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Presentation :
In this assignment we are concerned about Ryanair and the Brexit. However, this question
could be asked more broadly at the level of aviation in genera. How does Ryanair handle this
change ? What are the difficulties and ways of getting around them ? Can this airline get out
of Brexit unscathed ?

Ryanair is an Irish airline founded in 1984, headquartered in Dublin with its primary
operational bases at Dublin and London Stansted airports. In 2016, Ryanair was the largest
European budget airline by scheduled passengers flown and carried more international
passengers than any other airline.

Ryanair carries more than 154 million passengers a year on more than 2,400 daily flights. Its
route network serves 40 countries in Europe, North Africa (Morocco), and the Middle East
(Israel, Lebanon and Jordan).

Plan :
1. Presentation (Lisa and Alice)
2. Shareholders (Alice)
3. Brexit's aviation industry issues (Louise)
4. Competitors in front of the Brexit (Lucie)
5. Tourism (Lisa)
6. Companies Owned by Ryanair (Lisa)
7. Sources

Shareholders :
A shareholder can be a person, company, or organization that holds stock(s) in a given
company. A shareholder must own a minimum of one share in a company’s stock or mutual
fund to make them a partial owner. Shareholders typically receive declared dividends if the
company does well and succeeds.

Being a shareholder isn’t all just about receiving profits, as it also includes other
responsibilities. For example:
- Brainstorming and deciding the powers they will bestow upon the company’s directors,
including appointing and removing them from office.
- Deciding on how much the directors receive for their salary. The practice is very tricky
because stockholders must make sure that the amount they will give will compensate for the
expenses and cost of living in the city where the director lives, without compromising the
company’s coffers.
- Making decisions on instances the directors have no power over, including making changes
to the company’s constitution.

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- Checking and making approvals of the financial statements of the company.

The main shareholders of Ryanair are Capital Research and Management Company (16.70%),
Mr. Baillie Gifford (5.70%), BlackRock (5.10%) & Michael O'Leary (3.70%).

The Brexit being pronounced, shareholders have many questions about their future.
European law requires Ryanair to be majority controlled by EU nationals.
Therefore, if there is no-deal the shareholders are likely to become non-EU nationals, which
means that Ryanair will be majority controlled by non-EU nationals. However, UK
shareholders will not be obliged to sell their shares, even if the Board has the right to do
this. But if they don’t sell their shares, they will no longer have the right to vote because
they are non-European. If they decide to sell their shares, they will have to sell them only to
Europeans. This means that Ryanair in case of a non-deal will be controlled by Europeans.
British still allowed to buy ADRs but not ordinary shares. (ADR mean American Depositary
Receipt; it is a negotiable certificate issued by a U-S depository bank representing a specified
number of shares investment in a foreign company's stock.). British will not be able to
convert its ordinary shares into ADRs in order to avoid these problems and recover all
rights to its shares. Ryanair will not create any new classes of shares; the only existing ones
are common shares. Shareholders with ADRs will not be able to vote by mail because voting
on the ADRs will be prohibited until EU ownership has reached a majority.

If Brexit goes well, the EU and UK government are in agreement, things will happen very
differently and more simply.
This means that all shareholders will still have the right to vote on their shares, the finality of
the conditions is not yet defined, it will depend on a deal between the U-K and the EU.

To conclude in the event of a non-deal with the EU, Ryanair's UK shareholders will no
longer be entitled to vote and will be prohibited from purchasing ordinary shares. If there is
a deal with the EU, Ryanair's UK shareholders will still have the right to vote, and the right
to buy back ordinary shares.

Brexit's aviation industry issues :

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The aim of aviation industry is to move freely through different areas, but Brexit will isolate
the UK and as a result isolate Ireland because the UK is the largest aviation market in the
EU. Moreover, Air transport is important to Ireland, and the Dublin-London route is
Europe’s busiest international route. Like many other services, air transport is closely
related to demand and general economic activity. Then, the aviation sector plays an
important role in modern economies, in servicing business, trade and tourism. In the case of
Ireland, the aviation sector provides an even more important role in having to service an
island trading nation. The significance of the aviation sector was well described by Kevin
Toland, CEO, Dublin Airport Authority in a statement to a Seanad Committee: “As an island
nation, Ireland’s connectivity and accessibility is a key enabler for economic growth –
without it, tourism cannot thrive, Ireland would be an unattractive location for business and
the economy would not prosper”. However, as a positive consequence we noticed that,
with possible limitations on flying rights between the UK and Europe, it is possible that
Dublin will prove a more attractive gateway to Europe for the lucrative North American
aviation market, risking Heathrow's coveted spot. And the possibility that airline Head-
quarter moves to Ireland.

It is important to say that the aviation industry is influenced by international trade and
politics founded by the different organizations above. Moreover, the future relationships
after the UK’ exit with the EU remain unclear. However, there are three potential options
for the aviation industry post-Brexit:

- No agreement between the UK and the EU.

