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Companies reliant on international travel see shares take off ahead of travel rules shake up

  • IAG up 4%
  • TUI up 4%
  • The Restaurant Group up 4%
  • Informa up 3%
  • Rolls Royce up 2.3%
  • Burberry up 1.5%
  • IHG up 1.5%

 

Susannah Streeter, Senior Investment and Markets Analyst at Hargreaves Lansdown:

“Companies highly reliant on international tourists saw a jump start to their share price today with a big shake up in travel rules due. It’s expected the UK government will scrap the amber list of countries and reduce those on the red list, eliminating the need for so many costly tests. This is the jolt of energy the travel industry desperately needed after months of uncertainty.

British Airways owner IAG was one of the biggest risers on the FTSE 100, climbing 4% in early trade as the prospects for a big rebound in transatlantic travel now look so much brighter. Empty seats on aircraft are set to be snapped up by visitors desperate to see friends and family after so long. Rolls Royce has caught a lift upwards, rising 2.3% as a change in rules would bode better for its core business of making and servicing engines for long-haul aircraft. It desperately needs a slice of good news on this front as it has admitted it will need passenger traffic to climb to at least 80% of pre-pandemic levels in order to meet its longer term targets and keep cashflow in the black

The conference organiser Informa has also received a super-charged boost from the expected announcement today, rising 2.3% in early trade. The events business has been one of the biggest corporate casualties of the pandemic, and there are now hopes that global conferences, the cash cow of the business, will now be able to resume with more vigour.

IHG is riding high poised to finally capitalise on demand returning for holidays in Europe and for a boost in bookings for US hotels. Although business in China and the Americas has been more brisk of late, its European business has been the weak spot as rules kept international travellers at a distance.

Burberry was another strong performer on the FTSE 100. There are great expectations that the luxury fashion giant will see sales tick up as more international tourists start shopping in its high end boutiques in cities around the world. Its new London Sloane street flagship is likely to become a major draw if tough quarantine restrictions and costly testing are dropped for visitors.

On the FTSE 250 The Restaurant Group, the owner of Frankie and Benny’s and Wagamama was among the top risers. A relaxation of the rules would come as relief for its multi-brand concessions business in particular which has outlets in UK airports, where trade has dropped steeply. After a wash out summer there are high hopes now of brighter skies for tour operator TUI, which rose by 4% in early trade. A surge in demand for October half term and winter holidays could be on the cards, given how starved of sun so many UK holidaymakers have been this year.

But the seatbelts are still fastened for turbulence at easyJet. Shares in the airline, which plummeted after its announced another round of fundraising,  fell by another 1% today. Consolidation is expected in the airline industry as competition increases for the returning tourist, and easyJet appears to be falling behind while rivals nose ahead in the race to recover from the crisis.”

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