October 24, 2020

The Iberia and Vueling group negotiates with the Government and the EU to avoid a Brexit coup | Economy

The Iberia and Vueling group negotiates with the Government and the EU to avoid a Brexit coup | Economy

The Brexit approaches and the uncertainty regarding the next day is still absolute. Without an agreement that will clear how relations between the United Kingdom and the European Union will be from March 2019, the air group to which Iberia and Vueling belong, IAG, negotiates against the clock to prevent the divorce from impacting their business. The dome of this group, with headquarters in Spain but controlled by British capital, is in talks with the Government and the European Commission to ensure that IAG continues to be considered a company located in the EU and, therefore, regulated by the rules Community

From the beginning of the Brexit, the air sector was considered a priority. Aware that the uncertainties about Iberia and Vueling, the two Spanish firms of IAG, hurt both companies – and the entire tourism sector – Spain was one of the countries that most urged to save this stumbling block in Brussels. Then few politicians contemplated the hypothesis of a Brexit without agreement. Neither IAG was mobilized in excess to clarify its status before a separation that would leave it as a company belonging to a third country. But as the date approached, the nervousness has been spreading and the group, particularly through Iberia, has entered into conversations with the Executive and with Brussels, who will finally have to endorse the group's nationality. This is confirmed by EL PAÍS, three governmental and one community sources.

The management of IAG and the Ministry of Development have exchanged several letters in which this strategy has been broken down. One of them, dated October 1 and addressed to the group's president, Antonio Vázquez, confirms the contacts with the European Commission to "address the incidence of Brexit in the ownership and control of the IAG group airlines located in Spain" . According to that text, the Government has transferred to Brussels the group's efforts to comply with the European regulation that sets the criteria for an airline or group to be considered community: that has its main business headquarters in a member country and that has majority ownership or control of a person or entity based in the EU. Brussels has doubts that IAG meets this latter condition. The company defends that yes.

Although all the sources consulted trust that there is agreement between the EU and the United Kingdom and that the entire air sector is protected from the onslaught of Brexit, the risks are still high. The Spanish authorities urge to contemplate them. "It should not be forgotten that the companies of the IAG group must, like any other Community airline, take the necessary steps to ensure compliance with the regulations after the withdrawal of the United Kingdom from the EU and thus guarantee the maintenance of its operating license. ", Warns the Development letter.

As part of the single European market, British airlines can operate in the rest of the block without requesting prior permits. Also in 17 other non-EU countries thanks to the agreements signed by the EU. Among them is the United States, a crucial market, which is covered by the European open skies agreement. When the Community legislation lapses, the British authorities should subscribe individually those permits with the whole EU and with those 17 countries, among which are also Canada and Morocco. And airlines dependent on London regulation would be subject to signing or not signing such agreements.

Exceptional situation

Fomento slips in his letter that IAG did not contemplate in the beginning the risks of becoming a group linked to a third country after the British divorce"The Commission received this news with satisfaction, as it was not aware that IAG was being active enough to address the risks posed by this exceptional situation." The CEO of the firm, Willie Walsh, disdained the uncertainty a few months ago. Asked by the newspaper Financial Times on how he was going to demonstrate to Brussels that the matrix should be considered European after Brexit, he replied: "It's magic." A community source familiar with these works ensures that the group remained "in a state of denial" until recently.

The group continues to express confidence that an ambitious air transport agreement will be reached within the framework of Brexit. "Even if there is no agreement, both the EU and the United Kingdom have said they will apply an agreement that allows flights to continue," says a spokeswoman for IAG. On the three-way talks with the Government and the European Commission, he responds: "IAG has had a great deal of involvement with all relevant regulators and governments and will continue to do so."

The group refuses to give clues as to what it is doing to prove that it is Spanish. "We are confident that we will comply with the European and British rules of ownership and control after Brexit," he simply emphasizes. That plan to prove it will be presented in the coming days, according to government sources. What the Executive suggested at first was that changes would be applied to the corporate structure so that European control prevailed. IAG must communicate to Brussels the precise fit that it has in mind.

The merger with British shielded the 'EU passport'

When the IAG group had not even started to walk, shielding the company from losing the EU passport was a priority. At the end of 2010, IAG was just an empty shell without activity where Iberia and British Airways were going to be incorporated, and in the statutes of the mercantile registry they were in charge of devising an unprecedented system to avoid opas and protect the community traffic and landing rights . The objective was for the company to always have at least 50% capital in the hands of EU citizens, so as not to lose the EU passport. So he dusted off a precept included in the accompanying law of the 2001 State Budget and brought it to its maximum expression. According to the statutes of IAG, available on its website, it is still valid. IAG establishes that its shares are registered and that the nationality of the investors must be stated. All purchases of packages over 0.25% must be notified to the company. It created four shareholder registers (Spanish, British, EU and non-EU). And the possibility of setting the limit of shares in non-community hands was set at 40%. What nobody thought then was that the British could end up belonging to that group.


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