Ryanair drops London listing over Brexit compliance hassles

London

IRISH discount carrier Ryanair Holdings said it will drop its London Stock Exchange (LSE) listing, becoming the first major company to blame its departure on Brexit.

The move confirms a plan set in motion this month, when Ryanair cited compliance headaches tied to Britain's exit from the European Union (EU).

The region's biggest low-cost airline has had to limit some stock purchases to ensure it's controlled from within the EU, then police investors who ran afoul of the guidelines. While trading volumes in London have dwindled, the company hasn't managed to steer enough activity to its main listing in Dublin.

"As indicated at our interim results, and following subsequent shareholder engagement, Ryanair has decided to request the cancellation of London listing," it said on Friday (Nov 19). "The volume of trading of the shares on the London Stock Exchange does not justify the costs."

Ryanair shares are down 0.6 per cent this year, the best performance on the 6-member Bloomberg EMEA Airlines Index, which averages an 11 per cent decline. While a number of companies have disappeared from the London stock market, Ryanair is the first to explicitly cite Brexit. Europe's largest discount carrier has its largest operation at London Stansted, which won't be affected.

Airline ownership rules set decades ago to protect the industry in Europe play a part in the move, adding a layer of complexity to the divorce that took effect at the start of this year. EU-based carriers must be owned and controlled from within the bloc, and with Brexit, UK nationals don't qualify anymore.

Even after taking several steps to limit non-EU ownership, just over one-third of Ryanair's shares are held from member states, chief executive officer Michael O'Leary told Bloomberg TV earlier this month. He said then that the Dublin-based carrier needs to take added steps to bring the total over 50 per cent.

"It's an inevitable consequence of Brexit," O'Leary pointed out. "We must be EU-owned and controlled, and delisting from London is a reasonably small initiative in that strategy."

Brexit has put pressure on the LSE in other ways. With UK equities trading at a discount to global indexes, London's stock market is shrinking at one of the fastest paces among global listing centers. Cheap valuations have unleashed a flood of buybacks and encouraged a wave of acquisitions by foreign buyers and private equity houses.

Brexit has also prompted British firms such as commercial landlord Hammerson and warehouse group Segro to seek secondary listings on EU exchanges to maintain access to the wider market.

Oil giant Royal Dutch Shell and Unilever, meanwhile, have bolted the Netherlands, ending dual headquarters arrangements to settle in the the UK. BLOOMBERG