At first glance, buying an airline might seem like a slightly strange move. After all, aviation is not exactly famous for being an easy way to make money. Margins are often razor thin, and unpredictability is always looming. Wars break out, financial markets crash, volcanoes go boom. Seemingly, there is always something waiting around the corner to disrupt the carefully planned operation. But from an investor’s perspective, one of the most attractive parts of any airline is something passengers rarely think about—airport slots.
A slot gives an airline the right to operate a departure or arrival at a specific time. At airports where capacity is limited, these rights are incredibly difficult to obtain. A new airline can buy aircraft and hire crews, but securing attractive slots at airports like London Gatwick (LGW) or Amsterdam Schiphol (AMS) can range from hard to borderline impossible. You guessed it, easyJet sits on a bonafide goldmine in the shape of slots like these. But there’s more to it.
When yours truly grew up, flying was expensive and the market heavily regulated. Flag carriers were the norm and just booking a cheap getaway on a whim out of the question for the vast majority of Europeans. Along with airlines like Ryanair (FR/RYR) and Norwegian (DY/NOZ), easyJet has been one of the companies driving (and benefitting from) the transformation of European air travel. Traditionally positioning itself somewhere between a traditional airline and a pure budget carrier, it offers a large network, operates from major airports, and appeals to both leisure and business travelers.
Again, probably sweet music to the ears of both Castlelake and Apollo Global Management.
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