Share prices of airlines and other travel companies rose on Tuesday (January 4) amid hopes that restrictions could be eased and the Omicron variant is not as severe as earlier strains of Covid-19.
The Financial Times said travel and leisure stocks surged, “despite record numbers of cases in the US, UK, France and Italy”, because the Omicron variant is causing fewer hospital admissions than earlier waves.
It reported that industry executives expect the government to abolish the requirement to take a pre-departure test before returning to the UK as part of a review of rules on Wednesday (January 5).
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Transport secretary Grant Shapps “wants to abolish the testing rules” to help the aviation sector, according to “people familiar with the matter”, said the FT.
Sky reported: “The FTSE 100 climbed by as much as 100 points in early trading, hitting levels last seen in February 2020 before shares were hit by a steep slump as the pandemic advanced globally.
“Leading the way on the FTSE 100 was British Airways and Aer Lingus owner International Airlines Group – up 11%.”
Other airlines also saw their shares prices take off including easyJet, Wizz Air and Ryanair, while Tui rose too.
Travel stocks ‘powering ahead’
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told Sky: “Stocks reliant on international travel are powering ahead.
“With yet more indications that Omicron, though highly infectious, does not cause such serious illness, a wave of relief is pushing up companies which have been hit by worries about tighter restrictions.
“With so many people in the short-term being forced to isolate at home, it’s likely many people will be spending the next few weeks browsing travel blogs for inspiration, given there is so much desperation for a holiday around.”
The Times reported there are “high hopes for a bright 2022 after two years of pain in the aviation industry”.
Reasons for optimism
Johan Lundgren, easyJet’s chief executive, told the newspaper about “lots of reasons for optimism” including high vaccination rates, Covid protection measures and flexible booking and cancellation policies.
“We remain hopeful that restrictions will be removed soon by the government, which has conceded that measures are not effective once a variant is in wide circulation domestically,” he said.
On Tuesday, prime minister Boris Johnson said he hopes the country can “ride out” the current wave, although he acknowledged parts of the NHS would feel temporarily overwhelmed.
The BBC said trade body Airlines UK argued that continuing the current measures would be “financially disastrous” while Manchester Airports Group (MAG) has sent the government research which it claims shows that pre-departure testing has had little or no impact on the spread of Omicron.
More: Pre-departure tests ‘could be scrapped’ in rules review