More than £ 2bn wiped out of airlines and vacation companies’ value
More than £ 2 billion has been wiped off the value of UK listed travel and airline companies following a rollback in overseas holiday rules.
EasyJet, British Airways owner IAG Ryanair TUI, Wizz Air and engine manufacturer Rolls-Royce all suffered heavy crashes as news spread that no other country would be added to the government’s green list.
The move was confirmed after the stock market closed, but rumors were enough to reduce the value of the airlines by several hundred million.
The sector has been one of the hardest hit since the start of the pandemic and has seen companies solicit investors for funds and borrow heavily through government-backed programs.
Many had hoped that the reopening of holiday hotspots could see an improvement in business fortunes, but the latest guidelines on Thursday have stifled those hopes.
IAG saw its shares close 5.4% – wiping out almost £ 550million from its value. Ryanair shares fell 4.5%, wiping off £ 750million from the company. EasyJet shares closed down 5.1%, wiping out £ 215million. Wizz Air shares fell 3.8% or £ 234million, TUI shares fell 4.5% or £ 203million and Rolls-Royce lost 2.3% of its value or £ 218million.
Susannah Streeter, Senior Investment and Markets Analyst at Hargreaves Lansdown, said: “High hopes that brighter skies were in sight for airlines were brought back to earth with a bump after the UK government introduced even tighter controls on major vacation routes.
“Caution is the watchword of the UK government, but it is a blow to the travel industry.
“As planes stay on the ground, cash consumption is likely to escalate and eat away at the financial cushions that airlines have built up through debt restructuring and rights issues.
“The situation is also seen as a drag on the fortunes of Rolls Royce, the aircraft engine manufacturer and jet maintenance provider, as the resumption of commercial activities recedes further on the horizon.
“There is still a silver lining that the rapid rollout of immunization will give way to a recovery in fortunes at the end of the summer, but the travel industry is now going to have to play an even bigger catch-up game. “