Uncertainty in The Travel Sector Deepens, Focus On 3 FTSE Aviation Stocks

Source: Nieuwland Photography, Shutterstock

Summary

  • PM Boris Johnson at a press conference stopped short of confirming whether foreign travel would resume on 17 May.
  • This lack of clarity has pushed the already bleeding aviation industry into further uncertainty.
  • From 12 April, shops, pubs, and restaurants would be resuming business.

UK Prime Minister Boris Johnson while addressing a press conference said that though restaurants, pubs and shops will open from 12 April as the lockdown will be eased, but foreign travel opening may take a bit longer than 17 May. This lack of clarity has pushed the travel and tourism sector again into uncertainty.

Also read: Aviation sector calls on Johnson for more support

According to the new announcement made in the roadmap to easing by the government, all shops would be allowed to function 12 April onwards while restaurants and pubs can function with outdoor seating.

                          

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Also read: Why Are Travel and Leisure Stocks Bleeding?

In case of travel, the government plans to have a traffic light system that would allow passengers to travel to low-risk nations due to the worsening Europe situation. The countries will be grouped in red, amber, or green categories. The travel will be allowed on the basis of the destination country’s vaccination programme, infection rate, and virus strains.

From low-risk green countries, travel to and from those could take place without quarantine requirements though test pre and post travel would still be mandatory. However, Johnson did not clarify which countries were the safe ones or whether travel to these green countries would be allowed from 17 May.

British Airways’ CEO Sean Doyle said the company was hopeful that travel could resume 17 May onwards and asked the UK citizens not to lose hope and that summer holidays will be possible this year.

The airline industry worldwide is reeling under restrictions due to the pandemic, which have hit the balance sheet of aviation companies and forcing them to raise cash to remain afloat. Here are three largest aviation stocks by market capitalisation and how they have weathered the pandemic:  

Easyjet Plc (LON: EZJ)

The FTSE 250 aviation company with a market capitalisation of £4,608.60 million was trading at GBX 1,007.9, down by 0.10 per cent on 6 April at 10:56 GMT+1. The FTSE 250 was up 1.05 per cent at 21,960.52.

(Source: Refinitiv, Thomson Reuters)

For the quarter ended 31 December 2020, the company said its performance was in line with management expectations, though government restrictions and uncertainties impacted demand.

The group’s revenue fell by 88 per cent to £165 million. Passenger revenue dropped by 90 per cent to £118 million, while ancillary revenue fell by 84 per cent to £47 million.

Passenger volumes for the quarter fell by 87% to 2.9 million which was in line with fall in 84 per cent capacity to 4.4 million seats, which was 18 per cent of the capacity levels of FY2019.

Wizz Air Holdings Plc (LON: WIZZ)

The FTSE 250 company was trading at GBX 5,018, up by 0.80 per cent on 6 April at 11:17 GMT+1. It had a market capitalisation of £4,261.20 million. The FTSE 250 was up 1.05 per cent at 21,960.52.

(Source: Refinitiv, Thomson Reuters)

For the quarter ended 31 December 2020, the company’s revenue fell 76.5 per cent to €149.9 million from €673 million for the same period a year ago. Passenger volume fell 77.3 per cent to 2.3 million from 10 million in the same period a year ago.

International Consolidated Airlines Group SA (LON: IAG)

The FTSE 100 aviation company, which has a market capitalisation of £10,417.73 million, was trading at GBX 214.90, up by 2.74 per cent on 6 April at 11:36 GMT+1. The FTSE 100 was up 1.24 per cent at 6,820.64.

(Source: Refinitiv, Thomson Reuters)

The company’s full-year passenger capacity for the year ended 31 December was at 33.5 per cent of 2019 and continued to be affected by government restrictions and the pandemic. Its total revenue was down 69.4 per cent to €7,806 from €25,506 million a year ago. It made a loss of €6,923 million from a profit of €1,715 million a year ago.

 


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