Air France-KLM CEO signals openness to joint bid with Castlelake for Easyjet

Air France-KLM Chief Executive Officer Ben Smith has indicated a willingness to explore a potential involvement in a takeover bid for EasyJet Plc, stating he would entertain a proposal from investment firm Castlelake LP if approached. While describing EasyJet's slot portfolio as "very impressive," Smith clarified that his airline group is currently not participating in any active bid. However, the group shares a history with Castlelake, having previously partnered with the firm on a joint acquisition of the Scandinavian carrier SAS.

Smith noted it is "no surprise" that outside parties are targeting EasyJet, given the highly attractive nature of the British low-cost carrier's airport slots across Europe. Because strict regulatory frameworks prevent American companies from holding a majority stake in European airlines, Castlelake would require a European partner to successfully execute a takeover. The investment firm recently disclosed it has explored an approach and faces a month-end deadline to either formalize its intent or withdraw.

Asked whether Air France-KLM would pick up the phone to talk about a proposition for EasyJet, Smith said “for sure, and I would expect all of our competitors to do the same.”

On Monday, EasyJet said any deal is rife with risk, calling the bid “highly opportunistic” given the airline’s depressed stock price.

It had said it had not held talks with Castlelake but it would assess any potential offer if one was made given its duty to maximise shareholder value.

"The Board notes the highly opportunistic timing when easyJet's share price is temporarily depressed due to the current situation in the Middle East and its impact on customer confidence and jet fuel prices," it said in a statement.

"The Board remains highly confident in easyJet's strategy and its ability to deliver attractive long-term value for shareholders."

Reports from Corriere della Sera suggest Castlelake is also considering a joint bid with shipping and logistics giant MSC Mediterranean. Meanwhile, speaking at the International Air Transport Association's annual general meeting in Rio de Janeiro, Smith highlighted robust passenger demand across Air France-KLM's network, particularly at its major European hubs in Paris and Amsterdam. He cautioned, however, that any future spikes in fuel costs would force the airline to raise ticket prices, a move that could ultimately dampen consumer demand.

“It is a little unfortunate that a lot of customers are still not confident that there will be enough fuel,” Smith said.

“So we are seeing a late booking environment,” he added.

EasyJet, which has a market capitalization of £3.37 billion ($4.53 billion), has seen its shares slide 16% this year, most of that since the start of the US-Israeli war on Iran in late February.

EasyJet has struggled to recover its valuation since the COVID-19 pandemic, but has managed to boost its results thanks to a successful holiday business and an efficient Airbus fleet.

There has been speculation of a takeover bid for easyJet for years as it has faced a tough challenge from rival Ryanair .