Is Easyjet heading for a break-up

LONDON - UK carrier Easyjet could ultimately be broken up following its proposed takeover by US investment firm Castlelake, aviation industry observers said. Easyjet holds various fleet, airport slot and business unit assets that might become more valuable if carved out of the integrated airline.

Castlelake has agreed in principle to acquire Easyjet for around 5.2 billion GBP, taking the airline private after its fifth takeover approach was accepted by the Easyjet board. Under UK takeover rules, the investor has until early August to finalize its formal offer.

Analysts said the economics of the deal raise questions over Castlelake's longer-term intentions. Easyjet's most valuable assets include its portfolio of take-off and landing slots at capacity-constrained airports such as London-Gatwick, Milan-Malpensa and Geneva, as well as its young Airbus A320-family fleet.

Easyjet group fleet consists of 368 aircraft, including 76 Airbus A320neo and 30 A321neo. The airline expects an additional 125 A320neo and 162 A321neo from Airbus by 2034.

Some industry experts argue those assets could be worth more if sold separately than as part of an integrated airline, fuelling speculation that Castlelake may eventually pursue a break-up strategy.

Bernstein Research aviation expert Alex Irving considers it likely that Castlelake could eventually split the company up into its aircraft fleet, airport slots and its holiday business.

The proposed acquisition marks one of the largest transactions involving a European low-cost airline in recent years and comes as investors increasingly focus on the underlying value of aviation infrastructure assets, including airport slots and aircraft fleets.