Wizz Air CEO says shareholder vote curbs meet post-Brexit rules

By Sarah Young and Laurence Frost

LONDON, Jan 7 (Reuters) - The boss of Wizz Air said
stripping voting rights from the majority of his investors was a
sustainable way to meet post-Brexit rules, even as a leading
sector analyst said it may not be enough unless there was a
regulatory change.

Under European Union rules, EU airlines must be owned and
controlled by nationals from the bloc or aligned European
Economic Area (EEA) countries, or lose their licences.

UK investors were deemed non-EU from Jan. 1, meaning some
airline groups must act to stay compliant.

Those most affected - Wizz, Ryanair easyJet
and British Airways-owner IAG - have restricted voting
rights or introduced other measures, such as board changes, to
try to meet the EU control requirement.

"Personally I think this is a sustainable proposition," said
Wizz CEO Jozsef Varadi, when asked in an interview about the
airline's decision to disenfanchise the owners of about 60% of
its shares.

But HSBC analyst Andrew Lobbenberg said in a note on
Thursday the issue was unresolved and forced share disposals or
corporate restructurings may be needed without a subsequent deal
to loosen ownership rules.

"These moves defend the idea of EU control, but leave EU
ownership uncertain. We judge these moves to be temporary
holding measures," he said.

Ryanair boss Michael O'Leary predicted late last year that
Brexit could force a breakup of IAG.

The December post-Brexit EU-UK aviation deal does not allow
flexible treatment of UK shareholders, although it acknowledges
"potential benefits of the continued liberalisation of ownership
and control" and pledges to review the rules this year.

Some airlines have expressed hope a rule change will allow
them to lift the share restrictions and still retain EU
operating licences.

Without such a change, the current compliance efforts could
face legal challenges from competitors.

About 80% of Wizz Air shareholders are non-EU, but Varadi
said he expected some to be reclassified as EU investors over
time as they transfer holdings between investment vehicles.

"Irrespective of disenfranchisement, we have an attractive
stock to offer to the market no matter who the investor is,"
Varadi said.
(Reporting by Sarah Young and Laurence Frost; editing by
Barbara Lewis)