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IAG, the airline group that owns Iberia and British Airways, could see its flying rights curtailed in the event of a no-deal Brexit, according to a story in the Financial Times.
Although both sides have moved to mitigate some of the potential chaos surrounding the UK leaving the European Union on March 29 without a formal agreement, corporate ownership remains something of a sticking point.
In order to fly freely in and around Europe, Europeans need to own more than 50 percent of a particular airline but when the UK leaves, British shareholders will no longer count towards that total.
IAG’s potential route around this is an ownership structure where domestic bodies control half of the voting rights in each of its airlines, while IAG controls most of the economic rights.
“For IAG, I can’t see how it can be a solution,” a senior EU official told the FT.
IAG CEO Willie Walsh has always been confident that nothing will change for the airline group post-Brexit.
In October, Walsh told analysts that he still believed the two sides would come to an agreement.
“[W]e continue to believe and strongly believe that the arrangements post Brexit will facilitate the continuing operation of the airline industry as we know it,” he said.
“And we’re fully expecting a comprehensive agreement to be reached between the U.K. and the EU. If there isn’t, you’ve heard the language being used by both parties that they would expect a bare-bones agreement to apply, which I think will be sufficient for most.”
In a series of no-deal planning papers published in November, the European Commission — the EU’s executive arm —said flights between the UK and EU could continue but reiterated the requirement that “air carriers must be majority-owned and controlled by EU legal or natural persons,” adding “it is essential for companies that wish to be recognized as EU air carriers to take all the necessary measures to ensure that they meet this requirement on 30 March 2019.”
In a statement IAG said: “We are confident that we will comply with the EU and the UK ownership and control rules post-Brexit.”
Skift also asked the European Commission about IAG’s ownership structure in the event of a no-deal Brexit.
A spokesperson said: “Iberia is currently EU majority owned and effectively controlled, and therefore, holds a valid EU operating licence.
“As explained in our notice to stakeholders regarding air transport published in 2018, in order to maintain the validity of an operating licence – and the freedom to provide air services including in a no-deal scenario – a company must be majority EU owned and controlled.
“Competent licensing authorities in member states are responsible for reviewing compliance with the applicable requirements each time a potential problem has been suspected. In case of a change in one or more elements affecting the legal situation of an EU air carrier, these authorities shall decide whether the operating license needs to be resubmitted for approval.”