EU Ownership Review Casts Shadow Over easyJet Bidding War

Brussels is preparing to tighten scrutiny of who really controls Europe's airlines, a move that has wiped billions from easyJet's valuation and injected fresh uncertainty into the largest private equity approach the sector has seen.

An EU official confirmed the European Commission will conduct a review, likely in the autumn, clarifying which corporate structures satisfy rules requiring carriers holding EU operating licences to be majority owned and effectively controlled by EU nationals. The stated aim is to protect the bloc's strategic autonomy and prevent overseas investors gaining effective control of regional carriers.

The timing is pointed. EasyJet this month backed a £5.7 billion offer from Apollo Global Management, trumping a £5.5 billion approach from Castlelake, without setting out how it intends to satisfy the 51 per cent test. Apollo has until 7 August to formalise its bid. Shares closed almost 12 per cent lower following the news, the worst session since early 2020.

The mechanics are the sticking point. Goodbody analyst Dudley Shanley noted both bidders appear willing to leave 51 per cent of voting rights with European investors, but Brussels remains concerned that effective control would sit outside the bloc. EasyJet, headquartered in Britain but reliant on EU licences for its continental bases, has capped non-EU ownership at 49.5 per cent since Brexit. A successful transaction would set precedent in an industry where takeovers have traditionally involved rival carriers, often with state backing.

The regulatory intervention lands against a softening earnings backdrop. Ryanair reported first-quarter profit after tax down 34 per cent to €537.7 million, despite carrying 61.3 million passengers on a 6 per cent traffic increase. Average fares slipped from €51 to €48 while operating costs climbed 11 per cent to €3.81 billion, squeezed by unhedged fuel exposure following the Iran conflict.

EasyJet, Castlelake and Apollo all declined to comment. None has approached European regulators regarding deal structure.