EasyJet Starts New European Airline to Avoid Brexit FalloutBy
Subsidiary will allow carrier to keep flight rights within EU
Company to shift 110 of its planes to new Austrian division
EasyJet Plc will create a new airline based in Vienna that will shield its routes within the European Union against any fallout from Britain’s negotiations to exit the bloc.
The approval process for an air operator certificate that has been filed with Austria’s aviation regulator is “now well advanced,” with clearance expected in the near future, Luton, England-based carrier said in a statement Friday.
The new airline, dubbed EasyJet Europe, will form one of three owned and operated by the company, alongside its U.K. and Swiss operations. EasyJet will shift registrations for 110 of its planes to the new unit, representing about 42 percent of its fleet.
EasyJet is seeking to safeguard rights to fly between destinations in EU countries after Brexit takes effect, in the event the U.K. fails to reach an agreement on retaining access for its airlines. About 30 percent of EasyJet’s passengers fly between EU airports outside of the U.K., with about half its total customers originating from within the bloc, making it one of the carriers most exposed to policy changes from Brexit.
The company began the search for options for a new airline days after the U.K.’s Brexit referendum in June 2016, when the vote to leave prompted a one-third drop in EasyJet’s market value. The move only protects EasyJet’s intra-European routes. The carrier is still pushing for authorities to reach a deal allowing U.K. and mainland-Europe airlines to operate freely across the tighter border after March 2019, when Brexit is set to take effect.
Rival Ryanair Holdings Plc, British Airways owner IAG SA and U.S. trade body Airlines for America said this week at a European Parliament hearing that Brexit could disrupt all international flights serving the U.K. Ryanair Chief Executive Officer Michael O’Leary cautioned that the Irish discounter would start canceling flights six months ahead of time if a deal hasn’t been reached.
EasyJet will remain listed on the London Stock Exchange and keep its headquarters in the U.K., while meeting EU ownership restrictions that require airlines be majority owned by EU nationals. Investors from the other 27 EU countries currently hold “close to half” of EasyJet’s stock, including the 33 percent owned by founder Stelios Haji-Ioannou and his family, who are citizens of Cyprus, the airline said.
“In any deal that we strike with the EU, we want to make sure it’s a good deal for everyone, including businesses that operate here,” Alison Donnelly, a spokeswoman for the U.K. prime minister, said Friday at a briefing, adding that the Austrian registration is “a commercial decision for EasyJet.”
— With assistance by Thomas Penny