Saunders International Provides COVID-19 Update, Revises Revenue Guidance

Summary

  • The British travel industry has already lost more than 39,000 jobs because of the pandemic and is also witnessing a sluggish recovery because of the numerous safety-related restrictions on travel
  • The Association of British Travel Agents has made a request to lower some restrictions and also announce other measures to bring back business to the industry
  • The travel industry has been one of the most affected industries because of the pandemic, with most of the transportation services in the country remained suspended since the outbreak

The British travel industry has sought the assistance of the government to boost up the sluggish recovery the industry is witnessing post the opening of the lockdown. With the enhanced safety measures under implementation in most places, the industry has been unable to attract requisite numbers of passengers, which can be called recovery for the sector. The industry, which is one the largest employers in the country, also has put a significant number of people under the benefit of the government's furlough scheme, who are still facing an uncertain future. The Association of British Travel Agents (ABTA) which is a lobby group for the industry in the UK has made a number of demands before the government to protect hundreds of travel-related businesses in the country along with thousands of jobs associated with it. It is to be noted here that only two-thirds of the travel businesses in the country have been able to resume operations since the opening of the lockdown with cruise ship operations and school travel related operations still remain suspended.

The request made by the Association of British Travel Agents

Among the host of demands raised by the Association of British Travel Agents (ABTA) before the government, the primary demand is to implement a region-wise quarantine policy on people travelling into the United Kingdom rather than on entire country. A similar quarantine policy which is under implementation in Germany has ensured that travel-related businesses there have been able to recover faster than their British counterparts. Adopting such a measure will make travel possible from a number of countries which have been out of the UK air bridge travel list. Apart from that, the trade body has also requested the government to extend its furloughing scheme, as has been done in Australia, as many of its businesses have not been able to resume their operations fully. It is worth mentioning that recently the package tour operator STA Travels who sold holiday packages to young people and backpackers, went bust putting to risk nearly fifty of its high street branches and five hundred jobs. Several of the other travel and tour operators in the country have criticised the government’s travel rules and have warned that they may be forced to slash several hundreds of jobs in coming months.

Existing measures by the UK government other countries to support the industry

The biggest support from the government's side that came for the industry was the Furlough scheme announced in March. A significant number of people were able to save their jobs as the revenues in the industry went downhill after the lockdown. Several of them have yet not been called back by their employers. Apart from that, the government had also initiated an airbridge programme with several countries whereby people going and coming from these countries would not be subjected to the full range of quarantine measures that were prescribed for others. While these two measures saved a lot of jobs and companies in the industry, but it has been not of much help in taking it out of its pandemic slump. This is one industry which certainly needs a continuation of support from the government for some more time, than any of the other industries who faced a comparatively smaller challenge.

Countries like Germany have taken a more proactive approach and have eased restrictions on travel both within the country and on people coming in and going out of the country. This has helped local businesses recover faster, while no major spike in infection levels was witnessed because of this decision.

Performance of Carnival Plc, EasyJet and TUI since the opening of the lockdown in May.

Carnival Plc – (LON: CCL) Carnival Plc is a luxury cruise operator who has over 100 cruise ships operating under ten brands. The shares of the company are listed on the New York Stock Exchange as well as the London Stock Exchange, and trades with the ticker name CCL. Since the pandemic hit major parts of the world, the company suspended its operations until further notice. Cruise ship operations still continue to be banned in the UK.

The shares of the company stated sliding on the London stock exchange when the pandemic was first reported in China. The shares which were trading at GBX 2805.00 on 28 February 2020 slid to GBX 620.00 on 18 March 2020 in a matter of 20 days. However, since then they have made a recovery and as on 25 August 2020, were trading at GBX 1011.00, (as of 10.45 AM GMT).

Easyjet Plc (LON: EZJ) EasyJet Plc is a British low-cost airline which operated domestic as well as international flights on over 1000 routes in more than 30 countries. The company decided to ground its entire fleet on 30 March 2020 because of the coronavirus pandemic. Post lockdown the airline resumed its operations on 15 June 2020 with limited flights from 22 locations in the UK to select international destinations like France, Portugal, Spain, and Switzerland.

The shares of the company rebounded on the London Stock Exchange in June on the news that the operations would resume from the 15th of that month and reached a peak of GBX 891.20 on 5 June 2020 from a low of GBX 484.00 it traded on 14 May 2020, merely 21 days ago. However, since then the prices have slid back again and on 25 August 2020, they were trading at GBX 619.60 (as of 10.48 AM GMT).

TUI AG- (LON: TUI) TUI AG is an Anglo-German travel and tourism company that owns, travel agencies, airlines, retail chains, cruise ships and Hotels across the globe. The company is the largest travel and tourism company in the world, headquartered in Hannover and Berlin in Germany.

The shares of the company made a sharp recovery in May as both Germany and the United Kingdom announced special relief for tour operations to allow foreign tourists into their countries. The shares of the company which were trading at GBX 296.30 on 21 May 2020 jumped to GBX 530.40 on 28 May 2020. Since then however the shares of the company have been underperforming and on 25 August 2020, they were trading at GBX 325.70 (as of 10.50 AM GMT).


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