IAG chief executive Willie Walsh has described as “shocking” the persisting uncertainty over the UK’s withdrawal from the European Union, even though the company remains confident about its own preparations.
Walsh disclosed his view on the unresolved post-Brexit situation in the newly-released IAG annual report for 2018.
“I think it is inevitable that Brexit will have a greater impact in the months ahead,” he said. “It has been quite shocking to get so far in the political process without having any real clarity about the future. That can't be positive for the economy.”
Walsh says that “all the credible forecasts” predict a negative economic impact from the UK’s withdrawal in the short to medium term and that IAG, as a result, needs to “remain very agile”.
The possible impact on UK transatlantic operations – currently part of the US-EU ‘open skies’ arrangement – has resulted in a “lot of scaremongering”, says Walsh.
But the UK and US governments have reached a new post-Brexit pact, providing security for IAG’s UK operator British Airways.
“I was always confident the alignment of interests between the UK and US [governments] would result in a new deal,” says Walsh. New air services agreements have also been reached with Canada.
Under the withdrawal agreement negotiated between the UK and EU there would be no change to aviation arrangements until the end of a transition period on 31 December 2020, and that these would be succeeded by a comprehensive air transport pact.
But this agreement has yet to be ratified and this has resulted in contingency plans being drawn up to permit UK-EU flights and provide mutual recognition of certification and approvals.
IAG cautions that this contingency, intended to ensure basic connectivity remains, might result in “some restrictions” on codeshare flexibility.
Spanish-based IAG has continued discussions over its compliance with EU ownership and control regulations, but the company is confident that its operating companies will meet requirements following Brexit.
It predicts that, even if the UK fails to ratify a withdrawal agreement – the so-called ‘no deal’ scenario – the post-Brexit situation will have “no significant long-term impact on its business”.
IAG is irritated that Brexit “dominated” the European aviation forum last year.
“This has compounded the existing delays to EU legislation, and the reform of existing laws, due to disagreements over Gibraltar,” it says. “As a result, limited progress has been made in key policy areas, such as passenger rights.”
Walsh expects Brexit to remain the “biggest unknown” affecting the company this year but insists: “We refuse to be distracted by the uncertainty.”