EU review of airline ownership rules threatens easyJet takeover bids

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EU airline ownership review

Highlights

EU plans an autumn review of airline ownership rules to tighten enforcement on foreign control, clarifying permissible ownership and control structures.
easyJet supports a £5.7 billion ($7.65 billion) Apollo Global Management buyout offer, surpassing Castlelake's £5.5 billion bid but without details on EU compliance.
A successful easyJet buyout by private equity could set a precedent for foreign investment in the tightly regulated European airline sector, pending regulatory clarification.

Planned autumn review targets control structures

As first reported by Reuters, the European Union is preparing a review of airline ownership rules to prevent foreign investors from gaining effective control of carriers while keeping formal majority ownership within the bloc.

An EU official says the review is intended to protect strategic autonomy and ensure control of regional airlines remains in EU hands. The effort is likely in the autumn and is expected to clarify which corporate structures are permitted, particularly around the distinction between ownership and control.

The official says the concern is that some in the industry may believe the rules are no longer being enforced strictly. The official adds that regulators want to preserve enough room to act if investors attempt structures that comply on paper with the 51% local ownership threshold but transfer effective control elsewhere.

easyJet bids test limits for foreign investors

easyJet earlier this month backs a 5.7 billion pound, 7.65 billion U.S. dollar, offer from Apollo Global Management, topping an earlier 5.5 billion pound bid from Castlelake. The airline does not explain how the proposal would meet EU majority ownership requirements, a key barrier for any non-EU buyer of a European carrier.

If a deal proceeds, it could set an important precedent for the European airline industry, where takeovers typically involve another carrier and often include government backing. A successful private equity acquisition could open the door to wider buyouts in one of the region's most tightly regulated sectors.

The EU official says Apollo, Castlelake and easyJet have not spoken with European regulators about the details of their proposed transactions. EasyJet and Apollo decline to comment, while Castlelake does not immediately respond to a request for comment.

In our earlier report on the European Commission’s plan to expand the EU emissions trading scheme for aviation, we explained how the bloc wants to extend carbon pricing to more international flights from 2029, using a 5,000km radius to broaden coverage while limiting trade friction. We also noted the expected market and industry impact, including the share of flights still left outside the scheme and the Commission’s plan to reassess reliance on the global Corsia offsetting framework in 2032.

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