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Wizz Air Reportedly Bids for EasyJet Takeover
The U.K. aviation industry faces further uncertainty with the Guardian reporting that EasyJet was the target of an “unsolicited preliminary takeover approach” from another airline. Bloomberg and multiple other sources including the Guardian have identified Hungarian-based carrier Wizz Air as the potential aggressor, though the airline’s spokesperson offered no comment. EasyJet’s board rejected the offer, which came as the U.K. airline launched a £1.2 billion ($1.66 billion) call for funds to assist with its pandemic recovery.
The offer was said to undervalue the U.K.’s largest carrier and took the form of “a low premium and highly conditional all-share transaction.” EasyJet chief executive Johan Lundgren also declined to identify the bidder and said that no shareholder had been notified of the bid, including the airline’s founder and largest shareholder Sir Stelios Haji-Ioannou.
On the subject of the £1.2 billion fundraiser, Lundgren said the money would be used for “offensive and defensive” strategies. Lundgren cited opportunities across Europe with possibilities of slots becoming available at Amsterdam Schipol, Paris Orly and even Gatwick should the British Airways subsidiary strategy fail to get off the ground.
“We see retrenchment of legacy carriers across the network these opportunities are showing themselves. Clearly that would make sense if the conditions are right, it would be very little risk,” Lundgren said in a statement.
Defensively, the airline is facing a possible challenge at its Gatwick hub with the recent news that British Airways is negotiating with unions to launch a low-cost subsidiary from the U.K.’s traditionally second busiest airport. Both Wizz Air and Ryanair have also been aggressive in terms of planning to compete for the U.K. leisure travel market which will form the majority of the post-Covid-19 recovery demand and is EasyJet’s bread and butter.
Ryanair group chief executive Michael O’Leary weighed in on the recent developments by telling the Financial Times that “both easyJet and Wizz will either need to be taken out or coalesce together.” With regard to the British Airways situation the Guardian reported O’Leary as saying that the strategy was “doomed to fail,” adding, “Will BA ever successfully set up a low-cost airline? No. BA has had six or seven goes at it.”
O’Leary also told the Financial Times that “consolidation needs to happen and will happen. It’s an inevitability, particularly coming out of Covid.” The sentiments were echoed by Lundgren who acknowledged that “everybody would agree that when you go through situations like this, that there are consolidation plays happening.”
O’Leary indicated to the Financial Times that Ryanair was not in the merger and acquisition market at present though did acknowledge the airline had been interested in Wizz Air in the past. “I tried to buy Wizz three or four times off [founding investor Bill Franke], but we could never agree a price,” he said.
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