The European skies of aviation are filled with yet another exciting development as Apollo Global Management, a leading private equity firm, unexpectedly offered 5.7 billion for budget airline, EasyJet. This bold move overshadows the takeover attempt by Castlelake, creating a scenario which might be viewed as one of the most fiercely followed bidding contests in the tourism industry. Commentators in the sector see the events unfold as a significant turning point in the industry. The leading provider of low-cost airline tickets in Europe has faced a difficult time after the pandemic, where EasyJet’s business was heavily interrupted. With the fuel prices going up, the market getting extremely competitive, and customers wanting new kinds of services, even the strongest airlines have found themselves under pressure.
The entry of Apollo is happening at a moment when private equity firms are looking at airlines with very brand names and large network of routes and seeing potential for making them more operational efficient. As one of the biggest alternative asset management firms, Apollo Global Management, which has an enormous portfolio consisting of real estate assets, credit lines, and equity investments, has always been at the forefront of major transformation deals. The new offer for the acquisition of EasyJet by them means that investors would have to pay about 715 each stock. The offer reportedly surpasses Castlelake’s previous proposal by a large margin. The suddenness of the move is forcing the directors of the company to re-examine their position in the case as well as showing that the investment community has increased its trust in the resumption of travel post-pandemic, either for leisure or business reasons.
EasyJet’s customers and staff alike should see it as a win-win situation and a new beginning but also as some uncertainty. The airline company, founded by Stelios Haji-Ioannou, was the pioneer in cheap air travel for flights under 500 miles in length with its distinctive bright orange logo and no-frills policy. Its hub airports include big ones like London Gatwick as well as small regional airports. Takeover when a successful deal might help finance the upgrade of planes, a more user-friendly interface, and expansion to new territories. On the other though it is also going to raise concerns about a reworking of service policies, prices, or staffing, all of which are aspects of the brand that has been identified with EasyJet throughout its history. Such a high degree of interest is also driven by broader market forces. Private equity’s fascination with aviation properties has increased with the significant rise in travel demand. Apollo believes that with their presence in the market of travel and airline industry it would result in a significant growth in the company, besides that, they will help in a cost-effective utilization of the aircraft and a better understanding from the customers’ side as well. At the same time, there is pressure on the airline industry to make a contribution to the global fight against climate change. It is very likely that a new shareholder will need to reconcile with growth goals on one side and environmental commitments on the other such as the reduction of carbon footprint and the use of fuel-efficient planes.
