Travel stocks hammered by holiday chaos: £1.5bn wiped off by second wave fears
- Investors took flight from airlines and tour operators after the Government removed Spain from the quarantine-free list
- Thousands of holidaymakers cancelled trips to Spain as well as countries such as France and Germany amid concerns they could be next
Around £1.5billion was wiped off the value of Britain’s leading travel companies as quarantine chaos and fears of a second wave of coronavirus infections shook markets.
Investors took flight from airlines and tour operators after the Government removed Spain from the quarantine-free list with just a few hours’ notice.
Thousands of holidaymakers cancelled trips to Spain as well as countries such as France and Germany amid concerns they could be next.
Feeling the strain: Infection rates are on the rise across Europe
At the same time Ryanair sounded the alarm over a deadly second wave hitting later this year during the flu season.
The airline said another series of lockdowns across Europe is its ‘biggest fear right now’ as it urged governments to implement effective track-and-trace systems.
The decision to withdraw the air bridge to Spain cast a cloud over international summer holidays and the sector’s recovery.
IAG, which owns British Airways, fell 5.9 per cent, Ryanair was down 3.9 per cent, Easyjet lost 8 per cent, Jet 2 owner Dart dropped 8.5 per cent and Wizz Air sank 4.5 per cent.
At the same time, Tui, Britain’s biggest tour operator, plunged 11.4 per cent lower while cruise operator Carnival fell 8.4 per cent.
The rout wiped £1.5billion off the value of these companies on yet another dismal day for the industry as it reels from the Covid-19 pandemic.
Andrew Flintham, UK managing director of Tui, warned that more travel firms will fail as a result of the crisis and called for air passenger duty to be cut to help airlines through.
He said: ‘Having blanket country bans is very challenging, especially when you have a country the size of Spain. There will be failures. We haven’t received any revenue as an industry as airlines or holiday companies since this all started.’
The Government’s knee-jerk reaction to the Spanish outbreak also received criticism from outside the industry.
Andrew Sentance, a former member of the Bank of England’s monetary policy committee that sets interest rates, said: ‘UK Government switchback on Spain quarantine is very bad news for the travel industry and airlines.
‘Business cannot cope with such dramatic changes in policy, whatever the merits of the case.’
At the same time Ryanair said ‘over 99 per cent’ of its fleet was grounded between mid-March and the end of June and traffic fell from 42m to 500,000 passengers.
It lost £168m in the past three months, but said that a deadly second wave of Covid cases across Europe in flu season ‘is our biggest fear right now’.
The group said it expected traffic in the year to April 2021 to fall by 60 per cent to 60m passengers.
It said: ‘It is impossible to predict how long the Covid-19 pandemic will persist, and a second wave of Covid-19 cases across Europe in late autumn, when the annual flu season commences, is our biggest fear right now.’
IAG has lost around 70 per cent of its value on the stock market this year, while Tui has lost 68 per cent, Easyjet 62 per cent and Ryanair 28 per cent. There has also been a jobs cull as bosses shrink their businesses on the belief that air passenger numbers will not recover until at least 2023.
Virgin Atlantic made 3,000 staff redundant, IAG axed 12,000 staff, Easyjet removed 4,500 staff and Tui cut 8,000 roles.
The pandemic came at a time the industry was already strained due to concerns over fierce competition and low consumer confidence.
In March regional carrier Flybe went bust and in September last year Thomas Cook collapsed stranding 150,000 UK holidaymakers abroad.