Ryanair and Wizz Air are to take away the voting rights of UK shareholders as a result of Britain’s exit from the EU.
The airlines are acting to comply with EU ownership rules once Britain leaves the bloc on Friday.
Ryanair on Tuesday said it had to “take steps” to ensure it would remain majority EU-owned and controlled to comply with European regulations.
The Irish airline said in a stock market announcement it would issue restricted shares to non-EU investors, specifying that holders were not entitled to speak or vote at any general meeting.
Speaking earlier this month, Ryanair chief executive Michael O’Leary told the Financial Times the airline would be about 60 per cent owned by non-EU shareholders, once the UK was excluded from the bloc.
Wizz issued a similar stock market announcement. The Hungarian airline expects to serve about 60 per cent of its investor base with restricted share notices. Without the action, the airline would have been 80 per cent owned by non-EU nationals from January 1.
Both airlines are enacting long-held plans to ensure they maintain their flying rights after Brexit.
EU regulations demand that airlines with EU operating licences, including BA-owner IAG and easyJet, are majority owned and controlled by nationals of the bloc, Switzerland, Norway, Iceland or Liechtenstein.
This enables airlines to fly between two destinations within EU borders.
From January 1, UK nationals will be treated as non-EU and their shares will no longer count towards that ownership requirement.
While potentially problematic for UK shareholders, the arrangement will not present immediate operational issues, analysts say.
UK investors that may be affected include Baillie Gifford, which is the second-biggest investor in Ryanair, and Wizz top-20 investors Jupiter, Legal & General Investment Management and Schroders, according to Refinitiv’s latest filings.
The EU and the UK will look at “options for reciprocal liberalisation” of the rules within the next year, which Baillie Gifford said “potentially insulates carriers from challenges based on their ownership structure”.
Daniel Roeska, an analyst at Bernstein, said airlines with large UK ownership will either need to wait for a favourable agreement on airline ownership rights or design alternative ownership and holding structures to “safeguard EU-nationality of individual airlines”.
Analysts have long said that IAG, the owner of airlines including BA, Iberia and Aer Lingus, faces the most complex problems on ownership after Brexit. The group has never disclosed how many of its shareholders are EU nationals when the UK is excluded.
UK-based easyJet last week said it would suspend voting rights of some investors if necessary to raise its EU voting base above 50 per cent from 47 per cent, excluding the UK.
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