EasyJet shares jumped sharply on Friday after the British low-cost airline disclosed it is considering a higher takeover proposal from Apollo Global Management, setting the stage for a bidding contest with private equity rival Castlelake for control of one of Europe’s largest budget carriers.
The competing offers come at a difficult time for the aviation industry, as airlines contend with higher fuel costs, geopolitical uncertainty and weaker profit margins, while private equity investors appear to be betting that the sector’s long-term growth prospects outweigh its near-term challenges.
Shares in the London-listed airline rose as much as 13.2% after the announcement, reflecting investor expectations of a higher takeover price or the possibility of a prolonged bidding war.
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Apollo Tables Higher Offer
Apollo has proposed an all-cash offer of £7.15 per share (approximately $9.61), valuing EasyJet at £5.7 billion, or about $7.66 billion.
The offer represents a premium of roughly 22% to EasyJet’s closing share price of £5.88 on Thursday. It is also approximately 81% above the company’s closing price of £3.94 on May 28, the final trading day before the takeover process formally began following Castlelake’s approach.
In addition to the cash proposal, Apollo has offered shareholders an alternative structure known as a Stub Equity Alternative. Under that arrangement, investors could roll over their existing EasyJet shares into the investment vehicle through which Apollo’s funds would own the airline, allowing participating shareholders to retain an equity interest and voting rights in the business after it becomes privately owned.
EasyJet said discussions regarding the detailed terms of that alternative remain ongoing.
The latest proposal has prompted a significant change in the board’s position. Earlier this week, EasyJet said it had reached an agreement in principle on a $7.3 billion takeover proposal from Castlelake.
However, following Apollo’s higher bid, the airline indicated it no longer intends to recommend Castlelake’s offer.
“The Proposed Cash Offer delivers a superior outcome for easyJet shareholders by providing a higher cash value than Castlelake’s latest proposal,” the company said.
The board added that Apollo’s proposal offered “an attractive combination of value, strategic alignment and long-term stewardship of the business.”
“Accordingly, the easyJet Board is no longer minded to recommend the Castlelake Proposal,” the airline said.
Castlelake’s offer values EasyJet at approximately $6.90 per share, and the investment firm has until August 3 to submit a binding offer or withdraw from the process under UK takeover rules.
The emergence of a rival bidder raises the possibility that Castlelake could return with an improved proposal, potentially increasing value for shareholders.
Private Equity Targets Aviation Recovery
The competing bids highlight growing interest among private equity firms in the aviation sector despite its recent financial pressures.
Investors often view airline acquisitions as opportunities to improve profitability through operational restructuring, fleet optimization, route rationalization, and cost reductions before eventually relisting the businesses or selling them at higher valuations.
EasyJet remains one of Europe’s largest low-cost airlines, with an extensive network across the United Kingdom and continental Europe. The company has invested heavily in fleet renewal, digital services, and package holidays while expanding its position in key European markets.
Private equity firms may also see value in acquiring aviation businesses during periods of weaker earnings, anticipating improved profitability once industry conditions stabilize.
The takeover interest comes as global airlines continue to face difficult operating conditions. The aviation sector has been affected by higher fuel prices following the conflict between the United States and Iran, which disrupted energy markets and increased operating costs for carriers worldwide.
Last month, the International Air Transport Association (IATA) warned that global airline profitability is expected to decline significantly this year as rising fuel expenses erode earnings.
Fuel is typically one of the highest operating costs for airlines, and sustained increases in oil prices can substantially reduce profit margins, particularly for low-cost carriers that compete aggressively on ticket prices.
However, EasyJet’s recent financial results underline the pressures facing the airline. For the first half of its 2026 financial year, the airline reported a pre-tax loss of £552 million, compared with a £394 million loss during the corresponding period a year earlier.
Management attributed the deterioration partly to the impact of the conflict in the Middle East, saying higher fuel costs and reduced visibility regarding future bookings had affected trading conditions. Although airlines typically generate most of their profits during the peak summer travel season, increased operating costs and geopolitical uncertainty have made earnings forecasts more difficult across the industry.
Analysts Question Valuation
While Apollo’s proposal received a positive reaction from investors, some analysts questioned whether the financial assumptions underpinning the offer are achievable.
Bernstein analysts said an acquisition by Apollo could increase the likelihood that EasyJet continues executing its existing long-term growth strategy.
However, they cautioned that the valuation implies expectations for a significant improvement in profitability.
“In this case, a heroic cost restructuring and earnings inflection, far above what we currently forecast, would be required for the deal to make sense at this price,” Bernstein said in a research note.
That assessment suggests Apollo may be betting it can unlock value through operational improvements beyond what public market investors currently anticipate.
Attention now turns to whether Castlelake responds with an improved offer before the August 3 deadline. Under the UK’s takeover rules, competing bids often lead to higher valuations as rival acquirers seek to secure shareholder support.