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Wizz Air CEO says vote curbs meet post-Brexit rules

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LONDON - The boss of Wizz Air said stripping voting rights from the majority of his investors was a sustainable way to meet post-Brexit rules, even as a leading sector analyst said it may not be enough unless there was a regulatory change. Most Wizz Air shareholders are non-EU residents.

Under European Union rules, EU airlines must be owned and controlled by nationals from the bloc or aligned European Economic Area (EEA) countries, or lose their licences.

UK investors were deemed non-EU from Jan. 1, meaning some airline groups must act to stay compliant.

Those most affected - Wizz, Ryanair easyJet and British Airways-owner IAG - have restricted voting rights or introduced other measures, such as board changes, to try to meet the EU control requirement.

"Personally I think this is a sustainable proposition," said Wizz CEO Jozsef Varadi, when asked in an interview about the airline's decision to disenfanchise the owners of about 60% of its shares.

But HSBC analyst Andrew Lobbenberg said in a note on Thursday the issue was unresolved and forced share disposals or corporate restructurings may be needed without a subsequent deal to loosen ownership rules.

"These moves defend the idea of EU control, but leave EU ownership uncertain. We judge these moves to be temporary holding measures," he said. Ryanair boss Michael O'Leary predicted late last year that Brexit could force a breakup of IAG.

The December post-Brexit EU-UK aviation deal does not allow flexible treatment of UK shareholders, although it acknowledges "potential benefits of the continued liberalisation of ownership and control" and pledges to review the rules this year.

Some airlines have expressed hope a rule change will allow them to lift the share restrictions and still retain EU operating licences. Without such a change, the current compliance efforts could face legal challenges from competitors.

About 80% of Wizz Air shareholders are non-EU, but Varadi said he expected some to be reclassified as EU investors over time as they transfer holdings between investment vehicles. "Irrespective of disenfranchisement, we have an attractive stock to offer to the market no matter who the investor is," Varadi said.
© Reuters, | Image: Airbus | 11/01/2021 07:37

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