EU review of airline ownership rules could complicate Apollo’s easyJet takeover bid
A planned European Union review of airline ownership rules could create additional hurdles for US private equity firms seeking to acquire control of easyJet, as Brussels looks to tighten scrutiny of arrangements that could give non-European investors effective control of regional carriers, according to a report by Reuters.
The report cites an unnamed EU official as saying that the review, which is expected to begin in the autumn, is intended to clarify how ownership and control structures should be assessed and to preserve the bloc’s “strategic autonomy”.
The development comes as Apollo Global Management and Castlelake compete to acquire the UK-listed low-cost airline. easyJet has backed Apollo’s £5.7bn ($7.65bn) proposal, which surpassed Castlelake’s earlier £5.5bn offer.
easyJet shares fell sharply following news of the planned review, reflecting investor concerns that stricter enforcement could delay or complicate a transaction.
EU rules require airlines benefiting from bloc operating licences to remain majority-owned and effectively controlled by EU nationals. The requirements are particularly relevant to easyJet, which is headquartered in the UK but depends on EU licences for operations, bases and routes across the bloc.
The airline has capped non-EU ownership at 49.5% since Brexit to comply with the rules. However, the structure proposed by Apollo has not yet been publicly detailed, leaving questions over how a US-led ownership group would meet the requirements while retaining economic control.
The EU official said the review would examine the types of corporate structures permitted under the rules, with a particular focus on the distinction between formal ownership and effective control.
Castlelake’s proposal would reportedly place 51% of the ownership in a vehicle involving former Malaysia Airlines chief executive Peter Bellew and industry executive Mark Breen, both EU nationals, alongside potentially other investors.
The proposed transaction could become an important test of whether private equity firms can acquire European airlines while complying with ownership restrictions that have historically limited consolidation in the sector.
Industry observers have pointed to structures used by International Airlines Group as a possible precedent. The owner of British Airways, Iberia, Vueling and Aer Lingus uses different ownership arrangements at its airlines to preserve regulatory nationality requirements while maintaining broader economic control.
Apollo has until 7 August to formalise its proposal but has yet to set out publicly how it intends to satisfy EU ownership and control rules.
A review that ultimately seeks to restrict the use of trust or proxy arrangements could have implications beyond easyJet, potentially affecting ownership structures at other European airlines, including Wizz Air and Ryanair. However, any new regulations could take years to develop and approve.
