EU plans airline ownership review amid easyJet bidding contest

Brussels, Belgium. The European Union is preparing a review of airline ownership rules aimed at preventing foreign investors from gaining effective control of carriers, an EU official said, as U.S. investment firms compete to acquire easyJet.

The review, expected in the autumn, would clarify permitted corporate structures relating to airline ownership and control.

Ownership requirements

The official said the proposed review would protect the EU’s strategic autonomy by ensuring that regional airlines remain under the bloc’s control.

“This is to ensure that foreign investors don’t have full control,” the official told Reuters, speaking anonymously because of the sensitivity of the matter. “We need to make sure we have sufficient headroom when it comes to control.”

EU rules require majority local ownership and control of European airlines, creating a central hurdle for any non-EU acquisition.

easyJet bids

easyJet earlier this month backed a £5.7 billion ($7.65 billion) offer from Apollo Global Management, which exceeded an earlier £5.5 billion bid from Castlelake.

The airline did not explain how the Apollo proposal would meet EU majority ownership requirements. If completed, the transaction could set a precedent for European airlines and open the way for private equity buyouts in an industry where takeovers have generally involved other carriers, often with government backing.

The official said Apollo, Castlelake and easyJet had not discussed the details of their proposed deals with European regulators.

easyJet, Castlelake and Apollo declined to comment.

Market reaction

easyJet shares, which had risen in recent months on expectations of a transaction, fell by as much as 15% following the Reuters report and were on course for their largest daily decline since late 2021.

The official said there was concern that the industry believed ownership rules were no longer being enforced strictly.

“The concern is that the industry is on the wrong foot, thinking that we no longer enforce the rules strictly,” the official said. “People will go down the wrong alley because there’s a wrong perception.”