4 airlines stocks to buy as transatlantic travel restarts

Highlights

• US reopened its borders for fully vaccinated British visitors on Monday, which is expected to boost airline operations between both the countries.
• US fully vaccinated visitors were allowed to travel to Britain since the summer.
• Both companies have reported huge losses in the last 20 months due to restricted travel.

With US reopening its borders for fully vaccinated British leisure visitors, it is expected that airline operations between both the countries will get a much-needed boost since the pandemic began. US fully vaccinated visitors were allowed to travel to Britain since the summer when the Boris Johnson government lifted quarantine restrictions. Following the news, UK-based transatlantic-focused Virgin Atlantic said that the announcement means “the world” to them, as thousands of travelers are waiting for transatlantic flights for much-delayed reunions with their family and friends.     

Airline companies such as Virgin Atlantic and British Airways have already started operating synchronized departure from Heathrow to celebrate the end of the travel restrictions.

Virgin Atlantic, which is founded by Richard Branson, is co-owned by Virgin Group and Delta Air Lines. In 2020, due to travel restrictions due to Covid-19, the company collapsed. Before pandemic, the company’s major business used to come from transatlantic travel. According to the Foreign, Commonwealth and Development Office, before pandemic around 3.8 million UK travelers visited US every year. 

Since August 2021, the company has also benefited from the UK opening to vaccinated US travelers. Experts feel that with the travel relaxation, the economy will further boost, create employment, and support development plans to reduce carbon emissions.

According to travel data firm Cirium, a total 3,688 flights are scheduled to operate this month, up by 21% as compared to October 2021, but remains 49% down on the pre-pandemic levels.

In a survey by travel trade organisation Abta, the US is only behind Spain in the foreign destinations that UK holidaymakers say they plan to visit this year.    

Apart from being fully vaccinated, travelers need to provide proof that they have recovered from the virus in the previous three months or a negative report of covid test taken no more than three days before travel. Children between two and 17 age also need to take a covid test three to five days before travel. Travelers from the US to the UK also need to take a test on or two days before travel.

Virgin Atlantic and British Airways were deeply affected by the pandemic. British Airlines owner IAG is expecting losses of €7.3 billion in 2020 and 2021.

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Let us look at five FTSE-listed travel stocks that are expected to be positively impacted following the change in travel rules: 

International Consolidated Airlines Group S.A. (LON: IAG)

FTSE 100-listed International Consolidated Airlines Group, along with its subsidiaries, operates various airlines businesses across Europe and other destinations. The group has a fleet of more than 500 flights and operates its cargo and passenger services through British Airways, Iberia and other airlines.

In November, British Airways reached contract with the UK Export Finance (UKEF) and a syndicate of banks for a five-year Export development Guarantee committed Credit Facility of £1 billion, in addition to a £2billion UKEF guaranteed facility that was announced in December 2020 and drawn in March this year.

The company’s shares are trading at GBX 182.84 in the early hours of trade at 8:00 AM on 8 November 2021. Its shares gave a return of 75.77% to shareholders in the last one year, and the market cap stood at £8,937.79 million. 

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EasyJet Plc (LON: EZJ)

FTSE 250 constituent EasyJet Plc is a British multinational low-cost airline company that carries out its major operations in Europe, with a fleet of over 300 flights and has tour operation and financing services business.

The company reported decrease in passenger number by 89.4% to 4.1 million for the six months ended 31 March 2021, as compared to 38.6 million in the same period of 2020 and the revenue decreased by 90% to £240 million as compared to £2,382 million in the same period of 2020.  

The company’s shares are trading at GBX 658.80 in the early hours of trade at 8:00 AM on Monday 8 November 2021. Its shares gave a return of 24.16% to shareholders in the last one year, and the market cap stood at £4,981.64 million.

 Ryanair Holdings (LON: RYA)

FTSE 250 constituent Ryanair Holdings is an Irish Ultra low-cost passenger airline services provider that carries its major operations in Europe, with a fleet of over 450 aircrafts. 

The company reported loss of €48 million in the first half of 2021, as compared to loss of €411 million in the same period of previous year and its revenue increased by 83% to €2.15 billion, as compared to €1.18 billion previous year.

The company’s shares are trading at GBX 18.29, up by 0.97% in the early hours of trade at 8:00 AM on Monday 8 November 2021. Its shares gave a return of 36.07% to shareholders in the last one year, and the market cap stood at £16,990.27 million.

Jet2 Plc (LON: JET2)

Jet2 Plc is a UK-Based multinational airline business, engaged in the provision of air travel organizer licensing (ATOL) licensed package holidays by its tour operator, Jet2holidays Limited, and scheduled leisure flights by its airline, Jet2.com Limited (Jet2.com). It operates through Leisure Travel segment and is listed on the Alternative Investment Market (AIM) of the London Stock Exchange.

The company has recently entered into an agreement with Airbus to buy a further 15 new Airbus A321 NEO aircrafts, that are to be delivered between 2026 and 2029. The order is in addition to the 36 firm aircraft orders, with flexibility to extend up to 60 aircrafts.

The company’s shares are trading at GBX 1,346, up by 1.05% in the early hours of trade at 8:00 AM on Monday 8 November 2021. Its shares gave a return of 46.75% to shareholders in the last one year, and the market cap stood at £2,858.73 million.

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