Will Ryanair delist from the London Stock Exchange?
While the matter is still up for debate, it's looking more likely that Irish-owned airline, Ryanair, will delist from the LSE in the next 6 months.
Founded in 1984, Ryanair is an Irish low-cost airline that operates to more than 200 destinations across Europe. It carries more international passengers than any other airline in Europe and operates the world's largest fleet of Boeing 737 aircraft. Despite its recent financial troubles, Ryanair still has a reputation for being a cheap flight option for travellers heading to European destinations. Ryanair employs over 10,000 people and on average has more than 2,500 flights a day during peak summer season. A key factor that contributes to Ryanair's success is its cost structure. When released, tickets are cheap and the price can then fluctuate based on demand. Despite monumental success, the airline has of late has been considering delisting itself from the London Stock Exchange. Here's why…
Is the EU responsible?
Ryanair's decision to delist itself from the London Stock Exchange does raise two questions: Is the low-cost airline's departure just a one-off; in other words, will it be temporary? And, is it an indication that the EU is slowly peeling away bits and pieces of the UK's financial sector? Based on a statement released by the Irish airline, the consideration to delist from the LSE stems from a waning share price. EU rules stipulate that the bloc's airlines be owned and controlled by EU citizens; a scenario that now excludes British citizens since the UK exited the bloc. Should Ryanair elect to forgo its listing in London, it will still retain its primary Dublin-based listing on the EU-exchange Euronext. In addition, the company will also continue to retain its shares on the Nasdaq by way of its American Depositary Receipts (ADRs). According to the airline's chief executive, Michael O'Leary, the delisting from the LSE is an "inevitability" that's likely to to occur within the next six months.
Ryanair is not alone in delisting
While there might be certain aspects of Ryanair's scenario that are exclusive to airlines, it's far from being the only company that's opted to let its share price trading leave the UK since Brexit. Upon the expiration of the UK's transition agreement with the EU in December 2020, approximately €6 billion of day-to-day trading in EU stocks up and left overnight in favour of markets across the Channel. In the meantime, the EU's officials and politicians haven't held back from taking aim at Britain's financial sector ever since the vote for Brexit. Then French president Francois Hollande waisted no time in taking his first shot at London as soon as the referendum results were finalised in 2016. In addition, the EU has continued to apply pressure to its domestic banks, prompting them to shift crucial euro-denominated businesses out of the UK. It's been reported that the European Central Bank is insisting that financial companies transfer staff that services EU patrons to the Continent instead.
The UK remains formidable
The UK remains a formidable force in global finance, and the losses incurred in this sector have thus far been less impactful than some predicted. For instance, CFD trading performed in the UK, a form of trading that pays the difference in a settlement price between the opening and closing of a trade, remains a vibrant and lucrative part of Britain's financial sector. In the meantime, British officials have been looking at various ways to make its markets more competitive in term of IPO's and share trading, including endeavours to entice Special Purpose Acquisition Companies (SPAC's) to dual-class listings. The UK's fintech sector is second to none and its tech companies have managed to pull in massive sums of venture capital. However, Ryanair's debate regarding its LSE listing sends a clear message: the EU's reliance on its own rules to rip financial businesses away from the UK is definitely working. The only question that now remains is to what extent Britain will counter such attacks.
