EU to review airline ownership rules as Apollo's £5.7bn easyJet bid hangs in balance

The EU review

The European Union is preparing a review of airline ownership rules to prevent foreign investors from taking effective control of carriers, an EU official told Reuters on 22 July. The review, expected in the autumn, aims to "protect strategic autonomy" and clarify which corporate structures are permitted, especially around control and ownership. The official stressed that the move is not linked to any specific takeover bid but forms part of a broader revision of air services regulations. Current rules require EU airlines to be more than 50% owned by EU nationals and to be controlled by Europeans. The official said the industry may have a "wrong perception" that the rules are no longer strictly enforced.

The concern is that the industry is on the wrong foot, thinking that we no longer enforce the rules strictly. People will go down the wrong alley because there's a wrong perception.

The easyJet bidding war

The review lands amid a bidding war for easyJet, the UK-based low-cost carrier that operates an Austrian subsidiary to maintain EU flying rights after Brexit. Earlier this month, easyJet's board recommended a £5.7bn offer from US private equity firm Apollo Global Management, which topped a previous £5.5bn bid from Castlelake. The Castlelake consortium included Irish aviation executives Peter Bellew and Mark Breen as EU-national investors, a structure designed to navigate the ownership rules. Neither Apollo nor Castlelake has explained how a takeover would satisfy the EU's majority-ownership requirement, a key hurdle for any non-EU acquisition.

Market reaction

easyJet shares fell as much as 15% on Wednesday, the steepest drop in four years, before recovering to trade about 10% lower in late afternoon. Ryanair shares slipped more than 2%, though much of that decline came before the Reuters report. The sell-off reflects investor concern that a stricter interpretation of ownership rules could block or delay the Apollo deal, shrinking the pool of potential bidders for European airlines. Takeovers in the sector have historically been difficult: IAG abandoned its bid for Air Europa in 2024 after Brussels raised competition concerns.

I think the takeover of easyJet is likely to be very, very difficult because of the rules.

What the rules say

EU law requires any air carrier holding an operating licence to be majority-owned and effectively controlled by EU nationals. The rules apply to easyJet through its Austrian subsidiary, even though the parent company is listed in London. The upcoming review will examine whether complex corporate structures allow foreign investors to exercise "decisive influence" without formal majority ownership. The official told Reuters that Apollo, Castlelake and easyJet have not discussed the details of their proposed deals with European regulators.

What happens next

The review is expected to begin in the autumn, with no specific timeline for completion. If the EU tightens its interpretation, the Apollo bid could face significant obstacles, potentially setting a precedent for private equity buyouts in the tightly regulated airline industry. easyJet and Apollo declined to comment; Castlelake did not respond to requests. The official said the goal is to ensure "sufficient headroom when it comes to control" and to prevent a drift toward de facto foreign ownership.