Budget airlines Ryanair (RYA) and Wizz Air (WIZZ) will strip UK investors of their voting rights once the Brexit transition period ends, in order to stay in line with EU ownership rules.
In a statement Irish airline Ryanair said UK shareholders will not be required to sell their shares, but such shareholders will lose the right to attend, speak or vote at any general meeting of the company from 1 January 2021.
UK investors also won't be able to buy Ryanair shares from 1 January, as the company's long-held prohibition on all non-EU nationals buying shares - dating back to 5 February 2002 - will now apply to them.
Wizz Air, based in Hungary, also said from 1 January that UK shareholders will no longer be treated as ‘qualifying nationals’ and will lose the right to attend or vote at general meetings.
Both firms have enacted their long-held plans to ensure they retain their EU flying rights post-Brexit.
EU rules state that airlines with operating licenses in the bloc - which also includes the likes of EasyJet (EZJ) and British Airways owner International Consolidated Airlines (IAG) - must be majority owned by EU nationals, or those of Iceland, Lichtenstein, Norway or Switzerland. This allows them to operate routes between two EU countries.
So from 1 January, UK nationals will be treated as non-EU nationals and their shares will no longer count towards that ownership requirement.
FUND FIRMS AFFECTED
The move could affect a number of fund groups who hold stakes in Ryanair and Wizz Air, particularly Baillie Gifford, which is the second-largest investor in Ryanair. Its Monks (MNKS) investment trust recently added to its stake in the airline.
Other fund groups affected include Schroders, Legal & General and Jupiter.
UK-based EasyJet is less affected but in a statement last week said it would suspend the voting rights of some shareholders if needed to get its EU shareholder base above 50%, and would do this on a ‘last in, first out’ basis, i.e. shares most recently acquired by affected investors would have voting rights suspended first.
Anglo-Spanish IAG, which also owns Irish flag carrier Aer Lingus and Spain’s national airline Iberia, has long been highlighted by analysts as the airline facing the most challenges with its ownership structure after Brexit, but the company has not made any comment on the matter.
