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Highlights
- The UK aviation sector continues to suffer after the pandemic due to various reasons.
- EasyJet has recently announced removing seats in its fights to tackle staff shortages so it can fly with less staff.
The UK aviation sector continues to suffer post lockdown due to a sharp increase in demand for post-Covid air travel and staff shortages. With the removal of all travel restrictions, the UK became the most attractive destination compared to other countries, but with the pandemic impact on the aviation sector, the calls for government support are growing. The UK airline sector has been facing worse staff shortages as it previously cut its workforce due to a reduction in demand due to pandemic-related travel restrictions.
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According to Cirium data, many airline companies have cut their trips from their schedules. There were around 1,140 flight cancellations in the week of 28 March to 3 April, up from just 197 in the same period in 2019. The sector has already warned its intention to cancel some flights following a decision to reduce its operations until the end of May.
The pandemic-related staff absence has made the manpower shortage at airports and airlines worse as the sector is now struggling to recruit staff to fill the vacancies that were created during the pandemic. Owing to this the passengers now have to wait for security and check-in points in the airports.
Multinational low-cost airline group EasyJet has recently announced removing seats in its flights to tackle staff shortages so it can fly with three employees instead of four or more. The move will limit the number of passengers per flight to 150.
Similarly, British Airways has cut down its operations by 10% between March and October after it decided to slash around 10,000 jobs when it faced travel restrictions during the pandemic. JetBlue Airways reduced its flight for summer by between 8% and 10%.
Let us look at three FTSE-listed airline stocks that are impacted by staff shortages.
International Consolidated Airlines S.A. (LON: IAG)
International Consolidated Airlines S.A. is one of the largest airline holding companies in the UK, Ireland, and Spain that operates a fleet of 533 aircraft in 279 destinations.
The company recently reported that passenger capacity in Q1 was 65% of 2019 capacity up from 58% in Q4 2021. Its operating loss for the Q1 stood at €731 million, down from a loss of €1,077 million in Q1 2021 and its loss after tax and exceptional items for the Q1 stood at €787 million, down from €1074 million in Q1 2021.
With a market cap of £6,528.30 million, the FTSE 100-listed company’s share value devalued by -38.14% over the last one year as of 9 May 2022, while its year-to-date return stands at -7.75%. International Consolidated Airline’s shares were trading at GBX 131.28, down by 0.12% at 8:05 AM (GMT), as of 9 May 2022.
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Easyjet Plc (LON: EZJ)
Easyjet Plc is a multinational low-cost airline group, with around 340 aircrafts operating across 35 countries and 154 airports. The group reported that passenger capacity in Q2 was 80% of 2019 capacity. The group expects to report the loss before tax in the range of £535 million and £565 million for the six months ended 31 March 2022 and expects Q3 capacity to be around 90% of Q3 2019 levels.
With a market cap of £3,868.88 million, the FTSE 250-listed company’s share value devalued by -53.39% over the last one year as of 9 May 2022, while its year-to-date return stands at -8.20%. Easyjet Plc’s shares were trading at GBX 503.80, down by 1.29% at 8:05 AM (GMT), as of 9 May 2022.
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Wizz Air Holdings Plc (LON: WIZZ)
Wizz Air Holdings Plc is one of the most sustainable European low-cost airlines, operating primarily in over 45 countries across the Middle East, Europe, and North Africa, connecting over 155 destinations with over 900 routes across the world.
The company expects a reported net loss in the range of €652-632 million in FY2021 and for Q4 it is expected to be in the range of €210-190 million.
With a market cap of £3,042.71 million, the FTSE 250-listed company’s share value devalued by -41.78% over the last one year as of 9 May 2022, while its year-to-date return stands at -29.97%. Wizz Air Holdings Plc’s shares were trading at GBX 2,929.00, down by 0.78% at 8:40 AM (GMT), as of 9 May 2022.
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Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
