EasyJet takeover faces EU ownership review risk as shares fall

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EasyJet takeover faces EU review

Highlights

The European Union is reviewing foreign ownership and control rules for airlines, raising uncertainty over Apollo's proposed £5.7 billion takeover of easyJet.
EasyJet shares fell as much as 14 percent before recovering to 10 percent lower after news of the EU regulatory review and board recommendation for Apollo's offer.
Ownership and competition regulations have recently blocked major European airline deals, as seen when IAG abandoned its bid for 80 percent of Air Europa in 2024.

Ownership rules put deal under pressure

As first reported by Financial Times, citing Reuters, the European Union is seeking to clarify provisions on control of airlines by foreign investors as part of a broader review intended to protect what one official described as the bloc's strategic autonomy.

That move casts doubt over Apollo's proposed 5.7 billion pound acquisition of easyJet, whose board this month recommends the offer after it topped an earlier 5.5 billion pound bid from U.S. private credit group Castlelake. EasyJet shares fall as much as 14 per cent on Wednesday before recovering some ground to trade about 10 per cent lower later in the afternoon.

Under EU rules, airlines must be more than 50 per cent owned by member states or their nationals to secure an operating licence, and they must also be controlled by Europeans through decisive influence over the carrier's management. Those requirements still apply to easyJet after Brexit because the airline set up an Austrian subsidiary to keep operating flights within the EU.

The official says the review is not linked specifically to Apollo's bid for easyJet and instead forms part of a wider revision of EU air services regulation, including rules covering public service obligations for peripheral areas of the bloc.

European aviation deals remain difficult

Airline takeovers have historically been hard to complete in Europe, where ownership and competition rules can complicate cross-border transactions. In 2024, British Airways owner IAG abandoned its bid to buy 80 per cent of Spanish carrier Air Europa after the European Commission raised competition concerns.

IAG chief executive Luis Gallego told the Financial Times last month that he believed a takeover of easyJet was likely to be very difficult because of the ownership rules. Willie Walsh, head of airline industry group Iata and a former IAG chief, says airlines are already subject to some of the most stringent ownership requirements and that any changes should be guided by broad consultation with carriers operating under the existing framework.

EasyJet and Apollo decline to comment, while Castlelake does not immediately respond to a request for comment. A person close to the airline says EU regulators have not engaged with easyJet regarding the proposed deals with Apollo and Castlelake.

In our earlier article on JetBlue Airways (JBLU), we examined how rising fuel costs and operational risks are squeezing margins and weighing on the stock’s near-term outlook. We also noted JetBlue’s $58.5 million bid for 22 former Spirit Airlines slots at New York LaGuardia, which still requires final regulatory approval, alongside broadly bearish technical signals that keep downside risks in focus.

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