easyJet share price: Airline mulls Brexit contingency plans

easyJet (LON:EZJ) has examined setting up a separate European business if the UK votes to leave the European Union, The Telegraph has reported. The news comes ahead of the EU referendum on June 23.

easyJet’s share price has fallen into the red in today’s session, having lost 0.63 percent to stand at 1,426.00p as of 10:17 BST. The decline is largely in line with losses in the broader London market, with the blue-chip FTSE 100 index having dipped 0.46 percent to 6,087.64 points so far this morning. The airline’s shares have lost about 10 percent of their value over the past year, and are down nearly 18 percent in the year-to-date.

The Telegraph reported over the weekend that obtaining an air operator’s certificate (AOC) in an EU country, which would require it to establish a local holding company, was one of the options easyJet had looked at as part of contingency planning in the event of a Brexit. The budget carrier is also thought to have examined making better use of its Swiss AOC and its easyJet Switzerland subsidiary if the UK secedes from the EU.
Should the UK vote to leave on June 23, the worst-case scenario for airlines would be if the UK was subsequently pushed out of the European common aviation area. A potential Brexit is seen as more problematic for easyJet than for Irish rival Ryanair, and FTSE 100 peer International Consolidated Airlines Group (LON:IAG), with the latter owning Iberia and Aer Lingus, and having AOCs in the UK, Ireland and Spain.
“Of those three, [easyJet are] the ones that have to do the most contingency planning,” one analyst said, as quoted by The Telegraph. “They are a pan-European airline, they make maximum use of the traffic rights that allow UK airlines to fly to points within Europe.”
Earlier this year, the budget carrier warned in a prospectus for a debt issue that if Britain votes to quit Europe it could have a “material adverse effect” on the airline.
As of 10:42 BST, Monday, 13 June, easyJet plc share price is 1,427.00p.