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BREXIT WARNING: British Airways owner's no-deal plans DO NOT WORK, says Brussels

January 9, 2019 10:01 AM
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BREXIT WARNING: British Airways owner's no-deal plans DO NOT WORK, says Brussels

EUROPEAN Union officials have warned British Airways’ owner IAG that plans to keep planes flying in the event of a no-deal Brexit do not work and risk seriously impacting the firm.

IAG, which also owns Spanish carrier Iberia, is yet to carry out changes recommended by Brussels in order to navigate the challenges of Brexit which could see their planes all grounded. European airlines will have to prove they are more than 50 percent EU-owned and controlled in order to retain their flying rights in and around the bloc. IAG is hoping to maintain both UK and EU operating rights by proving both of its individual airlines are domestically owned through a number of trusts and companies, instead of being viewed as the wider group, which isn’t EU-majority owned.

When BA and Iberia were merged by IAG, the firm separated voting rights from financial rights within the subsidiaries.

Each airline had their nationality and flying rights are preserved by ensuring a majority of voting rights are held within their home country. And the holding firm IAG maintans most of the economic rights.

A senior EU official said: “For IAG, I can’t see how it can be a solution.”

IAG’s plan depends on whether Brussels will accept that, if a local body owns the voting rights while a parent company is the economic beneficiary, this fulfils the bloc's "ownership and control criteria".

If the EU rejects the plans, IAG will have to buy out many of its non-EU shareholders or face losing its EU flying rights in the event of a no-deal Brexit.

In a statement, an IAG spokesman said: "We are confident that we will comply with the EU and UK ownership and control rules post-Brexit."

Simon Phippard of law firm Bird & Bird said: "Without using dual nationals, it seems difficult for a single parent company to be majority owned and effectively controlled by both British and EU27 nationals."

Source: express.co.uk

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