Apollo Global Management's move to take EasyJet private, valuing the airline at approximately $7.7 billion, has led to speculation about further consolidation in the European airline sector.
Anna Macdonald, investment strategy director at Hargreaves Lansdown, highlighted Jet2 as a potential acquisition target, noting its low-cost carrier model and a price-to-equity ratio of 6-7 times, which has seen a 60% increase from its recent lows.
Despite the challenges facing the airline industry, including low margins and cyclical demand, the U.K. market is seen as an attractive opportunity for private equity investors. Macdonald pointed out that while private buyouts of international flag carriers are more complex, budget airlines like Jet2 present clearer upside potential.
Jet2's shares rose 0.5% in afternoon trading, reflecting investor optimism. However, a spokesperson for Jet2 declined to comment on market speculation. The broader context includes Castlelake's withdrawal of a $7.3 billion bid for EasyJet, which has cleared the way for Apollo's acquisition, indicating a shift in investor sentiment towards budget airlines amidst ongoing industry pressures