Key Takeaways
- Shares of easyJet gained 15% on Friday, and they’re headed for their best day since 2020, on news of a rival bid by US private equity house Apollo for the low-cost airline.
- The bid is 25p higher per share than a previous bid from Castlelake, which easyJet had publicly agreed to, pending regulatory approvals.
- Experts say the news is good for easyJet stockholders, as the Apollo offer could start a bidding war.
Shares in easyJet EZJ rallied to their best day in nearly six years after US private equity firm Apollo APO submitted a surprise rival bid to take the UK’s largest low-cost airline private. This comes just days after easyJet accepted a bid in principle from US alternative investment house Castlelake.
In London, easyJet’s share price rose 15% on the news that Apollo, whose previous purchases include delivery business Evri and media company Yahoo, submitted a bid of £7.15 per easyJet share. That topped Castlelake’s offer of £6.90 and is a premium of around 22% on easyJet’s Thursday closing price. The bid values easyJet at £5.7 billion.
Shares of easyJet have now climbed nearly 32% through July 10, positioning it for its best annual gain since 2023, when it climbed 57%. As a result of the bidding, easyJet is also no longer one of the UK’s most shorted stocks. Before Castlelake’s first offer on 12 June, easyJet shares were down around 2% in the year to date.
“The easyJet board has considered the proposal and is minded to recommend it, finding the financial terms superior to a previous offer from Castlelake,” easyJet said in a statement Friday morning.
Analysts say Apollo’s offer could be followed by further rival bids from Castlelake. “The bidding war now comes down to price,” says Dan Coatsworth, head of markets at AJ Bell. Castlelake has already shown “determination to get what it wants,” he adds. “The spotlight now turns back to the original suitor to see if it will dig even deeper to beat Apollo. Shareholders will be putting their feet up and enjoying the ride.”
Why Is Apollo Bidding Against Castlelake for easyJet?
Apollo’s bid may be good for shareholders, but it also underlines how attractive struggling UK firms have become to private buyers. Like all airlines, easyJet has faced the triple-pronged challenge of pandemic disruption, geopolitical uncertainty, and inflation in recent years, with consumer confidence low and its business plans struggling to achieve scale amid soaring fuel costs.
In addition, Morningstar analysts point out that a staff shortage has meant easyJet has struggled to adapt nimbly to changes, while fleet replacement delays have held the company back. For the first half of its 2026 financial year, easyJet reported widening pretax losses of £552 million.
In June, before Apollo’s bid, Morningstar equity analyst Loredana Muharremi said Castlelake’s £6.90-per-share bid was “attractive” and that the deal would likely succeed. However, she cited significant headwinds for the company. “Short-haul capacity in Europe remains at 90%-95% pre-pandemic levels, with many airlines struggling to increase capacity because of delivery delays from Boeing and Airbus,” she said.
The business still retains great potential, according to Muharremi. EasyJet’s revenue passenger kilometers are expected to rise as the airline expands into new locations. These include “high-return locations” such as Milan Linate, Rome Fiumicino, Southend, and Newcastle. EasyJet’s holidays business has also shown early success, she says.
Following the rival bid, Muharremi raised her fair value estimate for easyJet stock to £6.91 per share from £6.55, saying Apollo’s bid is a “full and fair price, reflecting easyJet’s scarce slot portfolio, modern fleet, resilient low-cost franchise, and easyJet holidays growth opportunity. As a result, we see limited reason for shareholders to reject the offer.”
