Home Business Hopes For Brighter Skies For Airlines Dashed As Restrictions Tightened

Hopes For Brighter Skies For Airlines Dashed As Restrictions Tightened

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  • IAG (LON:IAG) – down 5%
  • EasyJet (LON:EZJ) – down 6%
  • TUI (LON:TUI) – down 3.7%
  • Ryanair (LON:RYA) – down 4%
  • WizzAir (LON:WIZZ) – down 3%
  • Rolls Royce (LON:RR) – down 2.5%

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Q1 2021 hedge fund letters, conferences and more

High Hopes For He Airlines Come Down To Earth

“High hopes that brighter skies were in sight for the airlines have been brought back down to earth with a bump after the UK government brought in even stricter controls on key holiday routes. Far from beaming the green light on to more destinations, Portugal has been taken off the list, as infection rates increase in the country. Caution is the name of the game for the British government, but it’s a hand dealt as a bitter blow to the travel industry. Shares in British Airways owner IAG and EasyJet fell by more than 5% by mid-afternoon as the realisation dawned on investors that another summer washout could be on the way. Travel operator TUI which had also been counting on a rebound in bookings fell by 4%, while Ryanair and Wizz Air dropped by around 3%. As aircraft stay grounded, cash burn is likely to intensify eating into the financial buffers the airlines have built up through debt restructuring and rights issues. The situation is also being seen as a drag on the fortunes of Rolls Royce, the aircraft engine manufacturer and supplier of maintenance for jets, as recovery in its commercial business retreats a little further on the horizon.  There is still a glimmer of hope that swift vaccination roll outs will make way for a late summer revival in fortunes, but the travel industry is now going to have to play an even bigger game of catch up.’’

Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown


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