EasyJet's board recommended a £5.5bn cash takeover offer from a US investment firm on Tuesday, with shares in the Luton-based carrier climbing sharply in early London trading. The airline said the offer valued the company at a significant premium to its recent share price.

The agreement would take one of Europe's largest low-cost carriers into private ownership after years of trading below the valuations of rivals such as Ryanair. EasyJet's chairman said the board believed the terms fairly reflected the value of the airline and its EasyJet Holidays division.

The deal requires approval from EasyJet shareholders and clearance from competition and aviation regulators, including the UK Civil Aviation Authority. Analysts at Peel Hunt and Davy noted that ownership rules governing EU flying rights could complicate the transaction, given the airline's substantial continental operations based in Austria.

Investors reacted positively, with arbitrage funds moving in as the offer added to a wave of consolidation and private capital interest in European aviation. This follows earlier approaches to other carriers and airport operators across the region.

EasyJet said it would publish a scheme document setting out the full terms of the offer in the coming weeks, with a shareholder vote expected before the end of the year.