Easy Takings 
for Private Equity Jun/Oct 2026

For years, the standard playbook of aviation finance treated direct equity investment in airlines as an unhedged gamble. The consensus was straightforward: Private Equity (PE) firms could safely finance aircraft leases or fund MRO infrastructure, but they should not touch the volatile, low-margin, grubby business of actually flying passengers.

In general, when PE invested in airlines, it was as vulture capital: stepping into the wreckage of a bankruptcy to wipe out existing shareholders, clean up the balance sheet, and engineer a swift exit.

There are important aviation specialist exceptions: David Bonderman’s TPG was a strong supporter of Ryanair; Bill Franke’s Indigo Partners built an incubator of a family of ULCC airlines and remains heavily invested in Wizz, Frontier, jetSmart and Volaris. The latter’s buying power was able to secure a long pipeline of A320s at advantageous rates, parcelling the deliveries to its ULCC carriers wherever the regional returns made most commercial sense.

Is that old PE consensus disappearing? The recent hostile takeover battle for easyJet by Apollo and Castlelake may suggest a change in the way private institutional capital views commercial aviation. PE is perhaps no longer merely waiting in the corridors of the bankruptcy courts to rescue distressed carriers such as Virgin Australia, Aeroméxico or SAS, and make a quick buck; nor keeping charter carriers like Condor on government-backed life support. The bid for easyJet represents an aggressive targeting of a top-tier, stable and profitable listed carrier; and a relatively longer investment horizon.

Vulture financing

Castlelake’s previous foray into airline operations followed the vulture approach — rush in with bags of money, clean the asset and flip for a healthy return. In late 2023, SAS entered into a $1.2bn investment agreement to exit its complex Chapter 11 and Swedish restructuring processes. Castlelake had $500m in DIP funding and took the lead with a 32% equity stake at the head of a consortium that included the Danish State (26.4%), Air France-KLM (19.9%) and Lind Invest (8.6%). Air France-KLM plans to acquire Castlelake’s and Lind Invest’s shares (subject to regulatory approval) by the end of 2026.

Apollo had followed a similar route with its involvement with Aeroméxico. When the pandemic forced the Mexican flag carrier into Chapter 11 protection in 2020, Apollo stepped in providing $1bn in DIP loan financing. This senior position allowed them to dictate terms during the restructuring, effectively wiping out existing equity holders while renegotiating expensive widebody fleet leases and labour contracts. Aeroméxico exited Chapter 11 in 2022 a leaner and more efficient airline, refocused on booming US-Mexico nearshoring traffic; and profitable (see Aviation Strategy, May 2026). Apollo exited through a $2.8bn flotation on the New York Stock Exchange.

In Australia, Bain Capital took a modified approach. In 2020 Bain acquired Virgin Australia out of voluntary administration during the pandemic for A$3.5bn. It delisted the airline and, not bothered by the constraints of quarterly reporting, were able to make serious restructuring decisions. Long haul operations were eliminated, workforce cut, and the fleet was simplified to a single aircraft type of 737s. After setting up an alliance with Qatar Airways (cemented by a 23% equity stake), Virgin Australia was relisted in 2025 through a A$2.3bn flotation on Sydney. But Bain retains around 40% of the equity, looking to raise its returns from long term equity growth.

Re-engineering financing

Apollo acquired Sun Country Airlines in 2017. At the time it was a small full-service carrier that had been through several periods of bankruptcy protection since its founding by ex-Braniff pilots in 1982. Apollo parachuted in Jude Bricker as CEO, previously COO at Allegiant, who proceeded to transform the carrier into a ULCC. Antoine Munfakh, head of private equity North America at Apollo, is quoted by PE Hub as saying: “We had this vision that we could fundamentally flip the business model on its head”. That vision, somewhat unusual for a ULCC, also seems to have included cargo flights — the long term business contracts for freight operations were deemed a good counterbalance to the seasonality and volatility of passenger transport. In 2019 Amazon acquired a minority stake in Sun Country from Apollo and signed a 10-year contract with the airline to provide cargo flights for Amazon Air.

Sun Country came to the public markets in 2021 in a $1.3bn IPO. Apollo had sold down its remaining stake gradually over the next four years. During its ownership Sun Country had doubled in size: passenger numbers rising to 4.5mn from 2.5mn and revenues from $560mn to $1.1bn; and it was profitable. It has just been bought out by Allegiant for c$1.5bn.

PE Hub mentions that Apollo considered that a major lesson it had learnt from Sun Country was how underappreciated the cargo segment is in the aviation industry. Munfakh again: “We learned that the markets value a passenger airline very similarly to a cargo airline, but the businesses have totally different characteristics. In a passenger airline, individual consumers are buying tickets every day. In a cargo airline, you may have 10-year contracts with annual pricing escalators and minimum volume guarantees.”

Taking on a Titan

In 2022, Apollo led a consortium of investors to acquire Atlas Air Worldwide — the world’s largest operator of 747 freighters — for $5.2bn in cash. Delisted from the NYSE, its operations since then have been conveniently hidden from view. Apollo states: “By repositioning the company in the market and enabling reinvestment in the business, Apollo helped Atlas Air expand its capabilities, enhance its services, and solidify its role as a global leader in aviation logistics.”

