Thursday, May 10, 2012
Triple Five, a Canadian conglomerate, has requested financial information from Cyprus Airways as it contemplates purchasing a majority stake in the Cypriot flag carrier. See Michele Kambas, Cyprus Air Says Canada's Triple Five Eyes Stake, Reuters, May 8, 2012 (available here). While the potential deal is still in its early stages, it is unclear how the type of acquisition described in the article could be legal. Though the EU-Canada air transport agreement is relatively liberal, it only permits foreign ownership to the extent permissible by domestic regulation. As of now, the EU limits foreign ownership of community carriers to a 49.9 percent stake, and Canada, despite repeated discussions of raising the cap, still prohibits foreign ownership beyond 25 percent. That 25 percent figure would appear to be the maximum stake Triple Five could acquire under the EU-Canada agreement, as according to Annex 2, "ownership of a Party's airlines by nationals of all other Parties shall be allowable, on the basis of reciprocity, to the extent permitted by Canada's domestic laws and regulations for foreign investment in airlines." Canadian rules appear to allow for larger equity stakes, as long as voting rights and control of the carrier aren't included. However, Triple Five is unlikely to be interested in a majority equity stake without control of the carrier. The Cyprus government currently owns 69 percent of Cyprus Airways.