EU to Review Foreign Ownership Rules for Airlines, Raising Hurdles for easyJet Bids

The European Union is preparing to review its airline ownership regulations, a move that casts significant uncertainty over the potential acquisition of low-cost carrier easyJet by U.S. investment firms. An EU official told Reuters the previously unreported review aims to clarify rules on foreign control and protect the bloc's "strategic autonomy."

Regulatory Scrutiny Intensifies

The review, which is expected to take place in the autumn, will focus on clarifying which corporate structures are permissible to ensure that effective control of regional carriers remains within the EU. The bloc's long-standing rules require that airlines are at least 51% owned and controlled by EU nationals.

"This is to ensure that foreign investors don’t have full control," an EU official, who asked not to be named, told Reuters. The official added that the review is necessary because of a "wrong perception" in the industry that the EU is no longer strictly enforcing its ownership rules.

easyJet Takeover in Focus

The regulatory tightening comes amid a bidding war for easyJet. The airline's board recently backed a £5.7 billion ($7.65 billion) offer from U.S. private equity firm Apollo Global Management, which followed an earlier £5.5 billion bid from rival firm Castlelake.

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A key hurdle for any non-EU acquisition is satisfying the majority ownership requirement. According to the source, easyJet, Apollo, and Castlelake have not yet discussed the details of their proposed deal structures with European regulators. easyJet and Apollo declined to comment, while Castlelake did not immediately respond to Reuters' request.

Market and Industry Implications

This development could set an important precedent for the European airline industry, potentially cooling interest from foreign private equity firms in a sector where takeovers have traditionally involved other carriers, often with government support.

The EU's move signals a more assertive stance on protecting its aviation sector from foreign influence. The review aims to ensure the bloc has "sufficient headroom when it comes to control" of its airlines, the official stated, indicating that any potential loopholes for foreign takeovers may be closed.