| Summary: | Europe is one of the largest airline markets with a significant share of passengers withing Europe being flown by low-cost carriers, while long-haul passengers are almost entirely transported by traditional flag carriers. While Full-Service airlines have been actively trying to penetrate the low-cost market, Norwegian and some other LCCs entered the long-haul market. As this industry is risky and capital extensive, while also being highly competitive, we may expect a consolidation of European airlines. A merger between the second-largest low-cost carrier in Europe EasyJet and smaller but operating rather unique business model Norwegian would allow a boost of passengers for both airlines, open new markets, and deliver significant revenue and cost synergies especially on the side of struggling to fill their planes and maintain its margins Norwegian, and would create a new second-largest airline in Europe. We expect a transaction between two Airlines to happen in the last quarter of 2020, EasyJet is suggested to pay the premium of 20% over the market price, the total purchase would cost ₤1040m and generate ₤524m in Net Synergies after transaction costs. Suggested financing assumes using existing cash, debt, and stock issuance. The industry is highly dependent on the developments related to the COVID-19 outbreak, therefore we suggest constant revaluation of the deal as long as the new information appears..
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