Home Business NewsBusinessAviation NewsEasyJet shares jump on takeover speculation

EasyJet shares jump on takeover speculation

by LLB Reporter
31st Oct 22 10:28 am

Reports that EasyJet could be a takeover target for International Consolidated Airlines make perfect sense.

The pandemic has created concerns about the future of business travel, with companies globally realising they donโ€™t need to hold so many meetings in different locations. Itโ€™s far easier, cheaper and more environmentally friendly to hold many conversations over Teams or Zoom than get on a plane.

Therefore, companies like International Consolidated Airlines need to rethink their future sources of revenue as they may find that business travel doesnโ€™t match pre-Covid levels.

AJย Bell investment director Russ Mould said:ย โ€œOwning EasyJet would significantly boost International Consolidated Airlinesโ€™ position in the leisure market and give it access to many prized airport landing slots.

โ€œThe key challenge is funding such a deal. International Consolidated Airlines is already ladened with large debts and shareholders may prefer it to pay down these borrowings rather than spend billions on buying another airline such as EasyJet.

โ€œShares in EasyJet earlier this month traded at their lowest levels since 2011, which is the marketโ€™s way of saying it believes the companyโ€™s recovery from the pandemic will be very slow.

โ€œMany airlines will have been watching EasyJetโ€™s share price collapse and weighing up their options. An opportunistic takeover bid now could net them a bargain in the long term, but equally itโ€™s a bold move to take given the gloomier economic outlook which could cause further disruption to earnings over the coming year.

โ€œWizz Air has been linked as a potential suitor for EasyJet in the past and there is also logic behind a tie-up of those two companies. Eastern Europe-focused Wizz Air could strengthen its position in Western Europe by owning EasyJet. Additional airlines may also find a good rationale for owning EasyJet. This suggests International Consolidated Airlines will face competition from other parties should it decide to make a move on the low-cost airline operator.โ€

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