Buyout aviators flag under-the-radar airline value

Jet2

12/08/2026 11:35

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Oliver Taslic
LONDON, Aug 12 (Reuters Breakingviews) - Airlines can be volatile investments. That hasn’t stopped private equity interest, typified by Apollo Global Management’s APO.N £5.7 billion offer for easyJet EZJ.L. While other full-scale buyouts look tricky, the takeaway for other investors, and management, is that the sector has plenty of value flying under the radar.
Part of the appeal of easyJet, whose months-long takeover saga culminated last week, was the gap between its lowly valuation on the one hand, and its rock-solid balance sheet and hard assets – aircraft, engines, and the like – on the other. Before Apollo rival Castlelake announced its interest in May, the airline was trading below the value of its net assets, and, at 6 times forward earnings, per LSEG data, way below its pre-pandemic double-digit multiples. That allowed Apollo to offer an 81% premium to the carrier’s undisturbed price.
Another player that stands out is Jet2 JET2.L. The £3 billion company is financially conservative, reporting £2 billion in net cash as of March, and has over 100 new Airbus AIR.PA aircraft due in the coming years, suggesting plenty of growth ahead. RBC analysts reckon book value per share could reach £13.80 by March 2028, meaning Jet2 trades at 1.1 times this figure. Peers are valued around 1.7 times, using analyst forecasts compiled by Visible Alpha. That discount may be too steep, given the firm’s niche in the growing package holiday industry and its financial conservatism.
There could also be opportunities among the bigger carriers, especially in the bits of the business that don’t involve flying. One example is IAG ICAG.L Loyalty, which makes money selling Avios points to the likes of American Express AXP.N. Citi analysts calculated in June the unit could be worth up to €13 billion. That would implicitly leave the core airline part of IAG worth €14 billion, or just 4 times its forecast 2026 operating profit.
Another highlight is Lufthansa Technik, the arm of Deutsche Lufthansa LHAG.DE that performs aircraft maintenance – currently a booming industry thanks to aircraft delivery delays. Visible Alpha forecasts suggest the unit will generate over €700 million of operating profit next year. Put that on U.S.-listed peer StandardAero’s SARO.N 14 times multiple, and Technik could be worth €10 billion – or 60% of Lufthansa’s current enterprise value.
The question is how to unlock this value. Jet2 founder and 16% shareholder Philip Meeson may not want to sell. But that still leaves the group with plenty of firepower to buy back stock, with an up to £250 million programme launched in July. A more complex route was outlined by Air Canada AC.TO, which on Tuesday announced a deal to sell a minority stake in its loyalty business to Blackstone BX.N and others, valuing the unit at C$10 billion, more than its entire market capitalisation. Cheap valuations and savvy dealmaking means airline investing needn’t be a no-frills journey.
     
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CONTEXT NEWS
Air Canada announced on August 11 a C$2.5 billion minority equity investment in its loyalty programme Aeroplan. The deal, led by Blackstone and La Caisse, values Aeroplan at C$10 billion.
Apollo Global Management and easyJet announced on August 6 they had reached an agreement on the terms and conditions of a recommended cash acquisition of the UK-listed airline. The deal values easyJet at approximately £5.7 billion, according to the statement.
U.S. alternative investment firm Castlelake had also expressed interest in acquiring easyJet, before walking away.

(Editing by Neil Unmack; Production by Varun H K and Streisand Neto)
((For previous columns by the author, Reuters customers can click on TASLIC/oliver.taslic@thomsonreuters.com))