Airline shares soar on Covid vaccine optimism
‘It would be massively premature to say that the airline sector can now return to normal,’ cautioned aviation analyst John Strickland
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Your support makes all the difference.Airline and holiday company shares have surged on optimistic news from Pfizer and BioNTech that their coronavirus vaccine may be more than 90 per cent effective.
During the latest lockdown in England, passenger numbers have once again collapsed, with a general ban on outbound and domestic air travel. Many airlines and holiday companies have cancelled most or all departures until early December.
But after the vaccine news was revealed, shares in easyJet, Britain's biggest budget airline, rose from £5.54 to £7 – a jump of over a quarter – as investors moved in on hopes of a swift return to normality.
Tui, Europe’s biggest holiday company, saw a gain of 31 per cent in just 15 minutes. Its nearest rival, Jet2, saw a surge of 27 per cent.
IAG, the parent company of British Airways, saw its share price increase by as much as 40 per cent on the start of the day. The market capitalisation is now above half what it was in January 2020, before the coronavirus pandemic took hold.
Ryanair’s shares rose by over 10 per cent. Even Norwegian, which had begun the day warning that the government had refused any more funding, saw its value increase by 48 per cent, though on a very low base.
Malcolm Ginsberg, editor of Business Travel News, predicted "a rush for seats”. He said: “Whether it be for holiday or business there is a huge demand to travel and if the vaccine can be rolled out in time for the year end holidays that will be terrific.
"Airlines were undervalued, but it is a brave person who can see the carriers going back to their pre-Covid values in, say, 18 months time. The prices will settle into a proper value over a period of time".
The aviation analyst John Strickland said: “This news is certainly very welcome but it would be massively premature to say that the airline sector can now return to normal.
“Enormous damage has already been done and we can expect failures this winter.
“Demand will continue to be massively reduced and even if the vaccine can deliver there are still many questions to answer and logistical challenges ahead.”
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