Air France-KLM targets easyJet passengers during takeover turmoil
Chief executive of French-Dutch airline group sees opportunity if low-cost carrier is acquired by its suitors
Air France-KLM aims to capitalise on turmoil from an expected £5.7bn takeover of easyJet to seize back passengers who have fled to the budget airline.
EasyJet had poached customers from both Air France and KLM, forcing the Franco-Dutch group to revamp its low-cost offering, its chief executive Ben Smith said.
With an offer for easyJet expected as soon as this weekend — and likely to drag on for months — Smith is confident Air France-KLM can reclaim some passengers who have switched to the British carrier over the years.
“For sure [we will win them back] now that we have a product that can compete and with the lower cost,” Smith told the FT. “These are customers we’ve lost because of the attractiveness of their product.”
He said easyJet gave Air France-KLM “a headache . . . they are a very well run carrier and they have been able to create a niche for themselves, which is quite impressive”.
US private equity group Apollo and private credit group Castlelake are both weighing final offers for easyJet. Last month the airline said it favoured Apollo’s proposal for a £5.7bn takeover offer at £7.15 a share over Castlelake’s most recent £6.90 a share offer worth £5.5bn.
Under UK takeover rules, Castlelake has until 5pm on Monday to submit a final offer, while Apollo has until Friday. After Apollo’s surprise entry into the deal last month, Castlelake said it was considering its options.
If either company is successful, the sales process will stretch into next year. Once acquired, easyJet is likely to be overhauled by its new owners, giving rivals an opportunity to woo its passengers.
Although it started as a low-cost operator, with the ambition of making flying as cheap as buying “a pair of jeans”, easyJet has moved into higher-cost primary airports in recent years.
While this has meant higher ticket prices, it pits the airline squarely against legacy carriers that have higher cost bases.
Smith said easyJet had “relatively large positions” at key airports such as Paris Charles de Gaulle, compared with rivals such as Ryanair that only use second-tier airports farther from city centres.
EasyJet also “introduced some very premium business-friendly types of attributes like boarding fast, having [bookable] front-row seats, having free baggage, at Gatwick they have the lounge, so they’ve been quite innovative on this”, he added.
Transavia, Air France-KLM’s budget airline, had “modelled a lot of the product offering around what easyJet has been able to do”, Smith said.
His company has extended its “Flying Blue” loyalty programme to Transavia, and launched new services from Paris’s lower-cost Orly airport.