Airline shares soar massively on hope of Travel industry recovering soon with new vaccine

10.11.2020 at 16:59

Travel news

Finally a positive piece of news after months of depressing outlook for the travel industry.

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 and the whole Europe, passenger numbers have once again collapsed, with many countries imposing 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.

United Airlines added more than 19% to end the day at $41.32, while Delta Air Lines rose 17%, and shares of Hawaiian Holdings, parent of Hawaiian Airlines, soared 50%, each closing at the highest price since June. American Airlines rose 17% to a two-month high.

Shares of aircraft maker Boeing rose 13.7%, a three month closing high. The gains far outpaced the broader market with the S&P 500 ending the day up 1.2%.

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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