EasyJet is Europe’s second largest ultra low cost carrier, and also Europe’s second largest individual airline brand (after Ryanair, by both metrics). In recent weeks, we’ve known that US investment firm Castlelake was looking to buy the airline and take it private.
While EasyJet’s board rejected the initial takeover offers, they finally got an offer they agreed to, so a deal may very well move forward. However, it’s far from a sure bet, and the big question remains, why exactly is Castlelake so interested in acquiring EasyJet?
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EasyJet board approves Castlelake’s $7+ billion takeover bid
EasyJet’s board of directors has agreed in principle to a takeover offer from US investment firm Castlelake. This has been quite the process, as the board had first rejected offers starting at £5.60 per share, but Castlelake kept upping its offer, and the board finally accepted a £6.90 per share offer. This values the company at £5.5 billion, or a little over $7.3 billion.
Now, there are still three major hurdles:
- Castlelake is a non-European company, so it can’t directly own a majority of EasyJet, so it needs European partners who get in on the deal as well; the company claims it has two Irish advisory businesses that will also take part in the deal to meet that requirement, but we’ll see how that plays out
- This deal needs formal approval from EasyJet shareholders (and not just the board), and there are questions about whether they’re willing to accept the current offer price that the board has conditionally approved
- This deal also requires regulatory approval, and I imagine European regulators will want to know what the company’s plans are for the future, and how that impacts consumers
For those not familiar with Castlelake, the company was involved in the deal to acquire Scandinavian Airlines (SAS) after its reorganization, with the firm taking a roughly one-third stake in the airline. This was done in partnership with Air France-KLM.
Air France-KLM CEO Ben Smith said several weeks back that the airline group would be open to discussions to invest in EasyJet, but signaled that the company wasn’t involved in a formal bid at the time.
One certainly wonders if this could be another deal where Castlelake and Air France-KLM partner, to allow the airline group to expand its position across Europe. While Air France-KLM has its own low cost carrier subsidiary, Transavia, acquiring EasyJet would allow it to expand massively, and there’s definitely upside there.
What’s the real goal with investing in EasyJet?
While we’ve seen a lot of consolidation in European aviation, one logical question is why Castlelake is so interested in acquiring EasyJet, especially given the regulatory challenges. What’s the huge upside that Castlelake sees?
EasyJet is profitable, but not massively so. It’s not nearly as profitable as Ryanair (which has incredible efficiencies and scale), and it’s also not as profitable as Jet2 (which does an amazing job selling vacation packages, and that’s good for margins). But still, EasyJet executives have been promising that profitability will increase in the coming years. While EasyJet achieved a net profit of around £500 million last year, the company is aiming to roughly double that amount in the coming years (how realistic that is remains to be seen).
What’s interesting is that analysts suggest that the company’s break-up value is over £8 billion, referring to the value of its assets, including its fleet of planes and slots, which greatly exceeds the company’s market cap.
Some suggest that the plan here is to actually basically shut down EasyJet, and do something else with its aircraft and assets. That strikes me as being rather unlikely, especially in the framework of getting regulatory approval.
However, one also wonders about the disconnect between the company’s market cap, and the alleged value of the assets. Why hasn’t the company’s stock price reflected the value of the assets more? Is Castlelake somehow the only investment firm that notices that value, or what’s going on, exactly?
At this point I’d assume that this is far from a sure bet, in terms of purchase price, the parties involved, and whether this gets regulatory approval. I’m very much looking forward to seeing what the actual motive here is.
Bottom line
EasyJet’s board has tentatively approved an offer for Castlelake to acquire the company for $7.3+ billion, taking it private. EasyJet is interesting for the fact that the value of its assets (aircraft and slots) is estimated to be higher than its market cap.
Even though a deal has tentatively been approved, there’s still a huge uphill battle here, in terms of shareholder approval, regulatory approval, and a European partner. Then the big question is what Castlelake’s plans really are.
What do you make of EasyJet going private?
EasyJet backs $7.65 billion Apollo bid over Castlelake offer - https://www.reuters.com/business/apollo-trumps-castlelake-with-765-billion-easyjet-bid-2026-07-10/
A moderate chunk of value in EasyJet is its order book and guaranteed delivery flow. It would make sense for a new, well funded airline, in need of shiny new hardware, to stage this acquisition through a third party apparently at arms length, thus accessing the order book and avoiding the competition regulators. Looking at you Riyadh Air ...
Personally i would make EJ more efficient and then sell it off to a non-european airline. EJ has attractive slots on important european airports and could work as a feeder airline for a asian, american or middle eastern airline wanting to establish a firm position in europe.
Very simple, this is a private equity firm. They'll mortgage all the assets, pull the cash out of the business, and then dump what's left of easyJet onto the public markets. Same as just happened with Southwest. There is a shortage of juicy targets in the US so private equity is taking the same model of late capitalism to Europe.
When I read this, I immediately thought of what Elliott (mis)Management did to Southwest. Not good for passengers.
Castlelake requires an European partner. That partner will be MSC (cruises specifically)
They will sell all the planes, retain only the routes they need for the Cruise business, sell the rest of slots. Possibly acquire also Virgin Atlantic for another 1Bn. Consolidate the business in Gatwick - bring the non European tourists into Gatwick with the Virgin flights and fly them to the cruises (Barcelona, Venice etc) with the EasyJet
I think you captured the "why" in your article when you stated Easyjet hasn't been hugely profitable.
Castlelake is a PE firm. They are in it to grow value. They are buying low and feel they can grow the profitability of the business.
You need only look at where Easyjet has its largest bases to see there is huge value in its assets: LGW MAN BRS GVA LTN MXP BER LYS. A lot of its network is at major airports so there is huge opportunity to grow any airline that gets involved with Easyjet.
If AF/KLM does participate in the acquisition, might EasyJet participate in the Flying Blue loyalty program?
I don't think AF/KL is interested in maintaining EasyJet in its current form. More likely they'd snap up the slots and integrate it into Transavia.
Hey Ben, it's irrelevant to this article, but.. JAL is discontinuing NRT-ORD service right after AA launch it.
Source : https://sky-budget.com/2026/07/06/jal-close-nrt-ord/
US venture capitalist have always been excellent reading financial reports and analysing stock market performance. But have never understood government regulation, which is very strong in Europe. I guess they will try to sell slots, but who wants to buy them at wholesale quantity? Yes, slots at airports like LGW or GVA are scarce and achieve high prices. The few slots which occasionally become available are generally bought by long-haul airlines who want to start...
US venture capitalist have always been excellent reading financial reports and analysing stock market performance. But have never understood government regulation, which is very strong in Europe. I guess they will try to sell slots, but who wants to buy them at wholesale quantity? Yes, slots at airports like LGW or GVA are scarce and achieve high prices. The few slots which occasionally become available are generally bought by long-haul airlines who want to start one or two daily flights. But if the dozens of slots become available, I don't see an immediate buyer for all of them. It's not that Ryanair is on the doorsteps, the prefer rural cheap airports. And legacy carriers already have their slots.
Copy paste of Elliot Southwest deal? Easyjet underperforms compared to its competition, its costs have grown from its glory days (similar to WN), and in the eyes of an activist investor ought to be far more profitable considering the markets it has a stronghold on.
The bigger driver could be that the UK stock market is so undervalued compared to the U.S. that many companies are being acquired at low valuations. Easyjet would seem to be another victim of that.