EasyJet airliner on the tarmac at London Southend Airport, Southend-on-Sea, UK, May 3, 2024.
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easyjet Shares rose in early trading on Monday after the British low-cost airline agreed in principle to a 5.5 billion pound ($7.3 billion) takeover offer from U.S. private equity manager Castlelake.
The low-cost carrier rose 10.5% shortly after 8:15 a.m. London (3:15 a.m. ET), hitting a new 52-week high.
The improvements to Castle Lake’s easyJet take-private plans agreed on Sunday come after the airline rejected a £4.93bn offer from a private equity firm last month. Castle Lake has made a total of five bids for EasyJet.
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The new bid is a cash offer of $6.90 per share. Castle Lake now has until August 3 to make a firm offer or break the deal.
The proposal comes at a time when the global aviation industry is under stress as airlines weather a jet fuel crunch caused by conflict in the Middle East. The International Air Transport Association warned last month that global airlines could see their profits halved this year due to rising jet fuel costs, which are expected to rise by about 70% from a year ago.
In its latest half-year results published on May 21, easyJet reported a pre-tax loss of £552m for the six months to March 31, despite a 12% rise in first-half sales to £4bn, and warned of rising prices and a slowdown in bookings.
EasyJet and Castle Lake said in a joint statement on Sunday: “During discussions between the parties, Castle Lake emphasized its great respect for EasyJet and its employees and its intention to support its future growth and transformation into a stronger and more resilient European airline, to the benefit of all stakeholders once the transaction is completed.”
“Castle Lake supports easyJet’s fleet modernization program as central to the company’s long-term competitiveness, efficiency and sustainability objectives.”
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