Airline stocks rose sharply in trading on Thursday (23 December) as a number of Omicron studies offered the sector a much-needed injection of confidence that more travel restrictions will not be needed in the near-term.
Initial findings from four separate Omicron studies were released on 22 December, two from the UK, one from South Africa, and another from Denmark. All offered an optimistic assessment of the latest Covid strain, agreeing that the severity of illness appears to be milder compared to previous variants, including Delta.
The news was wholeheartedly welcomed by investors and travel industry operators, who have been running scared that a more severe variant would cause widespread international travel restrictions than already put in place.
Some countries, such as France and Germany, had already taken measures to ban travellers from the UK but if the severity of illness is lower, then a global halt to international travel similar to that seen in March 2020 is less likely.
AIRLINE STOCKS LIFTED
British Airways parent International Consolidated Airlines (IAG) led the FTSE 100 leader board on Thursday, the shares rallying nearly 4% to 146.5p, continuing the bounce off 2021 lows of 125.8p on 15 December. Aero-engine maker Rolls-Royce (RR.), which generates a lot of revenue from air miles flow by its engines, was also firmly ahead, adding more than 3% at 122.24p.
Airlines are also featured on the mid-caps leader board. Budget flyers Wizz Air (WIZZ) and EasyJet (EZJ), up 4.5% and 4% apiece at £44.20 and 558.6p respectively, are among the best-performing FTSE 250 stocks.
Holiday firms TUI (TUI) and Jet2 (JET2) also made gains. The latter is one of Shares top stock ideas for 2022, which subscribers can read here.
The widespread travel sector optimism was dented a little by a warning from Ryanair yesterday that flagged the likelihood of escalating annual losses and cuts to its passenger numbers forecast for January. The Irish airline recently delisted from the London stock market.
