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EasyJet Says Well Prepared For Brexit

easyJet PLC (EZJ.L) said that it is operationally well prepared for Brexit. The board has recommended a 43% increase in the ordinary dividend to shareholders. It has made a good start to the 2019 financial year.

EasyJet said it has undertaken significant preparations for Brexit and it remain confident of its ability to continue flying whatever the Brexit outcome. These preparations have included: putting in place new operating airlines in Austria and the UK; ring-fencing those operations so that there is no reliance on existing EU traffic rights by the UK airline; transferring over 1,000 pilots, re-issuing 3,300 cabin crew licences and re-registering 133 aircraft from the UK to Austria; putting in place the relevant safety certificates in Austria; and creating a second spare parts "hub" in the EU to limit exposure to any logistical supply chain risks between the EU and the UK.

The company noted that it has also been focused on ensuring that the right to fly remains between the EU and the UK, so that both UK and Austrian operating airlines are able to operate between the UK and the EU. It remain confident that this will be the case in a "no deal" Brexit situation, following the draft proposals from the European Commission, and given the UK's stated intention not to put in place any restriction on flights to the UK from the EU.

To allow us to continue flying within Europe after Brexit, the company is required to ensure ongoing compliance with EU ownership and control requirements. To this end, our active investor relations programme continues to focus on Europe and we have now increased our EU ownership to 49%. This level of EU ownership is only marginally below the 50% plus 1 share that would be required if there is a "no deal" Brexit and there is no adjustment period for compliance with EU ownership requirements.

If the EU does not give airlines any adjustment period to comply with the applicable EU ownership and control regulations, the Board stands ready to activate existing provisions of our Articles of Association to ensure that the Company will comply following Brexit. This would be achieved by exercising the Company's existing powers to suspend shareholders' voting rights, in respect of a small number of shares. For the period of any such suspension, the relevant shareholders would not be permitted to attend, speak or vote at shareholder meetings in respect of the shares subject to the suspension.

Given the current level of EU ownership, any suspension of voting rights should only apply in relation to a small percentage of shares and would be applied on a last in first out basis, meaning it would affect shares most recently acquired by UK and non-EU nationals first. A suspension of voting rights would apply only while EU ownership is below 50% plus 1 share, the company said.

The company expects to keep the position under review following Brexit. If EU ownership remained below the required level over time, the company retains the right to activate the provisions of existing Articles, which permit the Company to compel non-EU shareholders to sell their easyJet shares to EU nationals.

easyJet said, "While we are operationally well prepared, as we get closer to Brexit we remain focussed on the broader external risks that could emerge, in particular in the event of a "no deal" Brexit. These risks may be sector and/or non-sector specific and their impact is, by definition, less certain. This would include any impact on consumer confidence or the potential cost and operational impacts arising from increased friction in travel between the EU and the UK. Our focus remains on monitoring any such risks and being as ready as possible to put in place scenario plans to address them."

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