Last year, the United Kingdom voted to leave the European Community to be more independent. In many ways, the idea is appealing to the individual. However to companies, they follow the rules of the land. One company looking at the new rules is Ryanair – the home of inexpensive flights across Europe. It is cheaper to fly through Ryanair than drive your car, so many short term flights are done. Ryanair is Europe’s largest airline by passenger numbers, the Irish carrier flies over 120 million people from British airports.
According to Connor Humphries and Victoria Bryan of Reuters, Ryanair has been going through a number of possibilities including “Armageddon”. In breaking from the EU, England will have to negotiate with the EU and similar to divorce settlements some are easy and some are hard to work with. At the moment no one really knows which way it is to go. Will England still have access to Europe? under what conditions can people and goods and services be moved? While Britain is part of the EU, it operates under the open skies deregulated aviation market which allowed all EU airlines to fly to and from any airport within the bloc. Once Britain begins to break from the EU, the open skies will no longer be allowed and Ryanair will move its planes to Europe which means people in England will be unemployed and it will cost them more to travel. Will the Europeans want to fly to England in the numbers the English hope to bulk up their tourism?
Linking to dividend paying stocks, people in a democracy have the right and ability to vote anyway they wish to. There are generally business consequences to the actions – sometimes it is favorable, sometimes it is unfavorable. There is a big picture and there is a picture for companies. The companies might prefer to be in one place, but they will move on a dime, if market conditions are more favorable to them.
There are more questions than answers, till the next time – to raising questions.