Quoted airlines and travel groups all felt the cold in the wake of yesterday’s surprise profits warning by Ryanair with shares falling across the board.
Rival easyJet was the worst hit – falling 65p to 1215p while British Airways parent company IAG saw shares drop by 3.7p to 291p.
Tui Travel was down 11.1p to 334.6p and Thomas Cook lost 6.9p to 135.7p.
Cruise operator Carnival Corporation was also affected, dipping 51p to 2334p.
Evidence of the damage of expensive fuel and a hot summer, that tempted holidaymakers to stay at home rather than jet off abroad, was the reason for the crash in travel stocks.
Ryanair knocked the City’s confidence in the travel sector where traders were already nervous that companies could be struggling as the fuel price rose following concerns over Syria, The Independent reported.
Michael Hewson, a senior market analyst at CMC Markets, told the newspaper: “The budget Irish carrier cited increased pricing pressures across Europe and lower traffic as a result of the recent warm weather. Higher fuel costs due to rising oil prices are also likely to be a factor while the company also downgraded its profit forecasts for the current year.”
However, sources at other airlines queried Ryanair’s assertions, saying they had not yet seen signs of the same kind of weakness in the market, according to the Daily Telegraph.
Dónal O’Neill, airlines analyst at Goodbody, told the newspaper that Ryanair’s statement appeared to contradict “some of the commentary from its peer group and indeed Ryanair’s own commentary at its June investor day”.
The Irish carrier, which was last week ordered to sell down its stake in rival Aer Lingus, told investors at the time that it expects to carry 110 million passengers a year by March 2019, as it continued to attract travellers away from legacy carriers which are grappling with higher cost bases. The target was an upgrade from previous guidance of 100 million.
O’Neill believes Ryanair, which is known in the industry for its aggressive marketing and pricing strategies, is facing increased competition from Norwegian, Aer Lingus, Iberia and Vueling.