U.S. private equity firm Castlelake has confirmed that it is considering a buyout of the U.K. low cost carrier (LCC) easyJet. This follows a significant reduction in the budget airline’s share price following the conflict in the Middle East and subsequent rises in jet fuel prices.
Why is a buyout being considered?
Since January alone, easyJet shares have plummeted by 22%, with an overall reduction of 53% over the last five years, according to The Express. This leaves the airline valued at £3 billion, the smallest of Europe’s five biggest airlines.
The fall in value has largely been driven by the ongoing crisis in the Middle East. Jet fuel prices in particular have become a huge issue for many major airlines, due to soaring prices following the closure of the Strait of Hormuz. The Express reports that since the vital shipping route has become inaccessible, prices have increased by more than 80%.
At a time when a takeover is now cheaper than ever, Minneapolis-based private equity firm Castlelake is now eyeing up a potential buyout of the budget airline. The firm manages $36 billion (£27 million) in assets, with strong connections to the aviation industry. It previously considered a similar takeover of the now-defunct Spirit Airlines, but eventually decided not to proceed with a deal.
What comes next?
Under U.K. takeover rules, Castlelake now has until 5 p.m. on June 26 to decide whether to proceed with a bid. The firm has confirmed that it is in the early stages of considering a buyout, but has stressed that there is no certainty that a deal will go ahead.
For the time being, easyJet’s Chief Executive, Kenton Jarvis, has confirmed that the airline has hiked the prices of its winter 2026/7 flights by two to three pounds. This comes as an attempt to negate rising jet fuel costs, which jumped by an extra £25 million for the airline in March alone.
Have you ever flown with easyJet before? Do you think the potential takeover is likely to go ahead? Let us know in the comments below!
