EU to review airline ownership rules, threatening U.S. bids for easyJet

The European Union is preparing to review its airline ownership regulations to prevent foreign investors from gaining effective control of EU carriers, an EU official disclosed at the Farnborough air show on Tuesday, in a move that could upend a heated U.S. bidding war for British budget airline easyJet.

The previously unreported review is intended to "protect strategic autonomy" and ensure control of regional carriers remains within the bloc, the official told Reuters. EasyJet shares fell sharply on Wednesday following the report, with Halifax citing the stock as having "tanked" on the news.Investing.com+2

A Bidding War Under Threat

The EU's intervention comes as two American investment firms are locked in a takeover battle for easyJet. Apollo Global Management ↘ 1.39% submitted a £5.7 billion ($7.65 billion) offer of £7.15 per share on July 10, trumping an earlier £5.5 billion bid from Minneapolis-based Castlelake at £6.90 per share. EasyJet's board said it was "minded to recommend" Apollo's higher offer to shareholders.The Guardian+1

Under the agreed structure for Castlelake's earlier bid, the U.S. firm would take a 49% stake, with the remaining 51% held by Brookfield Asset Management ↘ 3.42% and other partners to satisfy existing EU rules requiring majority local ownership of airlines operating in the bloc.telegraph

The EU official said the autumn review would examine which corporate structures are permissible, particularly around questions of control and ownership. Current regulations under the EU Air Services Regulation require that EU member states or nationals own more than 50% of an airline and "effectively control" it.live.euronext.com+2

Strategic Autonomy in Focus

The review reflects broader EU concerns about foreign influence over critical infrastructure. "This is to ensure that foreign investors don't have full control," the official told Reuters.Investing.com

The announcement introduces fresh uncertainty into an already complex deal process. Apollo has until August 7 to submit a formal offer, while Castlelake's deadline is August 3. Both firms must navigate not only British takeover rules but also EU regulatory scrutiny of any ownership structure that could be deemed to give a non-EU entity effective control.Reuters+2

The review could set precedents for future airline acquisitions across Europe, potentially tightening rules that bidders have sought to work around through consortium structures designed to keep nominal EU majority ownership intact.Devdiscourse+1