- Bi-lateral trade agreement between the UK and the EU
- UK membership of the European Common Aviation Area

Firstly, we will see what is the European Common Aviation Area (ECAA). The European
Common Aviation Area covers 36 countries (and integrates Switzerland and Norway which
are not part of the EU). And extends the freedoms of the liberalized aviation market to each
of its members. The ECAA treaty is based on the principles of free market access, freedom
of establishment, equal conditions of competition, and common rules including in the areas
of safety, security, air traffic management, social and environment.

In other word, it is a single aviation market and free movement of people is a key
requirement for ECAA membership. it is for these main reasons that favorable Brexit
members wish to leave the EU.

Norway and Switzerland have not impact input into the rules, that they have to follow to be
part of a single market. Then, this scenario is that UK will have faced today. In fact, they have
to follow all the rules of the aviation industry, but they don’t have any impact only if the UK
remains a member of the ECAA. If on the contrary the UK don’t want to follow these rules,
this would mean that visa requirements for customers or passengers, with many controls in
borders. As a result, it will reduce the number of passengers flying and have a negative
impact on the aviation economy. The best situation is that UK would create bilateral
agreement (with the United States for example at the moment).

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But UK based airlines company will probably want to be based in other European country to
permits easy movement for example in Dublin, so possible airline head-quarter moves to
Ireland.

There is a delay in this hard Brexit until end of 2020, because the Brexit withdrawal
agreement says that most EU rules continues to be valid for UK during 2020. However, EU
has approved regulations in order to secure air traffic between UK and EU plus European
Economic Area. Also, the British government has taken various steps to ensure the
continuation of air travel, such as an open skies agreement with the United States of
America.

The European Common Aviation Area is controlled by the European Aviation Safety Agency
(EASA) and the rules are enforced by the European Court of Justice (ECJ). If the UK leaves
the ECAA, British airlines will no longer be regulated by the EASA and instead by the UK
Civil Aviation Authority (CAA). The ECAA rules require airlines to be majority EU owned
to offer intra-EU flights. With the UK outside the EU, a number of airlines will no longer be
majority EU owned. If affected airlines do not change their current ownership structure,
they risk losing their rights to operate intra-EU flights if the UK stays out of the ECAA.
Airlines are already taking steps to ensure they can continue their intra-EU operations after
Brexit, including considerations about ownership structures to maintain the rights to
operate flights within the EU.

However, if affected airlines changed their ownership structure to remain an EU carrier,

they may lose access to the intra-UK market since the UK would be unlikely to allow EU
carriers to operate intra-UK flights without reciprocity from the EU.

Secondly, we noticed that the Brexit will have negative impacts on the Irish economy in all
scenarios analyzed. In fact, Brexit will have negative impacts on Irish trade with adverse
knock-on effects on Irish production and ultimately Irish GDP. Brexit will also impact Irish
wages negatively for all skill groups. In the WTO scenario, the results show that real wages
will be 8.7 per cent below the 2030 non-Brexit baseline level for low skilled workers, while
the equivalent negative effect for high skilled workers will be 6.5 per cent. As a result, it will
have consequences on purchasing power to Irish people, then we will see a decrease on
tourist flights.

Finally, we can talk about emissions standards regulation; this can be expensive as airlines
generally are required to buy allowances. Removal of these emission standards, however,
may impact on UK airlines' ability to fly into Europe and reducing pollution protections may
be politically unpopular because they don’t respect European emission regulation

Competitors in front of the Brexit :

First of all, Ryanair is already known because it is a low cost company. People use it for the
low prices and not really for have a good services like a luxury service but that not the only
company who broke the price. The first Ryanair’s competitor is the company EasyJet who
sell as well plane journey for a low prices. This English company will be not in the same
situation as Ryanair if a no deal before the Brexit is decide. We know that Ryanair have a
problem with her investors but she stays a European company and she will can continue to
fly between all the Europeans countries. But, EasyJet will need of a special deal if she wants

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to continue to fly between Europeans countries but also if she wants to do fly between a
European country and another country who are not in the European union. So with this
information, we can say if we haven’t a deal with England before the Brexit for the fly, that
can be bad for Ryanair but not dramatic, but instead that can be something who will kill the
EasyJet company business. Indirectly that can be a good thing for Ryanair because her
principal competitor won’t have the same facilities as Ryanair. Ryanair can will be having a
better place on the market because she will can have the part of the market of EasyJet.

EasyJet have plan if after the Brexit they haven’t a deal, she had created a subsidiary in
Austria for continue to fly in Europe.

