Iceland-based carrier beefs up easyJet stake

Icelandic investors have upped their stake in easyJet within 48 hours of buying the fourth-largest budget airline in Europe, it emerged today.

Shares in easyJet surged 6% yesterday as rumours of a big trade echoed around the City, reviving takeover speculation that recently drove the stock to an 18-month high.

It was confirmed today that FL Group – the owner of Icelandic flag carrier Icelandair – had entered the market twice since the weekend to take its stake in easyJet from 14% to 16.18%.

Trading took place as the aviation industry digested Monday’s news that FL Group is to buy Nordic carrier Sterling for 1.5 billion Danish kroner (€200m).

That deal will double the turnover of FL Group next year, with Sterling bringing 30 aircraft and a network of 46 destinations serving 5.2 million passengers each year.

FL Group has previously played down speculation that it was steadily increasing its stake in easyJet ahead of a full-blown takeover campaign.

EasyJet holds the number-two spot in the sector for low-cost air travel and revealed earlier this month that it carried 2.7 million people in September compared with a year ago.

It is thought that any takeover bid would be difficult to accomplish as the family of founder and former chairman Stelios Haji-Ioannou owns around 40% and he has said he is reluctant to sell his stake.

The company’s articles of association also prevent non-UK investors from holding more than 40% of the shares.

It is thought FL could use a UK venture capital partner to overcome the twin stumbling blocks of its small size and the articles of association.

Icelandair, which is one of 14 subsidiaries of FL Group, operates 13 Boeing jet aircraft and flies to 22 destinations in 10 countries in Europe and North America.

Shares in easyJet were 2% lower today.