British low-cost airline EasyJet agreed in principle on Monday to a £5.5 billion ($7.3 billion) takeover proposal from US private equity firm Castlelake, sending the EasyJet share price up more than 10% in early London trading. The improved cash offer follows Castlelake's £4.93 billion bid rejected by EasyJet last month. The proposed acquisition comes as airlines face mounting pressure from higher jet fuel costs, with the International Air Transport Association warning that fuel prices are expected to stay roughly 70% higher than a year ago, while EasyJet reported a £552 million pre-tax loss for the six months ending March 31.
Castlelake Offers £5.5 Billion for EasyJet with August 3 Deadline
The latest proposal from Castlelake values EasyJet at approximately $6.90 per share. Under the proposed deal, shareholders would receive this cash offer. Castlelake now has until Aug. 3 to submit a firm offer or withdraw from the acquisition process. The improved bid follows several previous attempts by the private equity firm to acquire the airline.
EasyJet Reports £552 Million Loss Amid 12% Revenue Growth
In its most recent half-year financial results, EasyJet reported a pre-tax loss of £552 million for the six months ending March 31. Despite the loss, revenue increased 12% year over year to £4 billion. Management warned that customers could face higher ticket prices. The airline faces operational challenges as the global industry contends with elevated jet fuel costs driven by the ongoing conflict in the Middle East.
Castlelake Backs Fleet Modernization Strategy
In a joint statement announcing the agreement in principle, EasyJet and Castlelake said the private equity firm supports the airline's long-term strategy and future development. Castlelake expressed its intention to help strengthen the business and build a more resilient European airline if the acquisition is completed. The investor expressed strong backing for EasyJet's fleet modernization program, describing it as a key driver of the airline's long-term competitiveness, operational efficiency, and sustainability goals. Modernizing the fleet is expected to improve fuel efficiency and reduce operating costs over time.
FAQ
What did Castlelake offer for EasyJet on Monday?
Castlelake proposed a £5.5 billion ($7.3 billion) takeover of EasyJet, valuing the airline at approximately $6.90 per share. EasyJet agreed to the offer in principle, and Castlelake has until Aug. 3 to submit a firm offer or withdraw.
Why did EasyJet report a loss despite revenue growth?
EasyJet reported a £552 million pre-tax loss for the six months ending March 31, even as revenue increased 12% year over year to £4 billion. The airline faces higher jet fuel costs, with industry prices roughly 70% higher than a year ago according to the International Air Transport Association.
How does Castlelake plan to support EasyJet after acquisition?
In a joint statement, Castlelake expressed support for EasyJet's long-term strategy, fleet modernization program, and operational efficiency goals. The private equity firm stated its intention to help strengthen the business and build a more resilient European airline if the deal is completed.
