EasyJet has reached an agreement in principle with US investment firm Castlelake on a potential £5.2bn takeover, valuing the airline at £6.90 per share. The Luton-based carrier had previously rejected four offers from Castlelake, which holds a 2.14% stake through its funds, accusing the firm of attempting to acquire it cheaply.

The deal emerges as airline stocks have fallen globally following the Iran conflict and rising jet fuel costs. EasyJet, one of Europe's largest airlines with over 19,000 employees and 1,200 routes across 35 countries, saw its share price drop more than 30% in the past year before the initial bid emerged in June.

Castlelake faces a significant regulatory obstacle: EU rules require EasyJet to be majority-owned by EU citizens. To address this, the firm proposed partnering with former EasyJet COO Peter Bellew and aerospace consultant Mark Breen, who would control an EU-based company holding majority ownership.

The investment firm has until 17:00 BST on 3 August to confirm its intention to proceed. If successful, the deal would require shareholder approval. EasyJet's board indicated the terms merit recommendation, citing the airline's strong brand recognition, fleet of over 350 aircraft, and valuable airport slots at congested hubs like Gatwick and Paris Charles de Gaulle.