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Ryanair receives UK AOC as airlines plan for post-Brexit

2019-01-03

Irish LCC Ryanair has been granted a UK air operator’s certificate (AOC) and has registered its first aircraft in the country as European carriers move to shore up their post-Brexit operations ahead of the UK’s planned departure from the European Union (EU) in March.

 

The AOC granted by the UK Civil Aviation Authority (CAA) will allow Ryanair “to operate UK domestic and UK to non-EU routes in a post-Brexit environment, if necessary,” the airline said Jan. 3.

 

“The risk of a no-deal Brexit in March is rising, and despite our robust post-Brexit structures, including our post-Brexit plan around European ownership, we continue to call for the UK and EU to agree a transition deal from 31 March 2019, so that any disruption to flights and British consumer summer holidays in 2019 can be avoided,” Ryanair said.

 

The UK CAA’s website shows that a Boeing 737-800 previously registered in Ireland as EI-FEF was re-registered to Ryanair UK as G-RUKA on Dec. 20.

 

UK-based LCC easyJet has “already put in place” its post-Brexit structure, a carrier spokesperson said, adding: “We have put in place three operating airlines, in Austria, Switzerland and the UK, in order to be able to maintain flying both between the UK and Europe and within Europe.

 

“The Austrian airline is fully operational now and has been for some time. The planes and the people operating the Austrian airline were already based in Europe.”

 

Central and Eastern European LCC Wizz Air has invested $860 million in establishing a UK-based operation and was awarded a UK AOC in May. The airline last year registered eight Airbus A320s in the UK as part of what CEO Jozsef Varadi called “a key part of our Brexit contingency plan.”

 

Meanwhile, International Airlines Group (IAG)—parent of British Airways, Aer Lingus, Iberia, Level and Vueling—is taking steps to prove to the European Commission (EC) it would still be considered a majority EU-owned company in the event of a no-deal Brexit. IAG is Spanish registered with shares traded on the London and Spanish stock exchanges and corporate headquarters in London.?

 

The EC reiterated in December that “in order to maintain the validity of an operating license, and the freedom to provide intra-EU air services, all the conditions for the operating license need to be respected, including being majority EU-owned and controlled.”

 

“If the conditions are no longer fulfilled as a consequence of the United Kingdom’s withdrawal from the EU, the operating license will no longer be valid,” the EC added.

 

According to reports in the Spanish news media, Iberia is seeking to prove to the European Commission that it is majority-controlled by Spanish retail group El Corte Inglés.

 

To operate flights to countries with which Spain has bilateral agreements, such as Brazil and Russia, Iberia must be majority Spanish owned, whereas to continue intra-EU services it must be majority EU-owned, Bernstein Research analyst Daniel Roeska said.

 

IAG “has never disclosed its full ownership shareholding across different nationalities,” Roeska said. While some of IAG’s ownership is public information—Qatar Airways has about a 20% stake, at least 10% is held by UK investors and at least 15% is owned by non-European entities—there has been “no public disclosure” detailing the ownership nationality for up to 40% of IAG’s equity.

 

Nevertheless, Roeska does not believe there is “any material danger of flights being disrupted at IAG” as a result of Brexit. He said there is “ample time and opportunity” for IAG to address ownership and control issues, and options could include finding “fully Spanish” investors or placing some of Iberia’s equity into an Irish trust. 

 

IAG is equally optimistic. “We are confident that we will comply with the EU and UK ownership and control rules post-Brexit,” a group spokesperson said.

 

“IAG is a Spanish company and its airlines have long-established AOCs and substantive businesses in Ireland, France, Spain, Austria and the UK, employing around 63,000 people and operating 546 aircraft. The group has had other structures in place and protections in its bylaws since it was set up in 2011,” the spokesperson said.