Highlights
- The UK government has re-introduced pre-departure tests for all passengers arriving in the country.
- The recent rise in cases of Omicron variant and mandatory quarantine and testing rules is expected to impact the airline sector, which is yet to recover from the previous lockdown and travel restriction.
The ailing UK travel industry is set for another blow as the government has re-introduced pre-departure tests for all passengers arriving in the UK from anywhere. The pre-departure Covid test rule, which will come into force from Tuesday, has been re-introduced amid the rise in cases of Omicron variant, which was first detected in South Africa.
According to the UK Health Security Agency, 26 more cases of a new variant was detected on Saturday, taking total cases to 160 in the country. As a result, new measures were introduced, meaning passengers travelling to the UK have to take a PCR or a lateral flow test irrespective of their vaccination status up to 48 hours before their departure.
To further stop the spread of the new variant, the UK government has added Nigeria to the red travel list following 21 cases of Omicron variant in the country as positive passengers had a travel history related to Nigeria.
The recent rise in cases of Omicron variant and mandatory quarantine and the testing rules is expected to impact the airline sector, which is yet to recover from the previous lockdown and travel restriction.
© 2021 Kalkine Media
Let us explore some FTSE listed airlines stocks that might be impacted by the development:
Ryanair Holdings Plc (LON: RYA)
FTSE250 listed airlines company operates on the European domestic circuit and international routes. For November 2021, the carrier reported traffic of 10.2 million passengers, which is a significant rise in passenger number compared to 2 million in November 2020. The airlines operated 62,300 flights during the period. After the pandemic, the company has witnessed a recovery in passenger traffic amid pent-up travel demand. However, the new variant of coronavirus might put a brake on the recovery path and impact the company’s revenue and passenger traffic.
Ryanair Holdings Plc’s last close was at EUR 15.09 on 03 December 2021, with a market cap of £14,419 million.
Wizz Air Holdings Plc (LON: WIZZ)
The Europe-based airline company operates a fleet of 146 aircraft. The company reported an excellent recovery in passenger traffic in November 2021. It carried 2.1 million passengers, a rise of 375% compared to the same period last year. In addition, the company has signed an agreement with Airbus S.A.S to purchase further 102 A321 aircraft, which will be delivered between 2025 to 2027. The additional purchase of aircraft indicates confidence in the company’s business model by the management. However, the recent rise in Covid-19 variant cases might adversely impact the company’s growth prospects.
Wizz Air Holdings Plc’s last close was at GBX 4,283 on 03 December 2021, with a market cap of £4,414 million.
Pre-departure Test returns Amid Omicron : Should you Hold Aviation Stocks?
Easyjet Plc (LON: EZJ)
FTSE250 listed company has a fleet of 340 aircraft and travel to all major travel destinations worldwide. For the financial year ended 30 September 2021, the airlines reported passenger traffic of 20.4 million and total revenue of £1,458 million. However, the company ended the financial year in loss, reporting a £1,036 in loss before tax. The airlines expect a rise in passenger traffic in the upcoming quarters and will reach full capacity by the fourth quarter of FY2022.
Easyjet Plc’s last close was at GBX 528.20 on 03 December 2021, with a market cap of £4,003.8 million.
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