This article first appeared on GuruFocus.
Air France-KLM may not be in the EasyJet (EJTTF) bidding race today, but CEO Ben Smith just left the door open. Smith said he would take a call from Castlelake LP if the investment firm came forward with a possible proposal, while calling EasyJets European airport slot portfolio very impressive. For investors, that matters. Slots are scarce, strategic assets in European aviation, and Smith said it was no surprise that a party or group could be looking at EasyJet.
The possible deal remains early, uncertain, and full of moving parts. Castlelake has said it has considered an approach and has until the end of the month to clarify its intentions or walk away. Because a US company cannot own a majority of a European airline, Castlelake would likely need a European partner to make any bid work. EasyJet, meanwhile, has already pushed back, calling any bid highly opportunistic given its depressed share price.
IAG, the owner of British Airways, is also not considering involvement for now, though CEO Luis Gallego added that you never know. Smiths comments came as Air France-KLM continues to see strong demand across its network, especially into Paris and Amsterdam. But the other pressure point is fuel: any spike in fuel prices could force Air France-KLM to raise fares, and that could possibly weigh on demand as customers continue to book late.