Airlines grounded by travel restrictions

Shares prices fall for major travel and tourism companies as COVID-19 impacts continue

Article updated: 16 March 2020 11:00am Author: Ian Forrest

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  • Airlines and tourism groups are among the biggest fallers in the FTSE 100
  • IAG), the owner of British Airways and Iberia, said it’s reducing its capacity in April and May by at least 75%
  • There is a lot of bad news already priced in and it is unlikely that most of the restrictions will be in place for more than six months
  •  Investors clearly need to be cautious and aware of the risks if the disruption continues for more than a few months

The travel sector is again very much in the spotlight this morning with airlines and tourism groups among the biggest fallers in the FTSE 100. This is due to the growing impact of ever more widespread travel restrictions due to COVID-19, and little indication of when the crisis may come to an end. International Consolidated Airlines (IAG), the owner of British Airways and Iberia, said it’s reducing its capacity in April and May by at least 75% and cannot provide earnings guidance for 2020.

Easyjet also said it could not provide guidance and suggested the travel restrictions being imposed by governments in Europe, alongside a drop in customer demand, could see the majority of its fleet remaining on the ground. Given all of this it’s not surprising to see the shares in these companies dropping sharply, IAG by 21% and Easyjet by 27%. Tourism group TUI is also down 31%. There is a lot of uncertainty about how long the situation will last and what financial impact this will ultimately have on these companies.

Investors clearly need to be cautious and aware of the risks if the disruption continues for more than a few months. However, it must be also said that, following the significant drop in the share prices, there is a lot of bad news already priced in and it is unlikely that most of the restrictions will be in place for more than six months. Both our recommendations for IAG and Easyjet are now under review.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.

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