Ryanair boss Michael O’Leary has today cast aspersions on the future of the IAG group. The Spanish company, which owns British Airways, is facing a future where Britain will no longer be part of the EU. Under EU rules, airlines can lose their licenses to operate should they be more than 50% owned by non-EU nationals. O’Leary says this makes it impossible for IAG to continue owning British Airways and predicts a post-Brexit break-up of the group.
Brexit break up for BA?
Nothing says ‘European’ quite like the IAG group. The Spanish aviation group is headquartered in the UK and is listed on both the Madrid and London stock exchanges. It owns British Airways, Iberia, and Irish airline Aer Lingus, among others. The group is set to face some challenging times as the UK prepares to crash out of Europe with no deal in place.
Speaking at today’s Eurocontrol Hardtalk session, Ryanair CEO Michael O’Leary predicted a post-Brexit break up in the IAG group. In particular, he said he expected to see some problems with the ownership of British Airways. O’Leary commented,
“I do think the French and Germans are going to be very strong on trying to upset the BA ownership within IAG. I cannot see how IAG can survive as an owner of BA in a post-Brexit environment. Therefore, I think it is likely that there would be some break-up of the IAG group or BA will have to step outside of the IAG group.”
O’Leary is referring to the EU rules that insist airlines must be at least 50% owned by EU nationals. Not being owned by such nationals would risk the airline losing its license. IAG previously said that 39.5% of the company was owned by non-EU nationals but has not disclosed how many of these shareholders reside in the UK. Once UK nationals are considered ‘non-EU’, this could push the proportion over the maximum 50%.
IAG has dismissed the notion that it is at risk on December 31st. A spokesperson told Reuters today that,
“We are confident that we will comply with the EU and the UK ownership and control rules post-Brexit transition period.”
Stay informed: Sign up for our daily aviation news digest.
A tragedy for the consumer
In terms of the wider impacts of Brexit on European aviation, O’Leary doesn’t believe there will be a huge change. He said that, while there will be some issues regarding ease of access for Brits traveling abroad, he doesn’t foresee it taking away the urge to go on holiday. He commented,
“I don’t think it’ll affect air travel that much. People will still move between Europe and the UK.
“It will add some regulatory challenges for people traveling to and from the UK. I think the millions of UK consumers who visit Europe will be dismayed to find themselves in the non-EU passport control section. But it is what it is. It’s a tragedy.”
For UK holidaymakers, Brexit could make travel into Europe more time consuming, more challenging, and potentially more expensive. Whether that serves to have an impact on the aviation industry in general remains to be seen.