The sale of Easyjet, the Air Baltic crisis, the negative situation of Lufthansa and KLM and Ita. What’s happening in the European airline market
Rising demand for seats and fuel costs, green quotas extended to Asia and passenger entry system in the EU making its debut. The Union’s aviation sector between news and strategies. Meanwhile EasyJet will become American.
In the European civil aviation sector one of the most important news of the summer is certainly the acquisition agreement of EasyJet by the US company Apollo Global Management. Consequently, we wonder what will happen where the English carrier has a competitor Ryanair and to a lesser extent companies such as WizzAir and AirBaltic. The latter is reducing its fleet and is looking for financing, but in general the main European air transport groups are slowing down their plans to increase capacity due to high fuel costs caused by the crisis in the Middle East. And so that we don’t miss anything there European Commission has proposed to extend its emissions trading system to a greater number of international flights, always with the aim of appearing green at all (our) costs.
New ownership structures and the strategic value of slots
Today EasyJet has a fleet of almost 360 aircraft and covers around 1,200 routes, so it is an airline of considerable size. Apollo GM has made a direct offer of seven pounds and 15 dollars per share and the acquisition is expected to close by March 2027 although several regulatory hurdles remain to overcome. For example, new rules on airline ownership will come into force by the end of the year. EasyJet is a strong brand, it has valuable slots in airports with low flight availability and a substantial order book in Airbusbut its shares have yielded little and its costs remain higher than companies like Ryanair. Moreover, EasyJet has adopted a different business model, aiming to serve more central airports and offering more regular flights. Operating from the main airports entails higher costs, but there are also other important expense items and it will be interesting to understand what the new ownership will do, but the Luton-based carrier is unlikely to give up primary airports such as Amsterdam, Orly and Gatwick, but also Linate.
AirBalticthe Latvian company, is the largest in the Baltic region and until recently was following an ambitious growth strategy in preparation for going public. The goal was to have one hundred aircraft by 2030, but it has now scaled back its plans and intends to reduce the fleet from 54 to 36 planes by the end of this year. Under the leadership of the former CEO, Martin Gauss, the fleet was made up of different types of aircraft, but Gauss had standardized it with the Airbus 220-300. The goal was therefore efficiency and Gauss realized that the company needed to grow to be sustainable and reduce costs, so he made a plan to expand to one hundred A220-300s by 2030. The plan included both scheduled flights and maintenance and repair services for other companies. But by moving to a one-design fleet, a dependence on it has been created and when there is a problem, the entire fleet is affected, as in the case of engine problems Pratt & Whitney.
Another negative factor is the conflict in Ukraine and, more recently, there have been tensions in the Middle East, having a negative impact on profits. Then Gauss left and the managers revised the programs focusing more on the hub of Linedownsizing some markets such as Estonia, Lithuania and Finland.
The slowdown of large groups amidst price increases and compressed profits
Looking at other European companies, Lufthansa it has abandoned plans to increase capacity by up to 2% this year and is considering further short-haul cuts. Also Iag (Britich Airways, Iberia, Vueling, Aer Lingus and Level), has gone from growth to stability. Air France-Klm has lowered growth forecasts, but in general the European aeronautical sector is solid: in the last two months flights have almost always been fully booked with fares increased by an average of 20% compared to last year. There is strong demand and revenues are rising. The results of Air France-KLM, Lufthansa and IAG are probably what everyone expected, while large airlines such as Emirates and Qatar Airways are rebuilding their networks almost to pre-crisis levels. This will have a greater impact on European airlines in the second half of the year.
Lufthansa closed the second quarter of this year with an operating profit of 383 million euros, down from 2025. He is part of the group Ita Airways for 41%. The group’s revenues are growing, +8% to 11.1 billion, but the increase in costs Jet-A1around 750 million euros compared to 2025, and the strikes (at least 150 million euros impact) have lowered margins and net profit is at 123 million euros against almost one billion in June 2025. Carsten Spohr, CEO of Lufthansa, recently stated that they have not been able to fully offset the increase in fuel costs, but that global demand remains strong especially in premium classes.
Ita Airways experienced the second quarter in the red for just over 28 million euros, which brings the half-year figure to -140 million, paying leasing liabilities for -78 million in 2025 were positive at 305 million), but theEbit (earnings before taxes and interest on debt), was positive, at 37 million in the second quarter and 4 million in the half-year. On the other hand, Lufthansa Technik and Lufthansa Cargo are doing well, having already shown an improvement in results during the Ila event in Berlin.
Digital frontiers and the impact of new environmental constraints
On the passenger front, this summer they tested the new system of entry and exit from the Union, the “Ees”, which replaces the passport stamp for short-term visitors from non-EU countries including the UK and USA. There are episodes of long queues but also positive situations, so the system should stabilize within a few months.
More worrying is the emissions trading system proposed by the EU, which represents a long-term cost and competition problem for companies. From 2029, Brussels is proposing to extend the emissions trading system, currently limited to EU emissions, to include flights departing within a radius of 5,000 kilometers from the center of the Union, i.e. Frankfurt airport. It means that flights to the Middle East, such as Dubai and Doha, will be included in the ETS like Turkey. Another aspect is that airlines that use sustainable fuels (Saf) were able to request ETS credits to offset the increase in fuel costs. The amount of support offered, despite the overall increase in available funds, is intended to make the system accessible also to Middle Eastern airlines. The Council and the European Parliament will finalize the proposals by the end of the year.
