easyJet has said today that it continues to “stand ready” to activate its contingency plan should the UK leave the European Union (EU) without ratifying a deal in the coming weeks.
Last night, the EU’s 27 states agreed to give the UK until 12 April to workout its next move, if PM Theresa May does not get her proposed deal through Parliament and it is voted down by MPs as it has been twice already this year.
The UK was set to leave next Friday (29 March) but PM May asked for an extension to Article 50 which EU states agreed to with conditions. The UK will leave the bloc on 12 April with a no deal as it stands.
If this is what happens, EU rules stipulate an airline must be more than 50 per cent owned by EU-based shareholders if it wishes to keep operating within the bloc and airlines will have six months to comply with the rules, provided an acceptable remedial plan is submitted to authorities.
In an investor update, easyJet said that its EU (excluding UK) ownership stood at 49.92 per cent, just below the required share.
The airline added: “Accordingly, the board continues to stand ready to activate the contingency plan of suspending shareholders’ voting rights in respect of a small number of shares on a last in first out basis, in accordance with existing provisions of our articles of association.
“For the period of any such suspension, the relevant shareholders would not be permitted to attend, speak or vote at shareholder meetings in respect of the shares subject to the suspension.
“In due course, and to help facilitate the contingency plan (if required), the Company expects that it will set a permitted maximum of non-EU ownership in accordance with the existing provisions of our Articles.
“To ensure there is some headroom for the Company to maintain compliance with the EU ownership and control requirements, the permitted maximum will likely be set such that the contingency plan would take effect if EU ownership remains or falls below 50.5% (and therefore non-EU ownership remains above 49.5%).
“Upon activating our contingency plan (if required), the suspension of shareholders’ voting rights would apply to non-EU shareholders, on a last in first out basis, to the extent required to maintain compliance with the EU ownership and control requirements, and to all shares subsequently acquired by non-EU (including UK) nationals. The suspension would apply, to the extent required, until EU (excluding UK) ownership reaches the 50.5% level or above.
“Whilst the new EU regulations make it unlikely that the company will be required to take any immediate action to implement the permitted maximum or contingency plan in connection with Brexit, the timing of implementation (if required) will depend on the outcome of Brexit negotiations.”
In the longer-term, easyJet would likely transfer a minimum of 50 per cent ownership to European parties.