Airlines share turbulence continues despite flights recovery

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Airline shares were caught in crosswinds again even though the latest figures from the Office of National Statistics confirmed a strong rebound in the number of flights.


In the seven days to 29 August, the average number taking off rose to 3,405 or the highest number since the start of the pandemic.


Total flights though are still down by more than 50% since pre-pandemic and nervousness over the future with the spread of infections and almost daily reports of new variants of Covid-19 are suppressing any enthusiasm to buy into the air sector recovery, said analysts.


A new coronavirus strain named Mu and first identified in Colombia has been designated a variant of interest by the World Health Organisation (WHO).


Cases have been recorded in South America and Europe as has another variant C.1.2, though the WHO has yet to list this as a variant of concern even though it has received widespread media coverage.


The recent decision by the EU to re-impose restrictions on non-essential travel from the US has also dampened investor enthusiasm for the sector.


British Airways has traditionally done well out of transatlantic travel and its share price has slipped from 217p in March to 158.2p, down 1% today.


Ryanair was one of the few not to drop today as it echoed the bullish tone of the ONS data with its numbers for August.


The airline recently upped its estimate for passengers this year and said that August traffic increased to 11.1mln from 7mln a year ago and 9.3m in July 2021, with a load factor of 82%, the fullest its planes have been since March 2020.


A trading update from low-cost airline Jet2 added that the restrictions on travel meant people were booking “significantly closer to departure” this summer.


The low-cost carrier said it has seen momentum slow for winter deals due to concerns about restrictions tightening again and also the costs of travel, though advanced demand for next year’s summer season was encouraging.


Prices needed to remain ‘enticing’ to encourage people to fly, it added.


Wizz Air, meanwhile, carried 3.58m passengers last month, up 50% on twelve months ago at 84% of capacity.


EasyJet shares fell 0.5% to 793p, Jet” 1% to 1,181p though Ryanair rose 0.6% to EUR16.09.

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