A US airline entrepreneur has reportedly become the latest force in European aviation after he emerged as the biggest backer of the newly floated Wizz Air.
Bill Franke, a former chairman of three US airlines, has ‘got around’ European Union aviation ownership rules by retaining the majority of his £1 billion interest in Wizz Air in convertible instruments, the Times reported.
EU rules insist that European airlines be at least 50.1%-owned by EU investors, regulations that have led to investigations into whether the likes of Delta Airlines with Virgin Atlantic and Etihad with Alitalia are exerting effective majority control of a partner carrier via a minority shareholding.
The Wizz Air prospectus shows that Franke’s Indigo Partners private equity house, which specialises in aviation investments, holds nearly 20% of the stock, an arrangement that has satisfied regulators.
“If Indigo’s retained convertible notes and convertible shares were to be converted in full, Indigo would hold 66.5% of the voting rights in the company,” the prospectus says.
Franke has been chairman of central and eastern European budget carrier Wizz Air since 2004 and is a former chairman of US carriers Frontier Airlines, America West Airlines and Spirit Airlines. He serves on the board of Mexican airline Volaris.
He was chairman of Singapore-based budget carrier Tigerair between 2004 and 2009.
Wizz Air chief executive József Váradi was quoted as saying: “We have not ‘got around’ the rules.
“We have complied with ownership and control regulations. The convertibles do not have voting rights, so Indigo does not have the majority of voting rights. Of our board members, five are European and three are from Indigo.
“We have explained this to the European Commission multiple times. Our structure has been contemplated by the commission and it has been signed off. It is bulletproof,” said Váradi, who has a 4.6% shareholding.
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