Europe’s COVID cases hit airline bookings and stocks

British Airways owner IAG, Easyjet, Ryanair and Wizz Air have all taken a hit on the markets this week as soaring COVID infections in Europe intensify. Rolls Royce was also dragged down on the news, given its exposure to the sector.

The news comes as the World Health Organisation warns of an additional 700,000 new deaths in the region, taking the total to 2.2 million by March.

“This has caused fresh turbulence for airline companies, which had glimpsed light through the clouds as bookings, especially on lucrative transatlantic routes were expected to bounce back in the Spring,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

"But there are now concerns that surging infections and lockdowns will depress the confidence of the travelling public. Ryanair boss Michael O’Leary has warned of a fraught period, with passengers deterred by this dramatic wave of infections from making bookings. Adding to the fragility are warnings from a parliamentary committee that new swathes of red tape could tie up journeys from the UK to Europe next year due to new border management systems coming into force.

"Fortunes haven’t been helped by the oil price staying stubbornly high, with the benchmark Brent Crude above US$82 a barrel, despite the co-ordinated release led by the US of strategic oil reserves. There are worries that the oil cartel OPEC and its allies might hold off plans to increase production which is keeping prices higher. The upwards path of the oil price is a particular concern for the airline sector given that fuel makes up 25 to 30% of the operating costs of an airline. Although hedging may give some airlines breathing space for now, it’s still an ongoing worry. WizzAir which is unhedged on fuel has already said it’s expecting particular turbulence through the winter months as it navigates much higher costs and a substantial operating loss for the third quarter is forecast. There were high hopes that brighter skies would emerge by the Spring but now storm clouds appear to be gathering over the sector once again.’’

Image courtesy Ryanair

    Share Story:

Recent Stories


Cyber physical risks
Property damage as a consequence of cyber attack is often excluded from standard property policies, but as the industrial internet of things expands, so too do the risks. This podcast examines the evolving threat landscape. Published October 2021

Financial institutions were early adopters of cyber security and insurance. Are they still on top of the game?
Managing huge amounts of sensitive data online makes financial institutions a prime target for hackers. As such, the sector was an early cohort for insurers in creating cyber cover. Since then, the market has evolved almost beyond recognition. It continues to challenge itself to this day, complying with rigorous regulatory demands and implementing avant-garde enhancements to keep abreast of the ever-changing risks. Published June 2021

Advertisement