Yahoo Finance Germany and France will use post-Brexit rules to force BA spin-off, says Michael O’Leary
Germany and France will capitalise on post-Brexit rules to force British Airways to be spun-off as a standalone airline, the chief executive of Ryanair has claimed.
Michael O’Leary said that politicians and lobbyists in the Eurozone’s two biggest economies are “gunning for” IAG, the FTSE 100 airlines group that owns BA
After a hiatus of more than a year, Brussels officials are now reviewing how so-called ownership and control regulations will be applied.
Prior to Brexit, airlines operating within the EU needed to demonstrate that they were “owned and controlled” from member states. The rules were suspended after the UK left the European bloc, with both sides agreeing to talks over a new post-Brexit regime.
Brexit means that UK shareholders are no longer included in the EU ownership count. With a quarter of BA parent IAG owned by Qatar, it means that the UK flag carrier could be in breach of the rules when they are brought back into force.
The rules are complicated and open to interpretation, however. IAG insists it is already compliant by virtue of its Madrid-based board structure.
Brussels officials wrote to airlines prior to Christmas last year, asking them about how they would comply with the rules.
Mr O’Leary said that the reimposition of the rules, previously scheduled for later this month, but likely delayed by the Russian invasion of Ukraine, would provide Air France and Lufthansa the chance to weaken the position of IAG, the FTSE 100 company whose airlines also include Iberia, Aer Lingus and Vueling.
He said: “IAG is the one that the French and Germans are really gunning for. There is clearly a bashing up going on there at the European Commission, with the French and Germans looking for the break-up of IAG.
“The Spanish are trying to hold it all together… But generally at European level, whatever the French and Germans want, they get.
“I think it is inevitable that BA will be forced out of IAG. IAG will become a Spanish/Irish group.”
Last month, leading aviation analyst Andrew Lobbenberg disagreed with IAG’s assertion that it will satisfy the ownership and control rules.
The HSBC analyst said: “National interests are ever present in the airline industry, which is often the home for mercantilist policy making. The commercial interests of Air France-KLM and Lufthansa would unquestionably be supported by adding new strategic challenges to IAG.
“The company could consider demerging its non-EU business of BA into a separate non-EU owned company, leaving the legacy business EU owned.”
A spokesman for IAG said: “We comply with the EU ownership and control regulation. Our EU airlines’ remedial plans were approved by the national regulators in Spain and Ireland, and the IAG Board has a majority of independent EU non-executive directors.”
Meanwhile, Mr O’Leary reasserted his belief that budget competitors Wizz Air and easyJet would either merge or be swallowed up by a flag carrier.
He said: “I do not believe that Wizz and easyJet will survive as independent airlines. I think that they will either merge together and become one bigger, larger Airbus operator across Europe – or Wizz will merge with somebody like Lufthansa, and easyJet will get taken out by BA or Air France.”
