EasyJet’s board withdrew its support for a takeover by Castlelake on Friday after Apollo Global Management submitted a higher preliminary offer of £5.7 billion ($7.7 billion), or £7.15 per share. The London-listed carrier’s stock surged as much as 15% to around £6.75 in early trading, its highest level in four years, though it remained below both bid prices, signalling that investors anticipate further escalation. The board stated that Apollo’s proposal delivers a “superior outcome” for shareholders and that it is “no longer minded to recommend the Castlelake proposal,” which had valued the airline at £5.5 billion, or £6.90 per share.

The reversal caps a month-long pursuit by Castlelake, which had raised its offer five times before securing a recommendation on Sunday. Apollo’s unsolicited entry now forces a bidding contest. Under UK takeover rules, Castlelake must formalise its bid by 3 August, while Apollo has until 7 August to make a firm offer or walk away. Both suitors are US-based, meaning neither can acquire outright control of a European airline under EU and UK ownership rules requiring majority control by regional nationals. Castlelake had structured its proposal with 51% EU ownership, including two Irish aviation executives. Apollo said it would take “all necessary steps” to satisfy the rules but did not detail its partner arrangements.

Viewed from London, the contest reflects the perceived value of EasyJet’s slot portfolio, its expanding package-holiday division, and an order book of new Airbus aircraft. The airline reported a 27% deepening of first-half losses to £377 million, driven by fuel-cost spikes linked to the US-Iran conflict, yet broader industry data from Delta Air Lines shows carriers are recouping roughly 60% of added fuel costs through fare increases. Apollo, which manages over $1 trillion in assets and already holds aviation investments including Aeromexico and Sun Country Airlines, described EasyJet as “one of the most attractive businesses in the global aviation sector.” Castlelake, a major aircraft lessor with a fleet of 375 planes, retains an edge through its existing access to EasyJet’s books, which could enable a counterbid.

Founder Stelios Haji-Ioannou and his family, who control roughly 15% of the shares and collect a 0.25% royalty on revenue for the “easy” brand, are a pivotal constituency. Apollo’s commitment to preserve the brand and the existing licence agreement may prove more palatable to the founder. The next concrete milestone is the expiration of Castlelake’s deadline on 3 August, followed by Apollo’s on 7 August, after which shareholders will weigh any firm offers on the table.