares are owned by UK investors, so if the UK leaves the EU and doesn’t join the EEA, we’d have less than 50% European shareholders. We’d no longer be a European airline with rights to fly anywhere. The same problem would apply to IAG, owner of British Airways (BA, London Heathrow) and Aer Lingus (EI, Dublin Int’l). It would be forced to sell over half its shares to European investors to remain a European airline.”
In a worst case scenario, he also warned of the UK imposing tit-for-tat measures on European carriers seeking free access to the UK market.
“We’d need to set up a Ryanair UK with more than 50% UK ownership,” he said. “Britain would say, ‘What’s good for the goose is good for the gander,’ and apply the same ownership rules that the EU imposes on them. If Britain doesn’t at least remain in the EEA, it will [cause] chaos in the airline industry.”
To help mitigate the expected long-term repercussions of Brexit and its interim uncertainty, Ryanair this week announced plans to buy back EUR150 million (USD165 million) worth of its stock over the next fifteen months.
The matter will be voted on during an extraordinary shareholder meeting to be held on July 27.