easyJet PLC (LON:EZJ) has said it “stands ready” to activate contingency plans to suspend the voting rights of UK and other non-EU shareholders in order to continue operating in the bloc in case of a ‘no deal’ Brexit.
In an update, the FTSE 100 budget carrier said it had now upped its EU ownership to 49.92%, just shy of the 50% threshold that it would need to keep operating inside the EU post-Brexit.
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The threshold relates to EU rules that stipulate an airline must be more than 50% owned by EU-based shareholders if it wants to keep operating within the bloc.
easyJet previously upped its EU ownership to 49% in February and has set up separate operating companies in Austria and the UK and ring-fenced them to protect operations, as well as transferring over 1,000 pilots and re-issuing 3,300 cabin crew licences.
READ: easyJet ups European ownership to 49% in preparation for Brexit
If the UK does leave without a deal, easyJet said it planned to suspend voting rights for “a small number of shares” in order to continue meeting its EU ownership requirements, meaning some shareholders would not be permitted to attend, speak or vote at meetings.
The airline also said that it expects to set a maximum threshold for non-EU ownership, most likely at 49.5%, with EU ownership above 50.5%.
If the level of EU ownership dropped below this, easyJet said it retained the right to force non-EU shareholders to sell their holdings to EU nationals.
easyJet is not the only airline to have raised red flags over the restriction of UK shareholders in the case of a ‘no deal’ Brexit, with International Consolidated Airlines Group (LON:IAG) and Ryanair Holdings PLC (LON:RYA) also saying they would cap or restrict the voting powers of non-EU investors in order to keep flying within the bloc.
The chance of a ‘no deal’ Brexit seemed to spike on Thursday evening after Prime Minister Theresa May was given a short extension by the EU to try and get her withdrawal agreement passed through Parliament, with the UK’s expected departure date now postponed to 22 May if the agreement was approved but reduced to a much tighter window of 12 April if it was not.
In a note to clients, analysts at broker Liberum said any immediate action from easyJet was “unlikely” given the “slipping” on the Brexit date and the EU giving airlines a 6-month grace period to comply with the regulations.
In early deals on Friday, easyJet shares ticked up 1.2% to 1,189.5p.