Ryanair warns UK investors will be forced to sell shares

Airlines updates

Ryanair has warned it will begin selling the shares of some of its UK investors after they broke its ownership rules that shifted after Brexit.

The Irish carrier said on Wednesday it has appointed a broker to begin the forced sale of around 1m shares purchased this year by non-EU nationals, mainly UK nationals or institutions that bought the stock on their behalf.

The airline has been forced into the drastic action by the UK’s departure from the Single Market at the start of the year. EU rules demand that airlines based in the bloc are majority owned and controlled by nationals of the bloc, Switzerland, Norway, Iceland or Liechtenstein. This enables airlines to fly freely between two destinations within EU borders.

For nearly 20 years Ryanair has barred non-EU individuals from buying shares in the company, and reiterated its stance in the run-up to Britain’s departure. Institutions and individuals in the the UK have been prevented from buying new shares since the start of the year.

UK shareholders who had held stock before January have been able to keep their holdings but are barred from attending or voting at annual meetings. The total held by UK investors amounts to a fraction of the more than 1.1bn Ryanair shares available on the market.

Ryanair warned investors in February to begin disposing of their stock to comply with its rules. The airline said on Wednesday that the appointed broker will sell their shares in the market over the coming weeks, “independently of, and uninfluenced by, the company”.

“The net proceeds of such sale(s) will be transmitted to the relevant investors in due course,” it added. It also said it could begin further forced share sales “from time to time” in the future, without warning.

The UK’s departure, and the lateness of the UK-EU trade agreement, left airlines scrambling to ensure they complied with the changing standards. Wizz Air also disenfranchised UK shareholders.

The UK and EU agreed in December’s trading agreement to explore liberalising airline ownership rules to ease the burden on the industry, but are yet to announce any changes.

The ownership rules have been one of the most significant hurdles the aviation industry faced since Brexit, which has also thrown up operational challenges for larger players such as Ryanair.

Smaller aviation companies have complained that red tape including the need to apply for permits for non-scheduled flights have hit their businesses just as they try to recover from Covid.

Ryanair did not disclose whether the forced sales applied to institutional or individual investors, but one analyst said it would be a surprise if institutional investors had missed or ignored the new ownership rules.

Investors from outside the EU are still able to trade Ryanair shares on Nasdaq, as global depositary receipts.

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