EasyJet plans Brexit shake-up which could force UK investors to sell shares

 
Rebecca Smith
SPAIN-AVIATION-EASYJET
The airline is one of many in the midst of preparing for Brexit (Source: Getty)

EasyJet has set out plans which could force UK shareholders to sell their stakes after Brexit, as it prepares to comply with foreign ownership rules.

Under EU law, the airline needs to ensure majority control and ownership by EU nationals after Britain leaves in order for it to keep operating intra-EU. Today it unveiled plans to amend its articles of association, which currently give directors the power to limit the ownership of the firm's shares by non-UK nationals.

EasyJet intends to change this so they apply to non-EU shareholders, "which will exclude UK holders once the UK has left the EU" - giving it the power to force UK shareholders to divest their shares if need be.

The airline will put the changes to shareholders at its annual general meeting in February, saying the switch-up will ensure EasyJet is able to remain EU-owned and controlled at all times after the UK has left the EU.

No current intention

The carrier said it has "no current intention" of using the proposed powers, and added it is coming from a "position of strength", with close to 50 per cent of its shares already in the hands of European Economic Area (EEA) nationals, excluding those from the UK.

A key reason for the airline's confidence lies in how the shares of its founder Sir Stelios Haji-Ioannou are classified. Haji-Ioannou, who owns around a third of the airline's shares, is a dual UK and Cypriot national.

His shares had been classed as UK-owned, but it is understood that going forward, these can be viewed as EU-owned, meaning EasyJet's ownership picture will look rosier.

The airline said it will aim to surpass the 50 per cent marker by organically increasing share ownership among EU nationals, and will only look to utilise the change in powers as a last resort.

"The company has already begun a more rigorous investor relations programme across Europe with the intention of increasing EEA (non-UK) ownership above 50 per cent prior to the UK's exit from the EU," EasyJet said.

As such, EasyJet has no current intention of using these proposed powers in respect of non-EU holders of EasyJet shares, but considers these changes an important step in ensuring that EasyJet plc has the ability to maintain EU ownership and control at all times should it need to do so, and thus secure its future operations in Europe for the long-term.

Getting Brexit-ready

It is the latest effort by the airline, which unveiled its full-year results today, to get Brexit-ready. In July it established EasyJet Europe, which is headquartered in Vienna to allow it to continue operating flights both across Europe and domestically within European countries after the UK has left the EU, regardless of the outcome of Brexit negotiations.

Fellow low-cost carrier Wizz Air said last month it was setting up a UK subsidiary in order to guarantee its flights in the UK after Brexit.

The ownership question mark is also facing the likes of Ryanair and British Airways owner IAG, with the latter saying previously it will continue to comply with the relevant ownership and control regulations.

Meanwhile, Ryanair said in its annual report that if UK holders of the firm's shares are no longer designated as EU nationals, the board of directors "may have to take action to ensure continuing compliance" with regulations.

Non-EU nationals are currently effectively barred from purchasing ordinary shares, and Ryanair's directors have the power to require non-EU shareholders to dispose of their shares to EU nationals.

Read more: Ryanair's boss has just written to all his pilots begging them not to leave

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