Brexit – The aviation reaction

The United Kingdom woke up this morning to the news that the country’s people had voted to leave the European Union. By a small majority, 52 percent of residents voted for independence, a decision that could change the political landscape of Europe forever and could bring an end to the United Kingdom, as both Scotland and Northern Ireland look to maintain membership of the European Union.

UK voters have spoken and have rejected the European Union. Following the results of yesterday’s referendum, the UK government will begin the process of invoking Article 50 of the European Union treaty and start the painful process of separation. None of this will happen over night, and the UK will face a multitude of complex negotiations and difficult choices over the coming years.

Pan-European carrier easyJet said it confident that the result of yesterday’s referendum in favour of the UK leaving the EU will not have a material impact on its strategy or its ability to deliver long term sustainable earnings growth and returns to shareholders. The airline has been preparing for this eventuality in the lead up to the referendum vote and has been working on a number of options that will allow it to continue flying in all of its markets.

easyJet has confirmed its initial focus will be to accelerate discussions with UK and EU governments and regulators to ensure that the UK remains part of the single EU aviation market. This would enable EU airlines to fly freely within the UK and between the UK and EU, allow UK airlines to fly freely across Europe. The airline said it is confident that its unique network, digital leadership, cost advantage and financial strength will enable it to continue to execute on its strategy and to deliver long term sustainable earnings growth and returns to shareholders.

We remain confident in the strength of easyJet’s business model and our ability to continue to deliver our successful strategy and our leading returns. We have today written to the UK Government and the European Commission to ask them to prioritise the UK remaining part of the single EU aviation market, given its importance to trade and consumers,” said Carolyn McCall, chief executive, easyJet.

British Airways' owner International Airline Group (IAG) has issued an immediate profit warning after voters chose to leave the European Union and the company's share price fell 19 percent to 425.6p. "Following the outcome of the referendum, and given current market volatility, while IAG continues to expect a significant increase in operating profit this year, it no longer expects to generate an absolute operating profit increase similar to 2015," the company said in a statement.

The firm insisted it believes the Brexit vote "will not have a long-term material impact on its business", but added that it experienced "a weaker than expected trading environment" in the run-up to the referendum.

With concerns over future trade between the UK and EU members, executives at London Heathrow Airport have said the outcome of the referendum has made the case for a third runway at the hub airport "stronger than ever". However, the political ramifications of the vote and the resignation of Prime Minister, David Cameroon, could dilute its calls to be the site of a new runway for London - the boomakers favourite to become the new Conservative Party leader is former London Mayor Boris Johnson, has campaigned against the airport.

A spokesperson for the airport said: "Only Heathrow can help Britain be the great trading nation connecting all regions of the UK to the world. It is the keystone that connects businesses of every size to markets across the world as the UK's only global hub airport. Global connections are critical for a new outward-looking UK to help our businesses and economy to thrive - and with expansion we can deliver up to 40 new destinations on top of the 83 we serve now. We are confident that the Government will make the right choice for the future of the UK, putting the interests of the country first."

European airport trade body, ACI EUROPE, has called for the EU and UK aviation markets to remain fully integrated in the future – to safeguard and promote vital air connectivity for consumers as well as continued economic development.

“The EU and the UK are faced with the challenge of establishing a new relationship. While there is for now much uncertainty as to what will be the model, structure and modus operandi for this new relationship, it will be essential that it allows for the UK and EU aviation markets to remain fully integrated and based on totally aligned – if not common - rules," said its director general, Olivier Jankovec.

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There are also notable repercussions from the vote for aircraft manufacturer Airbus, although it said it was too early to analyse any impact. The UK head of the global business, Paul Kahn told UK television reporters that the UK's decision to leave the European Union was a “wake-up call” and "a catalyst for change”.

“We will work constructively with the UK government to minimise any impact on our operations. Clearly we will continue to support our workforce and operate our UK facilities. We will study the longer-term consequences of this decision on the competitive environment,” he said.

