Continued from page 48
full-blown war. But the region seems set for a long, hot summer of calibrated escalation, a slippery slope to conflagration, until Israeli elections in October and the American mid-terms [elections] in November.” That would put a
winter season return to normality in jeopardy. By contrast, we have as much
clarity on the immediate political situation in the UK as we are ever likely to, with Andy Burnham’s unchallenged procession to Number 10 to be confirmed on Friday and the new prime minister in office from July 20. A new chancellor should
be confirmed next week, along with a mostly new cabinet and team of ministers, and Burnham’s choice of chancellor could say much about the direction of his government. Jet2 chief executive and
Abta board member Steve Heapy noted last week the industry’s asks of government have not changed, stressing the need to stimulate production of sustainable aviation fuel (SAF) in the UK, get on with airspace modernisation and, most of all, not “treat the holiday industry as a cash cow”. To that we may add relief
on business rates for small businesses. However, Abta’s ask for
an UK-EU youth mobility scheme – identified as “an immediate priority” – remains stalled, with EU diplomats reportedly labelling the UK’s proposals a “non-starter”. Burnham will enter office
with a bounce, but any sense of a ‘honeymoon’ may be short lived. None of the problems his predecessor faced have gone.
ANALYSIS: US fund Apollo in pole position to buy airline. By Ian Taylor
EasyJet accepts takeover offer by investment fund
EasyJet seems certain to be taken into private ownership after a £5.7 billion takeover offer by US investment fund Apollo was accepted by the carrier’s board. But the precise outcome remains subject to some uncertainty. New York-based investment
and asset management fund Apollo Global Management is now clear favourite to acquire easyJet after the easyJet board announced “agreement in principle” on an offer it “would recommend to shareholders”. The board previously said it was
merely “minded to recommend” the lower offer of rival US fund Castlelake. It justified the decision by noting Apollo offered “a higher cash value”. But the offer is only £200 million higher and Castlelake could increase its bid, having done so five times. So, the outcome could yet be
determined by a bidding war that may suit many shareholders if not the board. In the words of one analyst, it’s now “all about the number”.
EU rules present challenges to any easyJet acquisition
Apollo faces the same challenge as rival Castlelake in meeting EU airline ownership rules if it is to acquire easyJet. These require European airlines to be majority EU or UK owned and controlled to operate freely in Europe.
46 16 JULY 2026
manages funds estimated to be worth near $1 trillion. It has provided funds to Virgin Atlantic and Air France-KLM, invested in Aeromexico and in US carriers, and had reportedly been readying a bid for easyJet for some time. Analysts suggest Apollo must have
The board’s preference has
more to do with the fact that Apollo expressed support for easyJet’s plans for a fleet of larger, more fuel-efficient aircraft and expansion of easyJet holidays, suggesting it offers “long- term stewardship of the business”. Apollo said it “believes in easyJet’s
existing strategy” and reassured the airline’s management team that it “recognises [their] important contribution”. It also acknowledged “the strong commitment of easyJet’s employees” and suggested they “will benefit from greater opportunities”. Apollo owns assets and
Part of the solution could
see easyJet founder Sir Stelios Haji-Ioannou involved. His family retains a 15% stake in easyJet. A royalty agreement pays
Haji-Ioannou 0.25% of the airline’s revenue – a deal Apollo has confirmed it would retain, with “the expectation that the brand value and royalties will increase”. That would leave a balance of
36% of easyJet stock to be held by other European entities. Apollo could retain other European
“big plans” to achieve the return on investment it will seek from a deal based in substantial part on debt, which Barclays has confirmed it will arrange. They note easyJet’s operating margin of 10% last year was about half that of Ryanair – an obvious target for improvement – and that easyJet employs about 54 staff per aircraft compared with 43 at Ryanair. Part of the reason for that is easyJet
operates at scale from more congested airports than Ryanair – Gatwick, in particular. Reducing headcount could threaten operations, as easyJet has found to its cost in the past. Apollo has an August 7 deadline
to make a firm offer and Castlelake until August 3 to improve its bid.
shareholders through its offer to allow them “to roll their existing shareholding” into the fund’s investment in easyJet. However, shareholders doing that would miss out on a payout. Ultimately, Apollo would look to
sell easyJet on or to take the carrier public again through an initial public offering of shares to realise its investment. The latter would depend on the state of the market, the former on meeting the requirements of competition regulators.
travelweekly.co.uk
PICTURES: Shutterstock/Simone Previdi, Markus Mainka, Spyros Vasileiou; Georgie Gillard/Daily Mail
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