Ignoring the traditional PE waffle, what Apollo did was to refocus the business on pursuing long term ACMI contracts with major shipping and logistics companies and away from the more volatile spot markets.

This is intended to give the message to any future buyer that the business model represents a predictable utility in vital infrastructure. They also recently acquired a 49% stake in fellow-ACMI operator the Air Atlanta Group, in the process acquiring its 14 widebody freighters.

And in March Atlas Air Worldwide announced its largest new aircraft order: 20 A350F aircraft (plus 20 options) for delivery from 2029.

Apollo is reputed to be looking for exit options with a touted enterprise value of $12bn.

Battle for easyJet

Wars have many side effects. The decision President Trump to wage a short war against Iran in February sent oil prices soaring, and airline share prices plumetting. easyJet’s shares, which had traded around 500p for most of 2025 slumped by 30% to 350p.

Castlelake smelled a valuation anomaly (maybe they had read the article in Aviation Strategy, Sep/Oct 2025) and put forward a series of offers to acquire the company at 560p per share, 600p and then 625p. All were rejected by the easyJet board for undervaluing the company.

The US investment firm then had to go public under the LSE takeover rules in June with a formal 625p per share offer, valuing the group at £4.7bn.

It had partnered with EU nationals and airline stalwarts Peter Bellew and Mark Breen to satisfy European ownership and control rules (see below). In early July, the group reached an agreement in principle with easyJet for an offer at 690p/share valuing the group at £5.5bn.

Apollo then flung its oar into the millrace with a superior cash proposal at 715p/share (£5.7bn) and secured unanimous recommendation from the easyJet board.

It shrewdly averred that it would continue with easyJet’s existing plans and strategy; and crucially it had received Stelios Haji-Ioannou’s approval for the deal.

What was so attractive?

Easyjet’s market capitalisation in May had been depressed by geopolitical events to sit at £2.6bn. The stock market had also been concerned about medium term cash flow as it entered a period of high capital expenditure: it was planning to increase the book value of assets owned on its balance sheet by 60% by the end of Sept 2028 to nearly £7.5bn.

The airline is the fifth largest in Europe by the total number of passengers carried (the second largest in terms of intra-European capacity and traffic), and sits in a sweet “hybrid” spot between the ULCC point-to-point models accessing secondary and tertiary airports and the network legacy carriers flying into primary gateways. Operating over 1,000 routes across 35 countries it holds dominant positions and strong market shares at key European airports — London Gatwick, Paris CDG, Milan Malpensa, Amsterdam and Geneva. It has strong brand recognition throughout the major European markets.

Castlelake (aided by the experience of its leasing arm) clearly saw value in the fleet. A third of easyJet’s 374 A320 family aircraft are fully owned and, in a market constrained by supply chain problems, could themselves be worth £4.4bn. In addition the company has orders for 280 A321 and A320neos. These will have been negotiated at very good prices and, on a rough back of the aircraft calculation, the order slots may well have an intrinsic value of an additional £1.2bn. Those eager to do sum-of-the-parts calculations could also add in another £500m for the value of its slot portfolio (particularly at Gatwick).

But easyJet has also successfully built easyJet Holidays — in a reversal of the traditional Inclusive Tour business model this is an airline tacking on an IT operation to sell tours to its captive client base as against a holiday business operating an airline to fly its customers on holiday. It achieved a pretax profit of £250m for the Easyjet Group in its 2025 financial year — well ahead of targets — and has been a buffer to the pressures of rising fuel prices for the airline. Separated from the airline, the holiday business would probably not have much value, but within the group it is a lucrative source of income and cash flow.

Ownership constraints

Any private equity bid for an airlines must adhere to the relevant ownership and control regulations. For many years ICAO’s model template for international bilateral air service agreements was to state that a designated airline on a route must be “substantially owned and effectively controlled“ by nationals of the home country. It has since moved to the concept that an airline’s nationality is determined by its ”principal place of business". The EU was one of the early adopters of the principle for external relationships on the establishment of the European Common Aviation Area in 2006 (while keeping ownership requirements for internal pusposes). The UK adopted it following Brexit.

Easyjet adds a complication: its UK operations require it to be based in the UK to retain its UK Air Operator Certificate (AOC) and access UK bilateral rights to non-EU destinations; its intra-EU flights are operated under an Austrian AOC through a subsidiary, easyJet Europe, which must be based in Austria and majority owned and controlled by nationals of EU member states. The company, while listed on the LSE, got through the regulations by limiting non-EU ownership (and voting power) to 49.5% of outstanding shares.

Apollo, in its proposed acquisition will be limited to 49.9% direct investment. It has proposed the establishment of a Trust (for the benefit of EU-based senior management) to hold a 5% stake, and is offering to “rollover” existing shareholders — so far accepted by the Haji-Ioanou family holdings and the board of directors — into a group that would account for at least 45.1% of the new unlisted easyJet holding company (see graph).

It hopes to fulfil all regulatory requirements to enable it to complete the acquisition by the first quarter of 2027.