UKinbound – the leading trade association which represents 370 of the country’s tourism businesses – says the Government must now focus on securing the best possible trade deal for the inbound sector; an industry which contributes over £22 billion per annum to the UK economy.

“UKinbound feels the decision to leave the EU is disappointing and inevitably will have far-reaching consequences. However, we have proved time and again that we are a resilient industry and the Government must now work hard to secure a deal which supports our vibrant industry, which relies on the European Union for two-thirds of its business. The priority must now be to ensure that our members have the best possible environment in which to grow their business and to support them in welcoming visitors from all corners of the globe,” said Deirdre Wells OBE, chief executive officer, UKinbound.

Here’s some more key quotes in reaction to the referendum from the aviation sector…

"I think leaving the European Union is a very sad decision that will do enormous damage to both Britain’s economy and Europe’s stability. This decision will create volatility and will threaten much of the good work delivered by the EU over the last 40 years. Nevertheless we must all accept and respect the majority vote."
Sir Richard Branson, founder, Virgin Atlantic Airways

“Yesterday’s vote has created, first and foremost, a lot of uncertainty about the future of the UK, the EU and Europe as a whole. For a business such as bmi regional, being heavily influenced by the freedom of trade and traffic, this uncertainty will undoubtedly add a layer of complexity to our business. bmi regional will keenly monitor developments over the coming weeks and months to assess the challenges and opportunities they will create for the business. It is, however, safe to say, that our continued business domicile as a UK entity is less than clear at this point in time. Over the last 18 months, bmi regional has significantly grown its activities outside the UK and we see further sizeable opportunities for bmi regional to continue this Pan-European growth. Should the dynamics that unfold prove too challenging for bmi regional to pursue these opportunities, our base as a UK airline may have to be reviewed. Any decision regarding a move to another domicile will not be taken lightly and will be carefully considered. Ultimately, the best interests of our customers, employees and shareholders will guide that decision.”
Peter Simpson, Chief Executive Officer, bmi regional

"The EU’s single and fully liberalised aviation market has delivered tremendous benefits for consumers and businesses across Europe – with increased air connectivity at lower fares at its core. By putting so many airports not just on the European but also the global aviation map, the single European aviation market has transformed them into engines of growth for their communities – especially in the regions. We simply cannot afford to go backwards on what is now one of the backbones of our economies. Securing legal certainty over the continued integration of the EU and UK aviation markets must be one of the key priorities of the future EU & UK relationship. This is about avoiding any risk in terms of connectivity & business disruption. As the voice of Europe’s airports both within and beyond the EU, ACI EUROPE will pursue this agenda on behalf of its members.”
Oliver Jakovec, Director General, ACI EUROPE

“We are deeply concerned about the potential effects of the UK's decision to leave the EU on the future of our thriving aviation sector. In particular, we note that analysts are predicting a reduction in demand for leisure and business travel, and a reduction in business confidence. The uncertainty ahead will be of great concern to pilots and the other thousands of people who work in the air transport sector. Whatever changes lie ahead, BALPA remains committed to ensuring the aviation sector can continue to thrive outside the EU.”
Brian Strutton, General Secretary, BALPA

"In a free and democratic process, the British people have expressed their wish to leave the European Union. We regret this decision but respect it. This is an unprecedented situation but we are united in our response. We will stand strong and uphold the EU's core values of promoting peace and the well-being of its peoples. The Union of 27 Member States will continue. The Union is the framework of our common political future. We are bound together by history, geography and common interests and will develop our cooperation on this basis. Together we will address our common challenges to generate growth, increase prosperity and ensure a safe and secure environment for our citizens. The institutions will play their full role in this endeavour."
Joint Statement by Martin Schulz, President of the European Parliament, Donald Tusk, President of the European Council, Mark Rutte, Holder of the Presidency of the Council of the EU, Jean-Claude Juncker, President of the European Commission

Richard Maslen

Richard Maslen has travelled across the globe to report on developments in the aviation sector as airlines and airports have continued to evolve and…