Before, Ryanair and EasyJet haven’t the same strategy for do plane tickets for a low price.
Ryanair had chosen to just use the secondary airport for had a lower airport taxes and that
permit to Ryanair to propose a service low cost. EasyJet deserve primary airport but it’s
simpler for a lot of traveler to choose this option, it is for that this company is more use in
some country and it’s one of the reason why EasyJet is one of the first competitor of
Ryanair. Ryanair purpose less destination and country than her concurrent but the company
despite this Ryanair is the leader of the low cost company. But there is a competition
between the different company for always have a price all time more down. For broke
prices, companies do a lots of compromises, sometimes that concession can have an impact.
This companies do concession on baggage, snack send in the plane, services like for cancel
or change a date for a travel. The biggest compromise is about the employees of the
company. With the prices who going to be always more down, this companies have done an
expansion quickly and were passed before companies big. But some of concession are
discuss because that talk about employees’ condition of work. The low cost is also
applicated for the employees: Ryanair for example, is known for be a company with bad
work condition what which led to numerous strikes by employees. That for example
prohibited for an employee to put their phone in charge in a plane because that cost
electricity. They need to use rely on crank generators to recharge their mobile phones. The
biggest problem is about the pace of work, a lots of peoples done 13 hours of services in
one day and take six different planes. It’s a lot of pressure and a rhythm has the limit of legal.
For the EasyJet company, the pace of crank can look like to the air France pace of crank but
it’s not really the same: during a flight, 4 employees are in the plane for take care of the
traveler. At the moment of landing the time is short because employees need to get the
passengers out and to clean all the plane in 30 minutes, before the departures of the new fly.
In general one employee of EasyJet does 4 flights by days and on average 70 hours of flight
by month.

So, this two aerial companies will have different problems if they haven’t a deal before the
Brexit but that problems could be solved easily. We have also seen some differences
between the both companies and how they done low cost prices and problems with their
employees’ conditions.

Tourism :
The UK’s vote to leave the EU have an impact on the Irish tourism sector in a lot of
different side. The most important is a fall in UK visitors to Ireland.

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The first thing is the British tourism, the weakening of the pound is a problem which will
affect Ireland. Before all the discussion about the Brexit, the exchange rate of the pound to
the euro was 1£ for 1,31€. After signing in 2020, the pound has dropped to 1£ for 1,12€.
This change diminishes the purchasing power of the British people, in fact they will be less
able to travel. These consequences will be bad for tourism in Europe on the part of the
British.

The British represent 49% of the total number of tourists in Ireland, its 4,5 millions of British
tourists. The main mode of transport to Ireland is by plane, with 92% of visitors travelling by
air. With a simple calculation, we can see that 4,14 millions of British travelers use the plane
to come in the green island. They bring in 1,3 billions euros to Ireland just for the tourism.
Though the majority of visitors and of spend relates to those visiting friends and families. The
number of British holidaymakers travelling abroad is down in the first half of the year (2019).
The alternative to a soft Brexit could lead to a bad scenario of a loss of €390 million,
Tourism Ireland warned. The Dublin to London route is the 2nd busiest international route
globally by number of passenger.

However, there was a notable slowdown in visitor numbers from Britain and mainland

Europe in May, with Britain down by 4.4% and mainland Europe down by 4.6% in comparison
with the same month last year.

Trips to Ireland from Great Britain

Finance Minister Paschal Donohoe told he was allocating €40m in "tourism-specific

initiatives” but promised more State money for the sector if Britain crashes out of the
European Union without a deal.

So we can extend all this information to Ryanair Airlines, it's one of Ireland's leading
companies. Bearing in mind that British tourists represent approximately 50% of all tourists.
But if their purchasing power decreases, they will less go on holiday. As we can see there's

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already a decrease in the number of tourists, and it's not going to get better in the coming
years. And so they'll turn less to Ryanair.

That's not the only problem this company has to deal with. The Great Britain had left the EU
so the ID card is no longer sufficient to enter the country. You need to buy a passport or a
Visa. The European Health Card will no longer be effective, all these constraints will cool
down the tourist potential in this country. Airlines such as Ryanair will suffer as a result of
this consequences.

Companies owned by Ryanair :

Ryanair continues to organize the redeployment of its aircraft within the EU, in the run-up
to Brexit. The Irish low-cost airline is acquiring a small and almost unknown Maltese
company, Malta Air, in order to strengthen its presence on the Mediterranean island.

This investment in Malta Air will enable Ryanair to strengthen its already significant presence
in Malta (3 million passengers per year) and to access non-EU (North African) markets from
this island.

In addition to Malta Air, the Irish group has acquired two small European low-cost players,
Lauda in Austria and Buzz in Poland. These two subsidiaries also enable it to redeploy its
aircraft in Central Europe.

Sources :
Veilleinfotourisme.fr

Crowe.fr

Ryanair.com

Irishtimes.com

Idependent.ie

Forbes.com

https://assets.kpmg/content/dam/kpmg/co/pdf/co-17-01-04-inf-revenue-q-n-as-on-real-
estate.pdf

Wikipedia.org

Dbei.gov.ie

Capital.fr

Businessinsider.fr