Apollo bought a stake in EasyJet. Now private equity firms are scanning the tarmac for other budget carriers to circle like vultures over a Sandals resort buffet.
The thesis makes sense if you squint. Airlines trade below book value. Their assets include actual planes. Planes can be sold. Or leased. Or flown into the ground while you extract fees and cut the free peanuts down to half a peanut.
Private equity loves businesses that can't escape. Budget airlines fit perfectly. They're capital-intensive. They operate on razor-thin margins. They're hated by customers who will absolutely fly them again in six months because the ticket was eleven dollars cheaper. You can't disrupt your way out of needing a functioning aircraft.
Retail traders will see this headline and think it's bullish for Spirit or Frontier or whatever burning wreckage they're holding in their Robinhood account. They'll picture a bidding war. They'll imagine Goldman Sachs analysts in suspenders shouting buy orders into rotary phones. They'll double down on calls expiring Friday.
What they won't picture is private equity doing what private equity does. Load the airline with debt. Pay themselves a special dividend. Rebrand the planes. Fire everyone who remembers how things used to work. Then either flip it to a bigger sucker or let it file for bankruptcy protection while they walk away with management fees.
The article says "this carrier could be next" but won't name which one because financial journalists love a good tease more than they love accuracy. Could be Ryanair. Could be Wizz Air. Could be any airline that makes you pay extra to bring your emotional support anxiety onto the plane.
None of this will show up on a chart. No moving average will predict the leveraged buyout. No RSI will signal the debt restructuring. But sure, keep drawing your triangles while Apollo's lawyers draft the term sheet.
Photo by Call Me Fred on Unsplash
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