Third-year law student Ananya Cartier explores the impact of EU regulations on the private equity takeover of EasyJet
Apollo has agreed to buy EasyJet for £5.7 billion. At least, “buy” is the simple version of the story.
Despite leading the takeover, Apollo-managed funds will own no more than 49.9% of EasyJet’s new parent company. Existing qualifying shareholders will own much of the remainder, while an EU trust could hold up to 5%. Spending £5.7 billion on a takeover only to cap yourself at 49.9% is, to put it mildly, an unusual way to buy a company. The reason lies in European aviation rules, and it makes this deal far more interesting than its headline suggests. Apollo may have won the bidding war, but getting the transaction to work is another matter.
An 81% premium… and still room for profit?
Apollo was not the first US investor to come knocking. After weeks of approaches from rival private equity firm Castlelake, EasyJet’s board was eventually prepared to recommend a 690p-per-share proposal. Apollo then appeared with 715p. Castlelake withdrew and EasyJet’s board unanimously recommended Apollo’s offer.
According to the formal takeover materials, 715p represents an approximately 81% premium to EasyJet’s share price immediately before takeover interest became public. AJ Bell calculates that the average premium across UK deals announced so far in 2026 is around 39%. Apollo is therefore paying more than twice the average premium — and still expects to make money.
There is another way of looking at that 81%, however, EasyJet shares traded above £14 before the pandemic, considerably more than Apollo’s 715p offer. What looks generous against EasyJet’s recent valuation may look rather different to a long-term shareholder.
Apollo, apparently, thinks there is still plenty left on the table too. Its plans are not based on ripping up EasyJet’s existing strategy. Apollo sees opportunities in EasyJet Holidays, loyalty, ancillary revenues, network optimisation and partnerships, while arguing that private ownership will give management greater flexibility to pursue investments that may take longer to produce results.
It is an attractive pitch. It is also, conveniently, exactly the sort of pitch you would expect from the private equity firm trying to take the company private.
That does not make Apollo wrong. Public markets can encourage short-term thinking, but they also bring scrutiny, liquidity, and accountability. Private ownership removes some of those pressures while replacing them with others, including the need to finance the acquisition and ultimately generate a return for Apollo’s investors.
Apollo is not really betting on a turnaround. It is betting that a business it already considers strong can become more valuable under a different ownership model. First, though, it has to work out what owning EasyJet actually means.
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So much for simply counting the shares
Under EU Regulation 1008/2008, EU Member States or EU nationals must own more than 50% of an EU airline and effectively control it for the carrier to satisfy the relevant operating licence requirements.
Ownership and “effective control”, importantly, are not the same thing. European Commission guidance makes clear that regulators can look beyond share percentages to rights and arrangements that allow an investor to exercise decisive influence. Apollo staying below 50% therefore does not automatically settle the issue.
Its proposed structure attempts to deal with this. Qualifying shareholders can take Apollo’s 715p cash offer or exchange their existing shares for shares in EasyJet’s new private parent. These “rollover shareholders”, including founder Sir Stelios Haji-Ioannou and his family, are expected to own between 45.1% and 49.9%. An EU trust could hold up to another 5%, with Apollo owning the balance up to its 49.9% cap.
There is a practical problem too. The Haji-Ioannou family currently holds around 15.31% of EasyJet and the proposed trust could account for another 5%. Apollo therefore needs enough other qualifying shareholders to remain invested rather than simply take the cash.
Those investors would be swapping publicly traded EasyJet shares for an investment in a private company with different rights and a different capital structure. Flexibility in the percentages, after all, does not create European shareholders.
Even if the ownership arithmetic works, the rights attached to those shares matter. Reporting on the takeover documents indicates that ordinary rollover shareholders would retain some voting rights, while Apollo and certain major shareholders would have greater rights over areas including board appointments and investment decisions. Certain non-EU holdings can also be compulsorily transferred or bought back where necessary to preserve qualifying European ownership. For Apollo, it turns out that the most important part of 49.9% may be the 0.1% it cannot own.
None of this means Apollo necessarily exercises the kind of effective control that would create a regulatory problem. That is for the relevant authorities to determine. It does mean that regulators need to look at how the structure works in practice rather than simply counting shares. For a transaction supposedly about buying EasyJet, the more interesting issue may be who ultimately gets to influence what EasyJet does.
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£5.7 billion is only the beginning
Even if the ownership structure works, Apollo still has to make the economics work. Recent reporting suggests EasyJet could ultimately carry around £3 billion of debt following the transaction, compared with roughly £434 million of net cash currently. EasyJet may, then, be taking on more baggage than its passengers!
It would be ‘easy’ to tell the familiar private equity story: lots of debt, therefore bad deal. The reality is less convenient. Leverage can increase returns when things go well. The difficulty is what happens when they do not. Airlines are hardly known for offering investors a smooth ride: they face large, fixed costs and are exposed to fuel prices, recessions, geopolitical disruption, and sudden changes in demand. None of which makes EasyJet an especially forgiving company to load with additional financial obligations.
The transaction documents also contemplate preference shares carrying a 14% annual preferential dividend, giving them priority over ordinary rollover shares for certain payments. For shareholders remaining invested, this is not simply the same EasyJet investment without the stock-market ticker. Sir Stelios and his family nevertheless intend to stay invested. That is a fairly meaningful vote of confidence. But once the deal is financed, Apollo still has to find the returns.
Making EasyJet more profitable without making it less easy
There are several places to look. EasyJet Holidays has been growing, while Apollo has identified loyalty, revenue management, network optimisation, partnerships and “premiumisation and business travel” as opportunities. Ancillary revenue is another obvious route. Baggage, seat selection and other extras already form an important part of the low-cost airline model. There is only so much value to be found in an extra suitcase, though.
EasyJet’s customers are generally quite interested in price. Additional charges can improve margins, but push them too far and passengers can compare the final bill with Ryanair, Wizz Air or another competitor. Cost-cutting has limits too if savings begin to damage service or operations.
Apollo has pledged that it does not intend to make general job cuts during the first 12 months following completion, although some roles associated with EasyJet being a listed company could disappear once it becomes private.
For now, Apollo’s stated strategy looks more like growth and optimisation than the stereotypical private equity story of buying a company and immediately cutting it apart. The challenge is simple to describe, even if considerably harder to achieve: make EasyJet more profitable without making it less easy. Paying £5.7 billion is one thing. Making EasyJet sufficiently more valuable to justify that price while supporting a substantially different capital structure is another.
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More than 49.9%
The takeover still requires shareholder approval, court sanction, and regulatory clearances, with completion currently expected by the end of the first quarter of 2027. Apollo has therefore won the bidding war, but there may still be some turbulence before it can call EasyJet its own.
It now needs enough qualifying shareholders to remain invested, a structure that satisfies European ownership and effective-control requirements, and enough financial upside to justify paying an 81% premium while substantially changing EasyJet’s capital structure.
The deal is a useful reminder that buying a company does not always mean buying every share and taking straightforward control. In heavily regulated industries, the legal structure can matter just as much as the amount written on the cheque. Apollo has shown that it is willing to pay 715p a share for EasyJet. Whether 49.9% ownership can deliver everything it wants from that £5.7 billion investment is the more interesting part of the deal.
Ananya Cartier is a third-year law student and Legal Cheek Campus Ambassador at Lancaster University. She has a keen interest in corporate law, particularly private equity and M&A, banking and finance, and capital markets. Ananya enjoys exploring how legal developments, major transactions and changing market conditions shape businesses and the wider commercial landscape.