IAG and Rolls-Royce shares take off as US turns off travel restrictions

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British Airways owner International Consolidated Airlines Group (LSE:IAG)’s shares took off late on Monday afternoon, fueled news that the White House has decided to ease restrictions on travel from anywhere in the world.


People who have received two Covid-19 vaccination will be allowed to fly to the US, ending a ban that was first introduced by President Trump in March last year.


From November, the Biden administration said travellers would need to prove they have been double-vaccinated and passed a PCR test in the previous three days.


Passengers will be required to wear a face-mask for the entire plane journey and to provide travel authorities with their phone number and email address for contact tracing, according to the FT, which first reported the story.


Shares in IAG shot up 11% to 165.86p on the news, having recently slumped to an eight-month low, while Rolls-Royce Holding PLC, which makes a large proportion of its revenues from the airline aftermarket, was up over 4%.


On the continent, Air France KLM and Lufthansa added to earlier gains to trade around 6% higher.


SSP Group plc (LSE:SSPG) and WH Smith PLC (LSE:SMWH), operators of airport food and shopping concessions, were up over 5%, while tour operator TUI AG (LSE:TUI) was up 2%


EasyJet PLC and Wizz Air Holdings (AIM:WIZZ), although not transatlantic carriers, were also carried higher.


“BA-owner IAG is a clear winner from this as its transatlantic business has been all but mothballed since the grounding of its jets due to the US policy,” said market analyst Neil Wilson at Markets.com.


“It indicates I think a direction of travel for the airlines that is way more positive than we have seen since really the peak of the vaccine optimism late last year and early 2021.


“Whether or not the US makes the green list or not come October is another matter. I would assume the loosening of the rules – a win for the EU and UK – is based on the quid pro quo that they will make it easy for their citizens to travel to the US. Levels of vaccinations in the US are high enough to outweigh concerns about cases.”


With the IAG shares only at their highest since late August, Wilson said there were “lots of caveats and reason to be cautious still – getting bums on seats and filling those planes again will take much longer – who’s going to wear a mask for 9 hours?”.

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