EU review of airline ownership rules clouds Apollo’s £5.7bn easyJet bid
Shares in UK low-cost carrier slide as Brussels move casts doubt on takeover
EasyJet shares fell as much as 14 per cent on Wednesday as reports about a looming EU review of airline ownership rules cast doubt over its planned takeover by US asset manager Apollo.
The bloc is seeking to “clarify” provisions on control of airlines by foreign investors to protect “strategic autonomy”, according to one official.
The move is the latest twist in a protracted takeover saga for the UK low-cost airline, whose board this month recommended a £5.7bn offer from Apollo that trumped an earlier £5.5bn bid from US private credit group Castlelake.
News of the EU review, first reported by Reuters, sent easyJet’s shares down as much as 14 per cent before they recovered some poise to be roughly 10 per cent down in late afternoon trading.
The EU requires airlines to be more than 50 per cent owned by member states or nationals of member states in order to obtain an operating licence, and to be controlled by Europeans, meaning they have a “decisive influence” on the running of the airline.
The rules still apply to easyJet after Brexit, as the low-cost carrier established a subsidiary in Austria to allow it to continue to operate flights within the EU after the UK left the bloc.
The official said the review was not linked to the Apollo takeover bid and formed part of a broader revision of the EU’s air services regulations, which also govern rules such as public service obligations for peripheral areas of the EU.
Takeovers of airlines have historically been difficult in Europe, with British Airways owner IAG walking away from a bid to purchase 80 per cent of Spanish carrier Air Europa in 2024 after the European Commission flagged competition concerns.
IAG chief executive Luis Gallego last month told the FT he thought the takeover of easyJet was likely to be “very, very difficult” because of the rules.
Willie Walsh, head of airline industry group Iata and Gallego’s predecessor at IAG, said airlines were “already subject to some of the most stringent ownership rules” and that any changes “should be informed by broad consultation with airlines who have built their businesses within the existing framework”.
EasyJet and Apollo declined to comment. Castlelake did not immediately respond to a request for comment.
A person close to the airline said EU regulators had not engaged with it regarding the proposed deals with Apollo and Castlelake.