Castlelake’s improved 5.5 billion pound bid for EasyJet could strengthen Portugal’s ongoing TAP privatisation by reinforcing investor confidence in the European aviation sector and potentially supporting a higher valuation for the Portuguese carrier.

The US investment firm has until August 3 to submit a final offer after securing EasyJet’s backing to continue the takeover process, ECO News reports.

EasyJet shares climbed 9.3 percent on Monday to 6.10 pound, although they remained below Castlelake’s 6.90 pound per share offer, suggesting investors are still uncertain the deal will proceed. Even so, the bid represents a premium of more than 70 percent over the airline’s share price before Castlelake’s initial approach, highlighting strong interest in the sector.

TAP valuation in focus

Portugal is selling a 49.9 percent stake in TAP, with 5 percent reserved for employees.

Financial analyst Nuno Barradas Esteves told ECO News that Castlelake’s move could support an upward revision of TAP’s valuation, which he estimates at between 1.7 billion euros and 2 billion euros. He pointed to TAP’s recent financial performance, its strategic network linking Europe, Brazil and the US East Coast, and improved medium-term prospects for the aviation industry.

Wider market implications

The potential EasyJet acquisition could also reshape the European airline market.

Barradas Esteves said Castlelake, which specialises in aircraft leasing, engine leasing and airline financing rather than operating airlines, would likely require an industrial partner. He suggested Air France-KLM is the most likely candidate, particularly as the Franco-Dutch airline group is also competing with Lufthansa in the race to acquire a stake in TAP.

Castlelake was part of the consortium that agreed to acquire SAS in 2023 before later agreeing to sell its holding to Air France-KLM. Although Air France-KLM chief executive Ben Smith said in June he was not involved in Castlelake’s approach to EasyJet, he indicated he would be open to discussions if contacted by the investment firm.