British Airways owner IAG and travel stocks under pressure as Covid cases surge

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International Consolidated Airlines Group (LSE:IAG) saw its shares slump again, losing another 4.4% on Wednesday, as COVID-19 cases in the UK are soaring.


Package holidays firm TUI AG (LSE:TUI) along with airlines easyJet Plc and Wizz Air Holdings (AIM:WIZZ) were similarly in the doldrums on the London Stock Exchange.


It comes as the UK registered over 43,000 new infections on Tuesday, with 223 deaths.


READ: Valneva says COVID-19 vaccine better than AstraZeneca in clinical trials


Matthew Taylor, chief executive of the NHS Confederation, called on Westminster to enforce a ‘plan B’ that would bring back some safety measures seen during lockdowns.


“Mask wearing in crowded places, I think avoiding unnecessary indoor gatherings, I think working from home if you can,” he told the BBC’s Radio 4 Today programme.


“I don’t underestimate that these are inconveniences, but we have to make a choice if we can see what is almost inevitable down the line.”


Business secretary Kwasi Kwarteng admitted that the rollout of booster vaccines is slow and it is “something that we really need to address”. He also ruled out the potential for another lockdown.


“Clearly, throughout this process there have been people saying the lockdown was unnecessary, and there’s been other people saying we should continue to lock down. We’ve really plotted a path between those two extremes. I think it has worked. And that is one of the reasons we’ve got the fastest growing economy in the G7,” he told Sky News.





TUI was one of the major fallers on Wednesday, down 6% to 228.8p, while British Airways owner IAG lost more than 4% to 158.39p.


Fellow airlines easyJet plc and Wizz Air dipped 3%, with airport concession holders SSP Group plc (LSE:SSPG) and WH Smith also losing 3%.


In the leisure sector, cinema operator Cineworld Group PLC (LSE:CINE), publican Mitchells & Butlers (LSE:MAB), casino owner Rank Group (LSE:RNK) and city-centre food chain Greggs PLC (LSE:GRG) were also 2-3% lower.


IAG is one of the stocks with the most to lose due to its reliance on transatlantic travel to the US.


The White House is planning to reopen its borders to vaccinated travellers from the EU and UK from 8 November, however, with the rise in cases, this may be put in question.


Analysts at Peel Hunt expect significant pent-up demand for business and leisure travel that will be released over Thanksgiving and the holiday season, however airlines could miss out on that if tougher measures are imposed.


Coupled with rising fuel prices, the broker cut the target price for IAG to 178p from 215p and downgraded its recommendation to ‘hold’ from ‘buy’.

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