UK Leasing

Which airline stocks could be most affected?


Airlines UK, a trade body representing UK registered airlines, has called for immediate government financial support for the airline industry amid falling demand for flights following a new set of restrictions of travel after a recent increase in cases of Omicron variants.

The airline industry, which provides nearly 500,000 direct jobs and contributes more than £ 10.9 billion to the country’s GDP, has been negatively affected since the start of the Covid-19 pandemic. Additionally, the industry was the last to open after restrictions eased and has shown signs of recovery in recent months. However, a further rise in cases of Omicron variants has derailed business operations as rules such as mandatory pre-flight coronavirus testing requirements negatively impacted consumer sentiment, leading to lower demand.

In addition, the airline industry has not received any direct government support since the end of the holiday. Instead, the government had urged airlines to maintain sufficient liquidity and preserve their liquidity. The airline industry is also facing a debt burden, as many airlines have borrowed heavily since the start of the pandemic to support their business operations.

Let’s take a look at the stocks of FTSE-listed airlines that are badly affected due to the recent increase in cases of Omicron variants:

International Consolidated Airlines Group (LON: IAG)

The FTSE100 listed company provides passenger and freight services around the world. It is one of the largest airlines in the world. During the third quarter, the company’s passenger carrying capacity increased to 43.4% in 2019, from 21.9% in the second quarter.

The company had previously said it was recovering from the impact of the pandemic and aimed to achieve 60% passenger capacity in the last quarter. However, the recent travel restriction aimed at curbing the spread of the virus could negatively impact airline operations, resulting in reduced capacity.

The current market capitalization of the IAG group stands at £ 7,142 million as of December 24, 2021.

The company operates its airline business mainly in European countries. It also has a tour and aircraft rental business. For the year ended September 30, 2021, airlines reported a 51.6% drop in revenue to £ 1,458 million. Passenger carrying capacity fell 48.9% to 28.2 million seats.

The company has steadily increased its passenger transport capacity as it anticipates a full recovery of its capacity by the fourth quarter of FY22. However, a full recovery may only be possible if the new travel restrictions are not implemented.

EasyJet Plc’s current market capitalization was £ 4,185 million as of December 24, 2021.

Wizz Air Holdings Plc (LON: WIZZ)

The low cost passenger carrier is present throughout Europe and countries in the Middle East. It provides point-to-point passenger air services and has a fleet of 144 aircraft.

The airlines reported revenue of 880.4 million euros and carried 12.5 million passengers during the six-month period ended September 30, 2021. However, the airline reported a loss of 120.9 million euros during the period.

The current market capitalization of Wizz Air Holdings Plc was £ 4,448.47 million as of December 24, 2021.